The conventional wisdom of business school text books is that companies should stick to what they know and not branch out too far, even when their markets are changing. Some commentators extend this theory to argue that oil and gas companies such as Shell and Exxon cannot possibly reinvent themselves as renewables businesses producing power from wind and solar. I think the judgment is too sweeping and underestimates the ability of the oil majors, in particular, to adapt. If you have lived through a century characterised by war, expropriation and the rise and fall of particular nations and empires you do know something about adaptation. But the current energy transition to a low carbon world is materially different from any previous change and will need a radical approach. Just as the energy market is in transition, so too are the organisational structures of the energy businesses. In these circumstances, rigidity is the enemy of progress. Companies are organic entities — always changing in one way or another. Over time, of course, parents and daughters grow apart — but that is absolutely natural and not a cause for regret. For the next two decades, as we move through the transition phase, there is no reason why both the old and the new cannot both thrive. We can have Shell, running its traditional oil and gas operations, and “Shell Green” creating the business of tomorrow.
FT 16th April 2018 read more »
BP has taken its first clear steps in the battle to tackle climate change by vowing to cap its greenhouse gas emissions until 2025 as pressure grows on Big Oil to clean up its act. The super-major will hope to see off a rebellion from worried shareholders and activist investors at next month’s AGM with a fresh plan to cut 3.5 million tons of carbon from its operations every year. This will enable the group to grow its fossil fuel business without increasing its overall emissions in the decade from 2015 when global governments agreed to tackle climate change through the Paris Climate Accord. Bob Dudley, BP’s chief executive, unveiled the new strategy in London, saying the FTSE 100 energy giant would take “aggressive action” across all its business areas to make “real, measurable and transparent progress”. But green groups were left cold by the plan which they say does not go far enough. The targets are below the more ambitious goals set out by its Anglo-Dutch rival Royal Dutch Shell, which has promised to cut its carbon footprint by 20pc by 2035 and halve its carbon dioxide emissions by 2050. “Improvements in BP’s operational emissions, while welcome, are too small t o move the needle to prevent runaway climate change or reduce BP’s exposure to carbon risk,” Luke Sussams, of think tank Carbon Tracker, said. “Similarly, while BP’s investments in low-carbon technologies are needed, it remains just 3pc of its annual capital spend and so does not make up a significant part of BP’s business, as this report suggests.”
Telegraph 16th April 2018 read more »
Environmental leaders have dismissed BP’s new low-carbon strategy as “greenwash” and a lightweight response to climate change and the energy market’s rapid switch to renewables. In a strategy published on Monday, BP said there would be no increase in its carbon footprint over the next seven years because it will cut emissions from its oil and gas rigs, and offset the rest. The UK oil firm said it would achieve a saving of 3.5m tonnes of carbon dioxide equivalent by 2025. That is equal to about 7% of its current operational emissions. However, it still has no target for its biggest contribution to global warming, which is the burning of its main products, oil and gas, unlike rivals such as Shell. Tom Burke, the chairman of environmental thinktank E3G and a former BP adviser, said: “Who cares about operational emissions? The problem is they have nothing to say on their product. This is a 20th century response to a 21st century problem.” The former UK government adviser characterised the plan as “lightweight PR” and “greenwash”. He said BP had “wasted 20 years” since the former chief executive John Browne tried to reinvent the firm as Beyond Petroleum in 2000. The criticism was echoed by Carbon Tracker, a think-tank that has analysed the risk of big oil being left with stranded assets by action on climate change, a danger that the Bank of England has also warned of.
Guardian 16th April 2018 read more »
BP has placed its recent acquisition of a major stake in Lightsource at the heart of its future low carbon efforts, offering only to cut emissions from its own operations rather than transition away from the polluting fuels it sells. Setting out its plans in a new report ‘Advancing the energy transition’, the company has embraced the three tenets of ‘reduce, improve and create’. The first two of these refer to capping its net greenhouse gas emissions out to 2025 at or below 2015 levels and producing more natural gas as a lower carbon alternative to coal and a complement to renewables. The latter is a reference to its plans to create low carbon businesses, referring to the recently renamed Lightsource BP following a US$200 million (£148 million) deal to be paid out over three years unveiled in December.
Solar Power Portal 16th April 2018 read more »