Following the appointment of Bernard Looney appointment as its new CEO, BP has joined the league of other oil companies with bold climate action ambitions. Its “net zero ambition” released on February 12, 2020 is five-fold[1]:

  1. Get to “net zero emission across operations on an absolute basis by 2050 or sooner”
    (scope 1 + scope 2 emissions)[2]
  2. Reach “net zero on carbon in oil and gas production on an absolute basis by 2050 or sooner” (including emissions from the use of products sold, i.e. scope 3 emissions defined in the category 11 of the GHG protocol)[3]
  3. Achieve “50% cut in the carbon intensity of products BP sells by 2050 or sooner” (that includes products BP buys from other producers and resells on the market, lifecycle GHG emissions per unit of energy based on marketing sales, expressed in gCO2e/MJ[4]);
  4. “Install methane measurement at all major oil and gas processing sites by 2023 and reduce methane intensity of operations by 50%”;
  5. Increase the proportion of investment into non-oil and gas businesses over time.

 

BP defines net zero as “Zero GHG emissions, after deduction of sinks, removals or reductions”. In total, these announcements would reportedly “equate to a reduction in emissions to net zero from what is currently around 415 MteCO2e a year” (respectively 55 Mt from its direct operations and 360Mt from the carbon content of its upstream oil and gas production). BP will reorganize itself around four business groups including a “Gas & Low Carbon Energy” to create focused low-carbon solutions and pursue opportunities new value chains such as hydrogen and CCUS.

 

While these announcements are bold, let us note the recourse to a very specific semantic, that of “ambition” (forward-looking statements), in opposition to targets or commitments. Moreover, the 2050 ambition outlined does not include intermediary milestones, nor very pragmatic implementation measures. Note that Repsol similar ambition announced in December 2019 did include intermediary targets set for 2025, 2030, 2040. Terminology and methodologies will be further explained in the forthcoming BP Annual Report and the BP Sustainability Report 2019. The industry and investors’ community are looking forward to BP’s Capital Market Day next September this year when the company releases more details about this net zero ambition in its 5-year strategic plan.

 

Overall, it is challenging to compare O&G companies’ because their ambitions often differ in their terminology, methodologies (perimeters & calculation methodology) and timeframes (as shown in the recap table below). One welcomes the growing number of O&G companies with announcements covering scope 3 emissions. Only Repsol and BP have announced net zero emissions ambitions. Whereas one can only applaud such bold statements, their underneath and feasibility must be investigated to prevent “net zero” to become a new buzzword. Sight must not be lost of the strategic decisions made for the next 5 to 10 years (incl. CAPEX and R&D expenditures).

 

[1] BP (February 2020), Press Release “BP sets ambition for net zero by 2050, fundamentally changing organization to deliver”. Available here: https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bernard-looney-announces-new-ambition-for-bp.html

[2] GHG emissions from its operations include direct (Scope 1) and indirect (Scope 2) GHG emissions (CO2 and methane) emissions on a CO2-equivalent basis (MteCO2e)

[3] For the purpose of this announcement, carbon in BP’s oil and gas production refers to “estimated CO2 emissions assuming combustion of BP’s upstream oil and gas production (Scope 3, category 11), on an equity share basis. Equity share basis means it comprises 100% share from subsidiaries and the percentage of BP’s share equivalent to its share of joint arrangements and associates, but excluding BP’s share of Rosneft. 

[4] Lifecycle GHG emissions comprise the sum of:  estimated GHG emissions from the production, processing and transportation, whether by BP or other parties, of the product, and estimated GHG emissions from the assumed combustion of the product.


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