BP’s climate reinvention dodges politics
BP CEO Bernard Looney is leading the biggest transformation in the oil industry’s 160-year history, but he's staying quiet on the thorniest part: the politics.
Driving the news: In our recent interview for “Axios on HBO,” Looney made a scripted case for BP’s big plan to pivot to renewable energy and survive — and even thrive — while doing it.
Over the course of an hour, he redirected or waved off questions on the climate-change positions of President Trump and Joe Biden, BP's lobbying activities in Washington, and mistrust from the public and environmentalists over the oil industry’s willingness to address climate change.
“I get the sort of suspicion. But we are serious about this. This is in the interests of our company. It's not like we're trying to protect our existing business and get by. We are pivoting BP from being an international oil company that we've been for 111 years to becoming an integrated energy company.”— Looney to "Axios on HBO"
The big picture: The company is facing strong headwinds: BP’s stock is tanking, investors are skeptical that the transformation can be profitable, and the pandemic is battering the entire industry’s finances. There’s little room for error.
How it works: BP unveiled in September what many experts consider the oil industry’s most aggressive plan to move away from oil and gas toward renewable energy.
- Cutting its oil and gas production by 40%, which would set it apart from other producers.
- Increasing the amount of annual spending on clean-energy technologies from $500 million to $5 billion.
- Reaching “net-zero” emissions from both its operations and its own oil and gas production, which means its entire business will not emit emissions (or will offset them).
- Cutting by 50% the emissions intensity (emissions per unit of output) from the products it sells. These emissions are at least double the emissions of BP’s operations and its own oil and gas.
The intrigue: For the CEO of an oil company that's trying to position itself as an industry leader on climate, he had little to say about either a president who encourages climate-change denial or a candidate who would pursue an aggressive climate plan that's roughly in line with BP's goal.
- On Trump: “My response is what we're doing. … [Climate change is] a huge issue and we're in action. And, you know, I'm not going to comment on what other people's views are. People have a right to their views.”
- On Biden: “I didn't study [Biden’s] plan in detail. … BP is supportive of any sound, sensible policy which accelerates the world on a path to net-zero. That's what we support.”
The backstory: Looney has given conflicting messages on how central government policy is to BP’s strategy.
- “We need policymakers to incentivize lower carbon choices,” Looney told investors at a week-long meeting on the new plan in September. In our interview right after that, he said, “While policy is helpful to our strategy, our strategy is not predicated on policy.”
- Close observers are blunter. “They fare much better in a world where climate policy is strong and universal than in a world that is more fragmented and weak,” said Andrew Logan, who interacts with oil and gas companies as a senior director at the sustainable investment nonprofit Ceres.
Where it stands: BP said it would end its long-running corporate reputation campaign — which cost the company $100 million last year — and redirect at least part of that money toward supporting climate policies around the world.
- For this year and next, the company has budgeted $6.5 million for campaigns advocating for climate policies throughout the country and in Washington, D.C., according to Geoff Morrell, a BP executive vice president responsible for global advocacy and spending.
- “We are spending millions and would gladly spend tens of millions more if there were viable net-zero policies to actively advocate for,” Morrell said.
- BP is supporting the European Union’s big climate policy and the United Kingdom’s plan to ban internal combustion engine cars in 2035, Looney said in the interview.
Looney deflected a few questions about past actions by BP and the industry writ large, including the sector's mixed practice over decades of helping fund initiatives doubting climate science and opposing policies.
- “I'm not sure it helps anybody to dwell in the past when we have an incredible challenge ahead of us,” Looney said.
What we’re watching: If Biden wins the White House, BP’s new lobbying posture will be put to an immediate test.
- Earlier this year, BP said it was leaving three trade associations, but it’s staying in the most powerful ones: the American Petroleum Institute and U.S. Chamber of Commerce. Neither one has climate policies anywhere close to what BP is pushing.
The bottom line: “The success of their climate strategy depends on society moving forward quickly as well,” said Logan. “If they’re earnest about what they’re trying to do, that will show up in their lobbying. It can’t be an ancillary effort — it has to be a core part of the strategy.”