Makeover: Oil Giant BP Promises to Cut Oil Production, Invest in Renewables
Somebody had to go I. It's no surprise that Covid Nineteen Delta Draconian blow to the oil and gas industry stay at home orders and line shutdowns of dramatically reduced the need for oil and gas prices and earnings plunged well. Now at least one giant oil company says demand for fossil fuels will never be the same again and it's taking steps not just to pivot, but to make itself over entirely. That business is BP the london-based behemoth last week, the one, hundred, ten year, old company announced a seventeen billion dollar quarterly loss and multibillion dollar writedown of its assets. But what generated headlines was its announcement that over the next decade, it intends to discard its identity as a fossil fuel business. Instead, it'll invest heavily in a wide variety of renewable energy technologies on its way to achieving net zero emissions by twenty fifty. Specifically bb says it will cut oil and gas production by forty percent over the next decade. At the same time, it plans to put ten times as much money into renewable energy investments as it currently does with a goal of investing five billion dollars a year by twenty thirty bio-energy hydrogen, carbon, capture and storage investments in electric vehicle charging stations are all said to be on the menu as our wind and solar. From. A business perspective the move does make some sense BP expects demand for oil to fall between fifty and seventy five percent over the next thirty years as the world attempts to slow global warming. In June BP officials acknowledged that the pain caused to the oil business by the pandemic isn't temporary. It's permanent. They say in a statement, they said covid nineteen would accelerate an existing transition to a lower carbon economy as country seek to quote, build back better meaning in ways less harmful to the environment. The shift is taking a toll on BP's employees. The company announced in June that it plans to lay off ten thousand people. BP's dismal second quarter didn't seem to faze investors instead they embrace the company's new renewable energy shift its share price leapt seven percent on the news stuart joyner an analyst at the market research firm redburn remarked that the move was major positive, thoughtful, and largely unexpected the New York Times reported. Unexpected too many perhaps, but close observers of the company may not have been that surprised. BP has spent the last decade clawing back from its disastrous deepwater horizon oil spill in the Gulf of Mexico. For obvious reasons, the company hasn't exactly been a darling of environmentalists, but quickly after becoming CEO in February Bernard Looney made a pledge for BP to achieve net zero emissions by twenty fifty it was the first of giant global oil companies to do so. At the time both socially conscious and traditional investors applauded BP's pledge Andrew Logan and oil and gas director at series a climate change advocacy organization said EP was setting a new standard for leadership in the oil industry CNN reported and Barclays analysts called the plan both fundamental and radical. Last week. Looney. said in a statement quote. This coming decade is critical for the world in the fight against climate change and to drive the necessary change in global energy systems will require action from everyone but so far oil giants. Exxon and Chevron have not followed suit indeed mobile continues to expand oil exploration and production around the world despite its own sharp drop in earnings. The Washington Post reported BP has attempted and failed at other eco, friendly initiatives over the years and BP will continue to invest in and make most of its money from fossil fuels for at least another five years. Still observers agree that this is the company's most transformative move yet, and the realities of business may give BP's ecoconscious strategy more momentum than has existed in the past. As reporter Steven muffs wrote in. The Washington Post for. BP. Is trying to get ahead of what climate change might forced the industry to do. Anyway.