The CEO of BP has labeled the oil and gas giant a “greening company” which is carbon-intensive today but planning for a net-zero future.
His comments are likely to raise eyebrows in some quarters at a time when a number of governments have declared a climate emergency and speak to the huge task facing energy majors in the years ahead.
Bernard Looney’s remarks were made during a panel discussion in Cairo, Egypt moderated by CNBC’s Hadley Gamble, where he spoke about issues relating to the energy transition.
Within the pivot to renewable energies, Looney said three criteria needed to be satisfied: Energy needed to be cleaner, reliable and affordable. The problem was a complex one, he said.
“What we need to get to is a world where a few things happen,” Looney said on Monday. “Number one, our objective is to reduce emissions, not to defend sometimes ideological positions about ‘hydrocarbons or not.'”
“Our objective is to reduce emissions, and if burning natural gas rather than burning coal reduces emissions then we should take that step.”
Expanding on his point, Looney said that given hydrocarbons were “such a massive part of the energy system today” it was very difficult to imagine how this would change overnight.
“If we want that energy to remain affordable because we want this loop where people desire the energy transition, we must invest in those hydrocarbons and drive the emissions down,” he said, before adding that his company was trying to do this.
“The third thing is, we need to back ‘greening’ companies,” Looney said, referencing a term his company has written about in the past. “And a greening company is a company who is carbon-intensive today like BP — some people would call it a heavy polluting company. Carbon intensive today, but has plans for net-zero tomorrow — not tomorrow, but in the future.”
Companies like this needed to be held to account, challenged and made to be transparent, Looney said.
“But importantly, they also need to be encouraged and they need to be backed because you simply cannot scale enough green companies in the world fast enough, quick enough to solve this problem.”
“You need to have companies who are carbon-intensive to become net-zero, and that’s what we call a greening company.”
A major producer of oil and gas, BP says it’s aiming to become a net-zero company by the year 2050 or before. It’s one of many major firms to have made a net-zero pledge in recent years.
While such commitments draw attention, actually achieving them is a huge task with significant financial and logistical hurdles. The devil is in the detail and goals can often be light on the latter.
Accusations of greenwashing
Looney’s comments come at a time when the debate surrounding greenwashing is becoming increasingly fierce, with the charge often leveled at multinational companies with significant carbon footprints.
Environmental campaign group Greenpeace UK has described greenwashing as a “PR tactic” used “to make a company or product appear environmentally friendly without meaningfully reducing its environmental impact.”
Looney was asked if accusations of greenwashing had no basis. “I can only speak for myself,” he replied. “If you look at what we have done over the past 24 months, we have conducted the largest restructuring in the company’s history so that we can transition.”
“We have a new strategy and allocation of capital so that we can transition,” he said. “Close to 10,000 people lost their jobs, we had to cut our dividend in half. I don’t think anyone would say that they are actions that are consistent with a company that’s greenwashing.”
“These are actions … consistent with a company that doesn’t have all the answers, who does make mistakes, doesn’t get things right all the time. But we are all-in on trying to make it happen and make a difference.”
Fossil fuels’ effect on the environment is considerable. The United Nations says that, since the 19th century, “human activities have been the main driver of climate change, primarily due to burning fossil fuels like coal, oil and gas.”
And yet despite the above, energy firms are still discovering new fields and oil and gas continues to play a major role in the planet’s energy mix.
Last week BP reported a massive upswing in full-year net profit, its highest in eight years, supported by soaring commodity prices.
The British energy major posted underlying replacement cost profit, used as a proxy for net profit, of $12.8 billion for 2021. That compared with a net loss of $5.7 billion the previous year.