Sami Cheqrouni Espinar examines the credibility of each of the aims outlined by BP to shift its position in a transforming energy sector.
On the 12th of February 2020, BP set a company-wide ambition of achieving net-zero emissions by the year 2050. Bernard Looney, the current CEO of BP, stated, “the world’s carbon budget is finite and running out fast; we need a rapid transition to net-zero.” The outlined aim was in response to the current climate crisis,whose alarm and severity has escalated in recent years with many critics accusing BP of exacerbating the problem. BP’s pledge has been met with both praise and scepticism.
With the company’s annual emissions reaching 415 million tonnes of CO2e, much work is still to be done.
BP’s target for net-zero emissions was initially set out in 2019 by Bob Dudley, the prior CEO of the company. In July of that year, Dudley addressed the corporate leaders in recognition of growing criticism, and protests from environmental pressure groups. His statement addressed the rallies held by groups such as Extinction Rebellion, who blockaded and damaged the London headquarters of rival company Shell in January of 2019, to create awareness of the current environmental emergency. In addressing the protests, Dudley stated “tensions are running high and we recognise there are real concerns being expressed – about BP, and about the energy sector more broadly” and discussed the unanimous international consensus from organisations such as the European Climate Foundation and the IEA that net-zero emissions are necessary to prevent lasting ecological damage.
BP’s ambition for net-zero 2050 at first glance seems credible. It offers promise for a sustainable form of oil extraction, addresses the critiques of its industry and looks to revamp an outmoded business model. But with the company’s annual emissions reaching 415 million tonnes of CO2e (carbon dioxide equivalent, a standard unit used to measure carbon footprints), much work is still to be done. Bernard Looney remains determined, and he cemented Dudley’s vision by outlining BP’s specific plan to reach net-zero with five main aims.
1. Net-zero across BP’s operations on an absolute basis by 2050 or sooner.
Many of BP’s commercial operations are pollutive and release large amounts of greenhouse gases. Achieving net-zero would lead to an overall reduction of annual carbon dioxide emissions by over 400 million tonnes. Last year, BP’s operational activities alone released around 55 million tonnes of CO2e.
BP has begun by focussing on specific projects. One example that they have reported is regarding flaring at their Angola site. A flare stack is a tall column found at industrial sites which burns unwanted, combustible products and by optimising this process and implementing well management strategies, emissions from flaring have been reduced. Improvements in efficiency have also been sought in the power generators at their Oman sites, thereby reducing the amount of needed fuel to deliver the same net power.
BP’s Operations are split up into upstream, downstream and renewables segments. Upstream activities include the exploration and extraction of fossil fuels, while downstream activities mainly constitute the refinery and commercialisation of extracted oil into a finished product. The implementation of technologies in these parts of BP’s operations to reduce carbon emissions will be crucial to ensure the reduction of future emissions.
2. Net-zero on carbon in BP’s oil and gas production on an absolute basis by 2050 or sooner.
Oil companies emit large quantities of CO2, in part due to the timescale of production (which can range from 20-50 years) and because of the vast infrastructure required. Transporting millions of tonnes of oil requires suitable concrete pylons to support offshore oil platforms, and kilometres-long pipelines to extract and transport the oil. The construction of such results in large amounts of CO2 being released – 360 million tonnes of carbon was released during BP’s oil and gas production in 2019. In response, BP have recently announced that the production of oil and gas will be reduced by 40 per cent by 2030 to contribute to meeting this goal.
These production activities make up a portion of the upstream operations and are the earliest stage in the chain of operations, albeit they do not encompass the refinement, transportation or combustion of extracted oil and gas which is mainly the focus of operational activities.
3. 50% cut in the carbon intensity of products BP sells by 2050 or sooner.
BP are also involved in commercial activities, including the production of various petrochemical products. These products include lubricants for cars, as well as bitumen and asphalt for the surfaces of roads. BP has already taken steps to lower the carbon intensity of car lubricants by introducing the world’s first set of carbon-neutral lubricants with Castrol, a British automotive lubricant firm. The strategy taken to make these products carbon-neutral was to offset the potential emissions that will be made during its product life cycle. Through this initiative, BP offset 594,180 tonnes of CO2e between 2017-2018.
The sale of fossil-fueled powered car engines in the UK is expected to continue steadily until 2035, with sales ceasing in line with policy set up during the COP26 summit which will halt their sales. Until then, efforts to decrease the carbon intensity of on-road maintenance products must be made so that the overall emissions from BP’s subsidiary products can decrease.
4. Install methane measurement at all BP’s major oil and gas processing sites by 2023 and reduce methane intensity of operations by 50%.
Methane has been linked to a large number of global respiratory deaths related to atmospheric pollution, so methane measuring devices are a critical tool for oil companies. Methane is considered a precursor gas (a gas which reacts chemically to form another compound) to ozone, which although is a crucial component of the delicate ozone layer in the stratosphere, at ground level is dangerous to inhale for humans and wildlife. In 2016, a study in China found that long-term ozone inhalation was related to approximately 23-40.3 million respiratory deaths. BP will need to make concerted efforts in this regard, not only for the environment’s health, but also for public health.
The feasibility of this aim is questionable from its outset. BP only announced plans to implement continuous methane measurement last year. Various new technologies will be soon rolled-out at all new sites as a part of this wider scheme. This includes the introduction of ‘multi-spectral flare combustion cameras’ which will use thermal imaging to analyse the gases emitted by flare stacks which, as mentioned previously, are a large source of emissions. Extensive efforts like this to install methane measurement technologies will be necessary to fulfil this fourth goal to curb further emissions by helping to identify where the biggest problems lie, and to quickly respond to leaks.
5. Increase the proportion of investment into non-oil and gas businesses over time.
BP revealed that they would ensure a ten-fold increase of investment into renewables, to $5 billion by 2030, and have also committed to a $25 billion divestment scheme from environmentally damaging investments. Though a positive move, the lack of specificity about the proportion of investments which will shift to green in its energy investment portfolio does not reaffirm critics, with some describing this dispiritingly as a ‘public relations exercise’.
In spite of BP’s proposals, a broad range of critics have cited a lack of detail in the planning needed to be enforced to meet these company goals. Bruce Duguid, an investment manager at Federated Hermes, noted that the details on carbon offsetting in the upstream sector were quite vague. It has been suggested BP will most likely use carbon offset schemes, like those used to reduce the emissions of their lubricants, to succeed in obtaining net-zero. Carbon offset schemes are investments into remote environmentally beneficial projects which aim to balance out outputted greenhouse emissions. BP currently has a set of offset schemes under the investment portfolio ‘Target neutral’, with a potential to offset 2.5 million tonnes of emitted CO2. Kiri Hanks, Oxfam’s climate advisor, has warned that BP’s strategy would result in poorer countries being ‘bribed’ to use the land for BP’s needs instead of its own agricultural and farming purposes. This strategy, informally described as ‘Climate colonialism’ has attracted criticism from NGOs as this form of offsetting stifles the growth of the poorer entity in the scheme, without the wealthier body having to make an actionable change to its business model. This practice is predatorial in its nature as it creates a vicious cycle of winners and losers as opposed to mutual interdependence between opposing interest groups with different economic and political standings.
Bernard Looney seems credible, aware and engaged with many of the groups and organisations who are concerned about the current climate crises and of BP’s role in furthering that. Cautious optimism is needed in placing faith in BPs mission statement. With the outlined goals seeming mostly achievable, the unfolding of BP’s strategy will now begin, with time being the test BP must stand to prove its determination to become a major green player.
Written by Sami Cheqrouni Espinar and edited by Ailie McWhinnie.
Sami is a final year mechanical engineering student, and enjoys writing in his free time. Find him on LinkedIn @Sami Cheqrouni Espinar