What's happened
BP has announced a significant shift in strategy, abandoning its green energy ambitions to invest $10 billion annually in oil and gas projects. This decision follows pressure from investors amid declining share prices and aims to restore profitability. The company plans to increase fossil fuel production while cutting renewable investments drastically.
What's behind the headline?
Strategic Shift
BP's decision to pivot back to fossil fuels marks a significant departure from its previous commitments to sustainability. The company plans to:
- Increase oil and gas investments to $10 billion annually.
- Reduce spending on renewable energy to between $1.5 billion and $2 billion.
- Abandon its target to cut fossil fuel production, now aiming for 2.3 to 2.5 million barrels per day by 2030.
Investor Pressure
This shift is largely driven by:
- A decline in BP's share price, which has fallen nearly 25% over the past two years.
- Pressure from activist investors like Elliott Management, which has pushed for a return to more profitable fossil fuel investments.
Environmental Concerns
The move has sparked outrage among environmental groups, who argue that BP's actions contradict its previous commitments to combat climate change. Critics label this strategy as 'climate vandalism,' emphasizing the risks of increased fossil fuel production in light of global climate targets.
What the papers say
According to Jillian Ambrose in The Guardian, BP's CEO Murray Auchincloss stated that the company's previous green ambitions were 'misplaced' and went 'too far, too fast.' This sentiment is echoed by Bloomberg, which highlights that BP's strategy reset is a response to poor returns and investor dissatisfaction. Meanwhile, The Independent notes that BP's decision to cut renewable investments by over half is aimed at bolstering shareholder support, but it has not resonated positively with investors, as evidenced by a drop in share prices following the announcement. Environmental groups have reacted strongly, with Scottish Greens co-leader Lorna Slater condemning BP's actions as 'environmental negligence.' This sentiment is shared across multiple sources, indicating a growing concern over the company's commitment to sustainability.
How we got here
BP's recent strategy change comes after years of underperformance compared to rivals like Shell and ExxonMobil. The company initially aimed for a 40% reduction in oil and gas production by 2030 but has now scrapped these targets amid rising fossil fuel prices and investor pressure.
Go deeper
- What are the implications for climate change?
- How are investors reacting to BP's new strategy?
- What does this mean for BP's future in renewable energy?
Common question
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Why Did BP Abandon Its Green Energy Goals?
BP's recent decision to shift focus from green energy to oil and gas has raised eyebrows and sparked debate. As the company plans to invest $10 billion annually in fossil fuels, many are left wondering about the implications for the environment, investors, and the future of energy. Below, we explore the key questions surrounding this controversial move.
More on these topics
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BP plc is a British multinational oil and gas company headquartered in London, United Kingdom. It is one of the world's seven oil and gas "supermajors", whose performance in 2012, made it the world's sixth-largest oil and gas company, the sixth-largest en
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Murray Michael Auchincloss is a Canadian business executive and the chief executive officer of BP. He was its interim CEO from September 2023 to January 2024.
Auchincloss earned BCom degree in finance from the University of Calgary.
Auchincloss qualified
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Bernard Looney FREng is an Irish businessman and CEO of BP.
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Greenpeace is a non-governmental environmental organization with offices in over 55 countries and an international coordinating body in Amsterdam, the Netherlands.
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Elliott Management Corporation is an American investment management firm. It is also one of the largest activist funds in the world.
It is the management affiliate of American hedge funds Elliott Associates L.P. and Elliott International Limited. The Elli
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Royal Dutch Shell PLC, commonly known as Shell, is a British-Dutch multinational oil and gas company headquartered in the Netherlands and incorporated in England.
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Chevron Corporation is an American multinational energy corporation. One of the successor companies of Standard Oil, it is headquartered in San Ramon, California, and active in more than 180 countries.
