Join our community of smart investors

BP leaps to front of pack with new emissions plan

Bernard Looney says the company can reach net zero carbon emissions by 2050 and halve the carbon intensity of all products it sells by then
February 12, 2020

BP (BP.) wants to prove the green in its corporate colours is not just for show. The supermajor, long seen as lagging in attempts to cut emissions compared with peers, has committed to reaching net zero carbon emissions by 2050 in new chief executive Bernard Looney’s first week in the job, while maintaining free cash flow and shareholder payouts.

IC TIP: Sell at 475p

This follows Spanish giant Repsol’s (SP:REP) pledge to do the same. BP did not outline how it would go from 415m tonnes of carbon dioxide equivalent a year to zero in 30 years in its initial statement. Repsol admitted it could only get 70 per cent of the way to net zero with "foreseen" technology. 

There had been expectations that Mr Looney would commit to cutting BP’s Scope 3 emissions – those from its products – and this is partly addressed in the new pledge. The supermajor will aim to halve the emissions intensity of the products it sells. This intensity pledge is similar to Royal Dutch Shell's (RDSB) ambition for 2050. 

BP will also up its spending on “low carbon business”. It already has wind and solar assets, and is backing electric vehicle infrastructure in the UK through its Chargemaster subsidiary. 

Mr Looney started his tenure with a conciliatory approach to those pushing for greater action on climate change from energy companies. To the Greenpeace protesters who turned up at BP headquarters on his first day, Mr Looney said he shared their “deep concern about climate change”. In the net zero announcement, the new boss said if every other oil and gas company followed BP’s (and Repsol’s) lead, “the emissions problem for our sector would be solved”. 

The announcement also included a plan for the supermajor to cut the methane intensity of its operations by half, although BP said it had to install measurement technology at its processing sites first. In order to make these changes, Mr Looney has decided to reorganise the company’s divisions. These will go from upstream, downstream and other, to 'production and operations', 'customers and products', 'gas and low carbon energy' and 'innovation and engineering'.