We have been educated by the inestimable Sir David Attenborough, frightened witless by Greenpeace and lectured by a Swedish teenager about the threat to our planet posed by carbon emissions. This onslaught has led to solemn promises and deadlines to mend our ways coming from all quarters. But it is time for action, not words.
Some practical guidance could from BP’s new CEO, Bernard Looney, who tells institutional investors his future plans for the UK’s flagship oil company. According to the Financial Times, his underlying message will be that “BP will be a stronger company when it produces less oil and gas” – a statement that would have bordered on heresy not so long ago and which runs counter to the attitude of die-hard oil giants based in America and Middle East.
The institutions will be interested in hearing how BP’s plan to write off billions of dollars of oil and gas assets and cut production by 40% can be achieved without damaging the value of the business. BP’s army of drillers and scientists will be seeking reassurances for reasons closer to home.
Part of Mr. Looney’s solution is a tenfold increase in BP’s investment in renewable energies which can offer steadier returns – reference to the fact that, due to the pandemic, the oil price plunged from $70 a barrel to below $20 in April and around $40 today. Capital spending on oil and gas projects will continue but spending on renewables is expected to rise to reach a third of the total by 2030. As to the selling of valuable assets, he told the FT: “We will sell things when there is a good market, not because we have to.”
Tellingly, he also said: “We build and operate some of the biggest projects in the world. I wouldn’t underestimate just how relevant some of those skills are” and added: “We have to be successful in this transition. Then maybe others can see it is not as big a risk as people think.”
Let’s hope he’s right because if BP can do it, so can we all. And this is not just wishful thinking. The Daily Telegraph recently pointed out that the free market is cracking the carbon challenge with both speed and efficiency, highlighting the fact that clean Hydrogen could abate 45% of all greenhouse emissions once it achieves scale. UK business are on the March to make that dream reality.