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This year is the 25th anniversary of the BP attempt to change the name of a greener oil and gas company, going “beyond oil.” The campaign, launched by the then executive president John Browne, was immediately attacked as false, even cynical and premature. However, on more than one occasion, BP has overcome that early ambition by Establish goals To change fossil fuels to the production of renewable energy that the world will need to address climate change.
This week, he returned to oil again. But again, BP’s moment is questionable. In “Fundamental restoration” Of its strategy, under the pressure of the activist investor Elliott Management, Executive President Murray Auchincloss withdrew objectives to reduce the production of oil and gas and to develop 50 gigawats of renewable energy. On the other hand, BP will increase its annual expense on fossil fuels by a fifth and reduce its exposure to renewable energy. In green energy, “we went too far, too fast,” Auchincloss said.
While it is widely forecast, this change of meaning is unfortunate. Given the failures of governments to adopt stronger policies to accelerate the green transition, it might be inevitable. It adds to the broadest sense that companies can continue postponing an urgent action to address climate change. BP says that its ambition remains a diversified oil company, and that its wind and solar arms will be “very large” business, despite moving its balanced operations. But the new strategy indicates a return to the search for short -term profits on long -term sustainability.
The International Energy Agency believes that the demand for oil and gas will reach its maximum point for the end of the decade. The OPEC disputes those calculations, but if the IEA is correct, the investors and the oil companies that deposit in a slower decrease in the demand are making a high -risk bet. A few hours before the BP announcement, the United Kingdom government advisor, the Climate Change Committee, warned about a “strong decrease” in the consumption of oil and gas, if the United Kingdom follows its recommendations for decarbonization.
The energy transition clash has not yet been as sharp as some warned. But the negative impact of China’s rapid change To electric vehicles in the appetite for oil is a sign of the risks that run for those, such as Auchincloss, which are predicting “Huge amounts of demand” for oil and gas in the next two decades.
The arrival of Donald Trump, with its open support from a “simulation” deregulating energy policy, has given oil and gas companies another reason to redouble their fossil fuel activities, since environmental, social and governance limitations are eliminated.
This geopolitical and regulatory context change has provided some BP coverage, but investor pressure is the main trigger for its announcement. BP has been forced to recognize that efforts to reduce exposure to oil and gas and invest in renewable energies were pursuing cash flow, disappointing shareholders and terrorizing the experienced personnel who worked in oil and gas that did not see future in a business announcing their commitment to solar energy, wind, hydrogen and bioenergy. Shell, which was forwarded in the yields of the shareholders in 2023, and Totalenergies of France, which has continued with investment in traditional and renewable energy, have surpassed it.
There is, then, a hard market logic in the short term to the decision. But unanswered the question that Lord Browne raised implicitly a quarter of a century ago, in making the intellectual case for change: what exactly is the long -term future of oil specialties? If all large international oil and gas producers, and national oil companies such as Saudi Aramco, are mainly concentrated on fossil fuels and demand decrease, only some will survive. The producers of greater cost, such as BP, may not be among them.
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