“The world is not on a sustainable path.”
The opening line of BP’s new fields-and-forest-laden marketing video strikes a rather ominous tone. The Earth is in trouble, but fortunately the energy giant has a plan to help.
In a press conference, new CEO Bernard Looney announced restructuring plans that he says will help the £96bn petrochemicals company achieve net-zero carbon emissions across oil and gas production by 2050, while also halving the emissions generated by the products it sells.
It’s an ambitious aim, to say the least. BP says its carbon footprint is currently 415 million tonnes equivalent of CO2 emissions annually, of which 55 million is a direct result of its own operations. That means that in order to reach its goal, it will have to find a way of reducing or offsetting approximately 235 million tonnes a year. For context, in 2019 it offset 1 million tonnes.
In order to do this, Looney said BP would “fundamentally transform its whole organisation” while retaining its financial return to shareholders, which totalled $8bn in dividends last year. While he did provide some broad aims, there was a distinct lack of detail - something Looney acknowledges, insisting specifics will be revealed in an investor presentation in September.
The question that presentation will hopefully answer is, does BP really intend to put its money where its mouth is or is this just a particularly egregious example of corporate greenwashing?
Cutting direct carbon emissions from operations is perhaps the more feasible of BP’s two main goals, albeit still a significant undertaking. Some investment is already underway for example in greener shipping (an industry in which oil firms are a major participant, it produces 2 per cent of global emissions) and reducing the methane intensity of natural gas extraction and delivery (in effect, the proportion of this high-impact greenhouse gas that escapes into the atmosphere without being burned).
Tackling the carbon footprint of BP’s customers’ use of its products will be somewhat harder, given that its customers have a rather nasty habit of burning them.
There are ways this could be achieved though. Looney said that while BP would continue to produce oil and gas - and its upstream investments to date indicate this is the case - it would aim to reduce the carbon intensity (i.e. the emission rate) of its products by half.
Presumably this will involve significantly greater investment in biofuels, which BP has been pursuing in Brazil for example, and in reducing the energy requirements of chemical processes that turn BP’s raw product into plastics.
Other than that, the only significant way BP can cut net emissions from what it takes out the ground - and it does still intend to take hydrocarbons out the ground - is by offsetting through tree-planting and industrial carbon capture. Given the amount of carbon we’re talking about here, that’s an enormous ask.
Climate scientists have modelled that the average tree captures about 5 tonnes of carbon from the air as it grows. Let’s say that takes ten years. A beermat calculation would indicate BP would therefore need to plant over 800 million trees to offset its carbon footprint over the next decade, if nothing else changed.
While in some cases it’s possible to plant a tree for less than a dollar, this perhaps represents the low-hanging fruit: the more reforestation scales, presumably the more expensive it will get, because of the pressure it will have on land prices.
None of this is to say that a plan like BP’s - which mirrors proposals by the likes of industry rival Shell - cannot work. But it will cost. It will require serious, bottom-line-shaking new investments, whether that’s in offsetting or in lower-carbon technologies, and a simultaneous reduction in investment in oil and gas exploration.
It’s easy to write a cheque you don’t have to cash for 30 years, but it’s also significant that this is the first big thing that Looney has done since taking over as CEO this month. He’s staked his legacy on this, from the get-go. We’ll have to wait until September to see what concrete measures he will take to honour it.
Image credit: Oli Scarff / Staff via Getty Images