In the last few years, oil and gas company British Petroleum (BP) made headlines for its historic promise to reduce oil and gas production significantly. But now, it’s changing course, doubling down on oil and gas for the foreseeable future. This decision delighted some shareholders, disappointed others, and frustrated those concerned about global warming.
A Change in Plans
In 2020, BP promised to cut the amount of oil and gas it produced by 40% within 10 years. The idea was to move toward clean energy like wind and solar. It would have been a big step forward for the energy transition, but in 2023, BP announced it was lowering that target to just 25% reduction by 2030. While the reduced commitment was disappointing to many environmentalists, it was still a very significant reduction.
Why the change? The war in Ukraine shook up the energy market. Gas and oil prices soared, and BP made a record $27.7 billion in profit in 2022, according to the Financial Times. With those profits rolling in, BP decided it needed to focus on oil and gas. As Bernard Looney, BP’s then CEO, put it, “Today’s energy system is still predominantly oil and gas, and that system needs investment.”
Here’s the shocking (although not surprising) big news: under new CEO, Murray Auchincloss, BP has now completely abandoned those reduction commitments entirely to focus on near-term returns, as reported by Reuters on October 7, 2024.
Keeping Investors Happy
Some of BP’s shareholders are looking for a short-term return on their investment Those are the ones that were unhappy that BP’s stock wasn’t doing as well as companies like ExxonMobil, which never veered from producing oil and gas. When BP announced it was pulling back on its initial oil and gas reduction commitments in February 2023, its stock jumped by more than 7% in one day. That was great news for these investors.
But not everyone was happy. Big shareholders who care about climate change, like members of a group called Climate Action 100+, were disappointed. They felt BP’s decision was a step back from fighting global warming.
What About Going Green?
BP claims it hasn’t given up on clean energy. The company still plans to cut its carbon emissions to net zero by 2050, which technically means zeroing out absolute emissions across operations, production and sales in order to support the target to limit global temperature increases to 1.5 degrees Celsius, as agreed in the 2015 Paris climate summit..
BP has invested in projects like solar power and biofuels made from plants, but according to Reuters, they have now “paused investment in new offshore wind and biofuel projects and cut the number of low-carbon hydrogen projects down to 10 from 30.” So, when BP says it’s still committed to net zero emissions, and still investing in clean energy projects, it does not appear to be backed up by their actual actions and investments.
Why Does This Matter?
BP says it’s trying to meet today’s needs while still planning for a greener future, but here’s the catch: scientists say we need to cut emissions almost in half by 2030 to avoid the worst effects of climate change. BP abandoning its commitments make that target harder to reach.
What It Means for Rural Communities
In rural America, this shift by BP might not feel like it directly impacts people. But it does. Higher oil and gas production could mean more stable energy prices in the short term, which is good news for farmers, truck drivers, and others who rely on fuel to get the job done.
On the flip side, if companies like BP don’t lead the way in cutting emissions, Nobel prize-winning scientists are in agreement that we will see more extreme weather events, more forest fires, more floods and more droughts, which of course impacts our crops, livestock, and the environment we all live in.
