Oil giant BP is set to scale back its green investments as profits drop sharply, marking a major change in the company’s strategy. The move comes as rivals such as Shell and Equinor have also scaled back their renewable projects.
BP’s net income fell to $8.9 billion last year, down from $13.8 billion the previous year, due to lower oil and gas prices and reduced profits from its refineries. The company had previously set a target of 50 gigawatts (GW) of renewable energy generation capacity by 2030.
However, this target is now expected to be abandoned on February 26, as BP announces plans to cut its commitment in renewables until 2030 by up to half. The company has already scaled back on renewables and put most of its offshore wind assets into a joint venture with Japanese company Jera.
Activist shareholder Elliott Management has bought a stake in BP to push for more investment in oil and gas, with investors anticipating board changes. Analyst Russ Mould said the sharp drop in profit “provided plenty of fodder” for hedge fund Elliott, highlighting the need for a clear and credible plan to restore investor confidence.
The scientific consensus is clear: there is a link between emissions from burning fossil fuels and climate change. However, some oil and gas firms are making plans to ramp up production, citing cost and profitability concerns.
In contrast, Norwegian energy giant Equinor has announced plans to halve investment in renewable energy over the next two years, while increasing oil and gas production. The company’s CEO said that the transition to lower carbon energy was moving more slowly than expected, with costs increasing and customers reluctant to commit to long-term contracts.
The move by BP is seen as part of a larger trend, with US President Donald Trump expressing support for fossil fuels and vowing to withdraw the US from the Paris climate agreement. This has sparked criticism from human rights campaign group Global Witness, which said that BP’s investment in oil and gas was double its investment in renewables last year.
As the world battles extreme weather disasters supercharged by fossil fuels, many are calling on governments to redirect billions of pounds invested in the oil and gas industry towards climate recovery funds.
Source: https://www.bbc.com/news/articles/c30d4ernzqjo