Twenty years after rebranding itself as ‘Beyond Petroleum’, BP has now joined oil & gas brethren Shell, Total and Equinor on the quest to reach net-zero emissions by 2050 — belatedly throwing its corporate financial weight into helping steer the planet away from the most cataclysmic of future climate scenarios.
CEO Bernard Looney’s plans to transform the petrogiant into “a very different kind of company” by 2030, using an annual $5bn budget to expand its clean-energy portfolio from 2.5GW to 50GW, sends a powerful message. And it points to the positive role that international oil companies (IOCs) — with their streamlined project-execution models, technology-rich DNA and deep pockets — could play in accelerating the energy transition.
“Could” is the operative word. Hard questions remain around the pace of the envisioned transformation of these oil giants — and whether it can be achieved on time and on budget. Worth asking too whether the allocated capital is sufficient, as at last count IOCs were collectively channeling under 5% of their yearly spend into renewables.
Whatever the rate of progress, one certainty is the deepening influence of Big Oil in offshore wind. BP — which in 2009 pulled back on its early bet on renewables, a move it now views as “bad timing” — synchronized its 2050 strategy announcements with a dive into the market via a $1bn deal in the US, the latest IOC to start investing in wind at sea.
The fact is that black gold is in terminal decline. BP declared that Peak Oil was probably passed last year, while DNV GL reckons that the Covid-19 energy demand drop brought the tipping point forward five years, condemning crude to follow coal into extinction. Gas is expected to take primacy in the world’s energy mix in 2026 before starting its own slide in 2035.
The consultancy’s latest Energy Transition Outlook report shows that the role of the oil & gas industry in the global energy economy is set to dwindle over the coming 30 years, falling from 77% of total expenditure to 44% by mid-century, with the upstream sector due a pointedly rude awakening.
The reasons for cheer are, as ever, that wind and solar power are expanding at an industrially unprecedented, exponential speed, while energy-storage technology costs are cratering. Against this backdrop, says DNV GL, meeting the Paris Agreement’s goals will be “entirely feasible” and affordable.
But still, despair haunts our hopes. Today, as phrases like “enhanced fire world” enter the public vernacular, we are heading for a global temperature rise of at least 2.3°C — assuming environmental feedback loops don’t give updraft to the trend.
Speaking the year BP unveiled a green-and-yellow sunburst to replace its imperial shield as its logo, then-chief executive John Browne said: “Companies composed of highly skilled people can’t live in denial of mounting evidence gathered by hundreds of the most reputable scientists in the world [that climate change is happening]”.
Fact is, they can and still do. Just ask the likes of ExxonMobil and Chevron or any number of national oil conglomerates.
Whether Looney’s words two decades on — “We’re making that big change because the world’s changing around us” — can motivate civilisation-saving action by a fossil-fuel industry that has powered the planet for the past 150 years, is still to be revealed. But it can’t take another 20 years.