There is joy in heaven over one sinner who repents, but hold any jubilation over BP’s conversion to the cause of net zero by 2050. It’s an “ambition” and the new-broom chief executive Bernard Looney was gloriously vague about how it will be pursued.
There were a few minor and immediate reforms, it should be said. BP’s new purpose is “reimagining energy for people and our planet”, which is an upgrade on the former purpose of “advancing energy to improve people’s lives”, if only in the sense that the planet is now mentioned.
Looney is also killing BP’s “possibilities everywhere” advertising campaign, which was widely derided as an artful piece of greenwashing. More significantly, he’s switching the company’s structure into four business groups, replacing the old upstream/downgrade split. That move that is bolder than it sounds because it carries the potential to upset internal power bases.
He still has to make the structural rejig stick, which won’t be easy in an organisation of 70,000 people that operates around the world. But yes, Looney is clearly trying to break with the rigid era of Bob Dudley, his ultra-cautious predecessor.
But then the picture turned fuzzy. BP says it will invest less in oil and gas and more in low-carbon businesses “over time”, wording that could not have been vaguer. BP, it seems, is still holding open the possibility that it will increase production of oil and gas for many more years.
Looney can expect to be chief executive for at least five years, or even a decade if he lasts as long as Dudley. He should set a few carbon-reduction targets to be achieved on his watch – he could even link his bonus to meeting them. There is, after all, a huge difference between a programme that aims for serious reductions in the 2020s and one that defers the hard work until the 2040s.
Come back in September to hear the near-term plans, said Looney. So, to be scrupulously fair, one should defer judgment until then. We have, however, been waiting a long time for BP to re-embrace the notion that the oil industry needs to change. The former chief executive John Browne, architect of BP’s short-lived Beyond Petroleum era, gave a famous speech on the subject in 1997 (and, incidentally, was in the audience on Wednesday).
September, then, is the moment when Looney will have to unravel the eternal conundrum: how is deep carbon reduction consistent with BP’s devotion to its “investor proposition”, which in effect means a dividend that never declines?
One can understand the board’s desperate desire to protect the dividend: reform, in theory, is easier if BP is perceived as strong, and the dividend is the City’s prime measure of an oil company’s strength. But is it really credible that BP can make rapid progress towards net-zero by 2050 without cancelling some of the oil and gas projects that underpin its revenues?
If Looney thinks he’s found a Paris-compliant formula that simultaneously spares shareholders, he needs to set it out in detail. That means carbon-reduction milestones to be reached long before 2050. Set some 2030 goals. If not, it all sounds Barely Plausible.
Own-goal for climate-conscious Shapps
Still on climate-related targets, the transport secretary, Grant Shapps, needs to understand that they are unhelpful if they change from one week to the next.
Little more than a week ago, the government said it could ban the sale of petrol and diesel cars by 2035. On Wednesday, Shapps took to the airwaves to say that, actually, the date could be 2032. Cue another outbreak of anger from the car industry, which makes the reasonable point that it is hard to shoot for goal if the goalposts keep moving.
The government should make a decision and stick to it. Better still, it should get national infrastructure in place to service millions of new electric cars. That is the surest way to encourage consumers to respond to the deadline, whatever it is.