This article is an edited version of a speech Bernard Looney made in London to introduce and explain BP's net-zero target. Edited by Leigh Collins.
The big challenge for BP is the one the world faces, that is climate change. But the reality is that we are seen by many as a source of the problem and, worse still, an obstacle to solving it. On my first day last week, protesters forced us to shut down our headquarters, and they’re not the only ones who believe we are out of step with society. Some investors do as well, and some of our own staff also. And that’s an uncomfortable place to be. Let me be very clear today that I get it.
The world does have a carbon budget, it is finite, and it is running out fast. And we need a rapid transition to net zero. Society has got to deliver on the Paris goals. So I get the huge frustration. I get the anxiety, I get the anger, and I get that people want cleaner energy.
Now some see that as a threat, a threat to our existence. I see it differently. I see opportunity. I see huge opportunity for BP to demonstrate that we are a force for good in the world, and to grow and to thrive.
Over the next few decades, trillions of dollars are going to be invested in replumbing and rewiring the global energy system. Currently around $300bn a year is invested in new energies. To keep to a 2C temperature rise that has to become $1trn, and for 1.5C it has to be $2.5trn. So the opportunity in providing the world with what it wants and needs is enormous.
Beyond what many may call a grand statement, what might reimagining the global energy system actually look like in practice?
There is a mass migration to urban areas. 70% of the world will be living in cities by 2050. And you have city mayors desperate for help, cleaning up the air, electrifying transport systems and dealing with waste.
The world does have a carbon budget, it is finite, and it is running out fast,
Imagine turning that waste into bio jet fuel for the planes that fly in and fly out of those cities. Growing cities need new homes, shops, offices, but cement production is responsible for up to 7% of carbon dioxide emissions. What if you could build that new infrastructure with concrete that locks up carbon instead of emitting it? Or how about capturing the carbon from big emitting industries like cement, steel or chemicals? That is already a possibility. Planning is under way on Teesside, here in the UK, for the world’s first large-scale gas-fired power station with carbon capture technology built in.
Here’s another one. Our solar joint venture, Lightsource BP, is going to provide the power for a steel mill in Colorado. It’ll be the first US steel mill powered this way, and it’s going to save 1,000 jobs in the process at the mill, and create 300 more building the solar facility.
Let me introduce a bit of a reality check at this point. I have no doubt that the pace and the direction of travel we’re setting out, as significant as it is, will be insufficient for some. And I know many doubt our intentions, based on seeming inconsistencies between what we say and what we do in areas like lobbying, on carbon pricing, and methane regulations. I get that.
We are taking steps to more firmly and visibly align our intentions with our actions and become much more transparent. And we won’t get everything right immediately, I know that. So if anyone sees BP acting in a way that is counter to what I say here today, then I want to hear about it. I believe that earning back people’s trust is essential if we are to stand a chance of fulfilling our purpose.
Does this mean that BP is getting out of oil and gas? What I can tell you is that we will increasingly focus our investments on the highest-quality barrels and drive returns and cash flow, not production volumes. And with that, you can expect oil & gas production to decline gradually over time.
Does that mean we’ll be producing and refining hydrocarbons in 2050? Yes, very likely. Does that mean we’ll be producing and refining less of them in 2050? Yes, almost certainly. And our aim is that any residual hydrocarbons will be decarbonized. And in a world that is serious about net zero, they will have to be. But we can only reimagine energy if we are financially strong to pay the dividends our owners depend upon and generate the cash needed to invest in new low- and no-carbon businesses.
Are we committing more capital to non-oil & gas activities? Yes, we will over time. I think we’d all agree the goal is not just to spend more money, it is to invest wisely into businesses that will make a difference to the world, businesses that we can develop at scale, in areas where we have unique capabilities — something that we can add, and where we can deliver competitive returns. We don’t plan to commit to an arbitrary or pre-set number. But make no mistake, we aim to invest more in low-carbon businesses over time, and by consequence, less and less in oil & gas. And we’ll come back to what those businesses might look like in September [when BP will announce more details of its net-zero strategy].
Lack of targets
Where are the near-term targets to back up our ambition? It’s a very valid question. I appreciate you want more than a vision; you want to see milestones; you want to see long-term targets, you want to see ways to measure. We don’t have those for you today, but we will have more to say on this in September and in the months and years ahead. We don’t expect progress to be a straight line.
Make no mistake, the direction is set. We’re heading to net zero and there is no turning back.
This isn’t going to be easy, but nothing worthwhile ever is.