BP sets ambition for net zero by 2050, fundamentally reorganises company
BP intends to host a capital markets day in September at which the leadership team will set out more information on BP’s strategy and near-term plans
Oil major BP has set a new ambition to become a net zero company by 2050, or sooner, and to help the world get to net zero carbon emissions, CEO Bernard Looney said. That process will mean an overhaul of the company structure.
Under the plans, BP’s existing, largely autonomous business segments – upstream and downstream – will be dismantled and the group reorganised globally into a more focused and more integrated entity, comprising 11 teams. The heads of these teams will make up BP’s new leadership team.
“The world’s carbon budget is finite and running out fast; we need a rapid transition to net zero," Looney said. "We all want energy that is reliable and affordable, but that is no longer enough. It must also be cleaner. To deliver that, trillions of dollars will need to be invested in replumbing and rewiring the world’s energy system. It will require nothing short of reimagining energy as we know it."
He outlined five aims to move BP towards net zero carbon emissions:
- Net zero across BP’s operations on an absolute basis by 2050, or sooner
- Net zero on carbon in BP’s oil and gas production on an absolute basis by 2050, or sooner
- 50% cut in the carbon intensity of products BP sells by 2050, or sooner
- Install methane measurement at all BP’s major oil and gas processing sites by 2023 and reduce methane intensity of operations by 50%
- Increase the proportion of investment into non-oil and gas businesses over time.
His plan also included five aims to help the world move towards net zero:
- More active advocacy for policies that support net zero, including carbon pricing
- Further incentivise BP’s workforce to deliver aims and mobilise them to advocate for net zero
- Net new expectations for relationships with trade associations
- Aim to be recognised as a leader for transparency of reporting, including supporting the recommendations of the TCFD
- Launch a new team to help countries, cities and large companies decarbonise.
“This will certainly be a challenge, but also a tremendous opportunity," Looney added. "It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change. And we want to change – this is the right thing for the world and for BP.”
The company currently emits around 55 million tonnes of CO2 equivalent per year through its operations, and the oil and gas that it produces are equivalent to around 360 million tonnes of CO2 equivalent per year.
“This is what we mean by making BP net zero," Looney said. "It directly addresses all the carbon we get out of the ground as well as all the greenhouse gases we emit from our operations. These will be absolute reductions, which is what the world needs. If this were to happen to every barrel of oil and gas produced, the emissions problem for our sector would be solved. But of course, the world is not that simple; the whole energy system has to be transformed and everyone has a contribution to make – producers and sellers of energy, policy makers and everyone who uses energy.”
A press statement from BP noted that the company would "fundamentally reorganise to become a more focused, more integrated company".
Four business groups will "deliver performance and value growth": Production and Operations; Customers and Products; Gas and Low Carbon Energy, and Innovation & Engineering. Notably, upstream and downstream do not appear to be separated.
The company will also have three integrators which it says will identify and maximise opportunities: Sustainability & Strategy; Regions, Cities & Solutions; and Trading & Shipping.
From the internal side, it will also have Finance; Legal; People & Culture; and Communications & Advocacy.
The company will host a capital markets day in September to set out its strategy and near-term plans.