BP walks back on renewable investment, to scale up fossil fuel production

Fossil fuel giant BP has announced plans to scale up its oil and gas production and cut renewable energy investments, citing pressure from investors.

The oil and gas firm has promised to increase its fossil fuel investments by 20 per cent to $10 billion. It will simultaneously slash planned funding for renewables by over $5 billion.

The new strategy comes on the heels of rumours about the firm’s possible merger with Shell. BP’s Chief Executive Tony Hayward has denied the possibility, Reuters reported.

BP’s new oil and gas strategy

The company aims to increase its production to 2.3 million to 2.5 million barrels per day in 2030, with another jump in capacity possible by 2035. BP’s new 2030 oil and gas production targets represent a sharp rise of 60 per cent than the ambitions it set in its net-zero goals, as per The Guardian.

In terms of projects, the company plans to start 10 new major fossil fuel initiatives by the end of 2027. Another eight-10 projects are scheduled to start by the end of 2030.

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BP’s move part of larger pivot to fossil fuels

The company has claimed that its new strategy is part of its move to ensure “sustainably growing cash flow and returns.“

Murray Auchincloss, the firm’s Chief Executive Officer, said that BP was reallocating capital expenditure to its businesses with the highest returns.

The company has faced pressures from shareholders to move away from its green pledges as its share price has gone down. BP’s net income in 2024 slid to $8.9 billion from $13.8 billion in 2023, as per BBC.

BP joins Shell and Equinor in reducing green energy investment as US President Donald Trump's "drill baby drill" rhetoric has led to greater investment in fossil fuels.

The company has faced pressure from activist hedge fund Elliott Management, which has amassed a 5 per cent stake in the oil company.

BP net-zero goals at risk

The new strategy puts the company’s net-zero goals at risk. In 2019, BP had unveiled its plan to reduce its carbon footprint to zero by 2050. The company had pledged to scale back its oil and gas production and offset about 360 million tonnes of emissions annually through carbon capture technologies and measures like afforestation.

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The latest strategy indicates that the company is now prioritising profit over returns going in tandem with green pledges. The next few years will be crucial in terms of whether BP manages to move away from its climate targets altogether or just push back its targets.

FAQs

1. What is BP’s net-zero goal?
The company plans to reach net-zero emissions by 2050.

2. Will BP merge with Shell?
The company has denied all rumours of a merger.