BP plc is one of the few oil majors to set an absolute Scope 3 emissions reduction target — meaning it has a goal to reduce the emissions from the combustion of the fossil fuels it produces, as well as the emissions it takes to produce them.
Of the majors, only BP and Shell plc have net zero Scope 3 targets for 2050. BP set a baseline of 361 million tonnes of CO2e for its Scope 3 emissions in 2019, and initially set a target to reduce this by 20 per cent by 2025 and by 35-40 per cent by 2030. That equates to achieving annual emissions of 289 million tonnes of CO2e or lower in 2025 and 216-234 million tonnes of CO2e or lower in 2030.
As of 2021 the firm had achieved a 15.8 per cent reduction with Scope 3 emissions of 304 million tonnes of CO2e (see chart below), Evaluate Energy data shows.
But earlier this year the firm downgraded the 2025 target from 20 per cent reduction to a 10-15 per cent reduction and the 2030 target from a 35-40 per cent reduction to a 20-30 per cent reduction. The move illustrates that the company’s emissions reduction targets are not binding and can be adjusted depending on global energy security concerns.
This downgrading gave BP leeway to increase emissions over the next few years and still hit its targets. Emissions in 2022 have already increased slightly year-on-year to 307 million tonnes of CO2e — a 15 per cent reduction on the baseline — as fossil fuel production increased 1.6 per cent year-on-year to 2.253 million boe/d.
Between now and 2025 BP expects emissions to grow further due to major project start-ups, deferred divestments of existing production, and further production growth — suggesting it is likely to hit the lower end of the downgraded 10-15 per cent reduction target. But in its latest sustainability report it restated its confidence to hit the mid-range of the 2030 target with a 25 per cent reduction on the baseline, thanks to the anticipated base decline of existing fields and to new low carbon projects coming online after 2025.
BP’s fossil fuel exploration and production capital expenditure has declined from a peak of $4.6 billion in 2010 to around $500 million in 2022, but again it has indicated this figure could grow in the next three years.
Earlier this year BP adjusted upwards its overall capital expenditure expectations from $14-16 billion per year to $14-18 billion per year out to 2030. Of the midpoint $16-billion annual investment between now and 2030, $8 billion will go into transition technologies and $8 billion into fossil fuels.
“We are growing our investment into our transition and, at the same time, growing investment into today’s energy system,” said CEO Bernard Looney, announcing the extra investment.
After 2030, the firm is looking to reduce Scope 3 emissions through two key strategies. The first is producing blue hydrogen using carbon capture and storage (CCS). In April BP signed an agreement to take a 40 per cent stake in the Viking carbon capture and storage (CCS) project in the North Sea.
The second is generating more renewable electricity from its power portfolio.
Renewable generation capacity
By 2030, BP aims to have developed 50 GW of renewable generating capacity, with an interim target of 20 GW by 2025. Apart from Norway’s Equinor, few oil and gas firms have adopted the strategy, preferring instead to focus on hydrogen or CCS.
By the end of first quarter in 2023 the firm had brought 5.9 GW of renewables to FID, and had 38.8 GW in the pipeline, including 10.3 GW relating to the Australian Renewable Energy Hub green hydrogen project and 1.5 GW relating to its Morven offshore wind project in Scotland, in which it was awarded a lease option in January 2022 in partnership with EnBW.
In 2022 the company progressed its offshore U.S. Empire Wind 1 and 2 projects with Equinor and development work continued on its Beacon Wind project. In March 2022 BP partnered with Marubeni Corporation to explore an offshore wind development opportunity in Japan.
In 2022, BP’s transition technology investment doubled year-on-year to $4.9 billion, forming around 30 per cent of total capital expenditures for the year, up from around three per cent in 2019 (see chart above). It sees this figure reaching $6-8 billion in 2025 and $7-9 billion in 2030, meaning a cumulative investment over 2023-2030 of around $55-65 billion.
BP does not provide guidance for oil and gas investment that far out, but this transition spending would leave a remaining cumulative non-transition capital expenditure budget of $73-79 billion over the same time period.
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