BP's abandonment of climate targets: realism or simply kicking the (oil) can down the road?

In 2020, British Petroleum (BP), under the steer of former CEO Bernard Looney, set out the most ambitious energy transition plan ever seen in the sector. Pledging to cut oil and gas output 40% from 2019 levels by 2030, BP joined the bandwagon of energy giants keen to ‘do their part’ in the fight against climate change, promising to transition firmly away from hydrocarbon production in favour of investing more heavily in renewables.

The subsequent four years saw a series of events, some sadly predictable, some less so. Unpredictability, the Covid-19 pandemic and Russia’s invasion of Ukraine caused energy prices to soar due to panic over global energy supplies. Predictably, energy giants seized this moment to capitalise and began the process of scaling back their climate targets to appease the growing pressure from their investors to increase production. In February last year, Looney announced a diluted target of a 20-30% decrease in oil and gas production by 2030, amidst a year of record profits for the firm.

However, despite toeing the line between being too strong for their stakeholders and lacking in vision for environmental campaigners, BP’s net-zero targets remained head and shoulders above the dwindling pledges of its energy rivals. This translated to the stock market where BP’s shares underperformed in comparison to Shell, Chevron and Exxon Mobile, paving the way - in part- to Looney’s resignation in September 2023.

His successor Murray Auchincloss, BP’s former Chief Finance Officer, revealed in an exclusive by Reuters earlier this week, that BP has scrapped its goal to cut oil and gas output by 2030. Leaning on his financial background, Auchincloss appeared to have one goal in mind – to focus on profitability in order to regain stakeholder confidence. This means investing ‘first and foremost’ in oil and gas as prices rise once again due to conflict – this time in the Middle East.

Though BP maintains that it plans to reach net-zero by 2050, it has already scoped out sites of investments in the Middle East and the Gulf of Mexico to expand its hydrocarbon portfolio, something that the International Energy Agency declares in incompatible with the goals of the Paris Agreement.

The scaling back of climate targets has been a prevalent trend throughout the private and public sector as of late due to issue of overpromising and underachieving. However, though disconcerting, the abandonment of unrealistic targets could lead to higher levels of success in the long run, so far as they are replaced with immediate and tangible actions.

With the climate crisis looming, the further mitigative actions are pushed down the line, the more stringent and hence unachievable they will become without serious policy backing. Sustained and meaningful action is needed now. All eyes will be on BP when it reveals its new strategy in February next year.