Energy giant BP says it will cut its fossil fuel production significantly over the next decade, marking the first commitment from a major global oil company to such short-term production declines, which are critical to reining in global greenhouse gas emissions.
The company said Tuesday that its oil and gas production will fall by about 40 percent by 2030, while its refining output will decline about 30 percent, driving down BP’s direct emissions as well as those that come from its products.
The announcement is the most detailed and significant of the pledges made by the world’s leading oil and gas companies, which over the last year have been announcing increasingly ambitious plans to address climate change, yet have largely failed to explain how or when they will pivot away from fossil fuels in coming years. In fact, many of the plans allow the companies’ oil and gas output to continue growing for years.
“BP has radically changed the game,” said Andrew Grant, head of oil, gas and mining at the Carbon Tracker Initiative, a think tank that has closely tracked the industry’s climate change plans.
He added: “In the arms race of emissions announcements, most oil and gas peers have conveniently ignored the global need to produce and use less oil and gas” and BP’s production cut makes it “unquestionably the industry leader.”
The 40 percent production cut does not include BP’s 20 percent stake in Rosneft, a Russian energy company that is one of the world’s largest oil and gas producers, according to David Nicholas, a BP spokesman.
BP chief executive Bernard Looney said in February that the company would reach net-zero emissions by 2050, but he declined to spell out what steps he would take in the near-term. Now, the company says it will boost its investments into low carbon energy ten-fold, to $5 billion a year by 2030, as it draws down its exploration and production of oil and gas.
Within 10 years, BP said, it will have developed 50 gigawatts of renewable energy, up from 2.5 gigawatts today, and will have 70,000 electric vehicle stations, up from 7,500. BP will also increase investment in biofuels, hydrogen and carbon capture and storage—a technology that pulls carbon dioxide from smokestacks or directly from the air.
Together with its scaled down oil and gas output, the company says its direct emissions will fall by about one-third by 2030, while the carbon-intensity of the products it sells will decline by more than 15 percent.
Mel Evans, a senior climate campaigner for Greenpeace UK, which has been critical of BP’s plans, called the announcement “a necessary and encouraging start.”
On Sunday, Greenpeace released an analysis of BP’s venture capital spending, which is largely devoted to clean energy, and found that it included investments in companies that use artificial intelligence to help explore for oil and gas.
Nicholas, the BP spokesman, said in an email to InsideClimate News that about 10 percent of the fund is devoted to making oil and gas development “cleaner and more efficient.”
Oil companies have lost billions of dollars as the coronavirus pandemic has sent global oil demand plummeting, and BP’s announcement came the same day that it reported losing $16.8 billion in the second quarter of the year. That figure included $10.9 billion in write-downs, or one-time accounting losses, driven by the company’s lower projections for oil and gas demand as a result of the pandemic and global efforts to address climate change. BP also said it was cutting its dividend in half.
Luke Parker, vice president of corporate analysis at Wood Mackenzie, a research and consulting firm, said the announcement filled in key blanks from the company’s earlier commitments and “constitutes the clearest and most detailed roadmap” provided by any of the major oil companies.
Andrew Logan, senior director of oil and gas at Ceres, a sustainable investment advocacy group, called BP’s plan “transformative” because of its acknowledgement that oil and gas output must fall rapidly.
“For sure this plan leaves plenty of questions,” he said in an email, particularly around BP’s stake in Rosneft, “but BP’s shift from seeing oil as an engine of growth to something that will largely serve to generate cash to finance a transition throws down a gauntlet for the rest of the industry.”