BP Slashes Renewable Spending by More than $5 Billion

British Petroleum (BP) on Wednesday said it would slash its renewable energy businesses by more than $5 billion.

The multinational oil and natural gas company will now spend between $1.5 billion and $2 billion on its renewable energy businesses per year, while increasing its oil and gas spending by $10 billion.

The pivot away from green energy is a “major strategy shift aimed at boosting earnings and investor confidence,” according to Reuters.

BP now aims to produce between 2.3 million and 2.5 million barrels of oil per day in 2030; it pumped 2.36 million in 2024.

“It’s a radical shift,” BP CEO Murray Auchincloss told Reuters after the company’s announcements during its investor day.

Reuters reported:

It is the latest big energy company to change its position in response to the need to lower carbon emissions and curb climate change, returning the focus to oil and gas.

Under Auchincloss’ predecessor, Bernard Looney, BP pledged in 2020 to cut oil and gas output by 40% while rapidly growing renewables by 2030. It lowered that target to 25% in 2023.

BP also removed its previous target of 20 to 30 percent reduction of “Scope 3 emissions” between 2019 and 2030. The emissions include greenhouse gases such as carbon dioxide.

Auchincloss said the transition to renewable energy has been slower than the company expected and that the coronavirus pandemic, energy markets, the war in Ukraine, and changing attitudes toward green energy has shifted the dynamic away from renewables.

“What that meant is hydrocarbon demand continues to be very, very strong, stronger than we would have envisioned five years ago, and the transition has not proceeded at the pace we would have thought,” the BP chief executive remarked.

“We will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset BP, with an unwavering focus on growing long-term shareholder value,” he continued.

“Three big things we’ve done: reducing capex, reducing costs, material divestment with an outcome of growing cashflow and returns,” Auchincloss said.