BP boss Bernard Looney today called for an "orderly" transition to renewable energy, which will require investment in both future green energy projects and "today's energy system, which is predominantly an oil and gas system."
"To be clear, orderly is not another word for slow. What it does mean is keeping affordable energy flowing, where and when it's needed. Investing in the transition and investing in energy security," Looney told a London conference today.
The chief executive pointed to BP's latest investment pledges as examples of this dual approach - with the fossil fuel titan today committing a further $16bn to the global energy system over the current decade, including a 50/50 split on pledges for oil and gas and green energy projects. This would mean investment in EV charging and sustainable aviation fuel alongside oil and gas investments.
In Looney's view, this was part of the company's shift from an oil and gas producer to an "integrated energy company."
"We're putting shovels in the ground and we're putting, I believe, our money where our mouth is," Looney said. "In the past three years, the capital we've invested in our transitional growth engines has gone from three percent to over 30 percent."
Looney was speaking at the International Energy Week conference in London, where dozens of protestors had gathered outside the Hyde Park venue to protest BP's continued operation of oil and gas projects and investment in fossil fuels - their chants audible from the conference room.
The company recently announced it made a record £23bn profit for the year, reigniting calls for a further windfall tax.
BP was one of multiple energy producers to announce mega profits this year
It also sparked anger after it rowed back some of its key climate pledges and reneged on plans to slash the amount of oil and gas it produces over the current decade.
The energy giant had previously promised its emissions would be 35-40 percent lower by the end of this decade. But it is now targeting a 20-30 percent cut, and plans to produce more oil and gas over the next seven years compared with previous targets.
However, it aims to invest 40 percent of total spending on green energy projects by 2025 and for that to rise to 50 percent by 2030. Last year it spent around 30 percent (£4.1bn) of its capital expenditure worldwide on low-carbon and renewable projects.
Looney today also defended the firm's payouts to shareholders.
BP's share price has risen significantly during this year's trading amid continued oil and gas investments (Source: London Stock Exchange)
The company increased its payout to shareholders by 10 percent - spending a further £2.3bn buying back its own shares.
Last year, BP handed back more than £11.7bn ($14bn) to shareholders - including £3.7bn in dividends and £8.4bn in share buybacks.
"We have to take care of our shareholders and there lingers a narrative that shareholders are somehow faceless institutions. They are far from it. Millions and millions of people around the world, rely on BP shares and dividends and companies like ours for their livelihoods," Looney said.
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Comments
Evidence of this shift is:
1- The energy transition needs to happen in an orderly fashion, a reference to the EU’s hasty transition that precipitated Europe’s energy crisis.
2- Saying that BP would be producing more oil and gas for longer and as a result scaling back BP’s emissions targets from 35%-40% to 20%-30%.
3- Lack of energy supply leads to price hikes and volatility both of which undermine popular support for the transition, an outcome which nobody wants.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert