HOUSTON—The world’s energy needs will rise by about a third over the next two decades, according to BP’s Energy Outlook, and the oil and gas industry can meet that goal while also protecting the planet. It has the right relationships, financial power and technical acumen to do so.
“We have to move from being pure-play oil and gas companies into broader energy businesses. Our focus has to be on developing an energy system that is cleaner, better and kinder to the planet,” said BP CEO Bob Dudley at CERAWeek by IHS Markit.
The industry has to go through some kind of step change to reduce greenhouse gas emissions, and get coal out of power generation, Dudley said.
Renewables could account for half the growth in global energy supplies over the next 20 years, he said, and be the largest source for electric power by 2040.
“At BP we learned this lesson 20 years ago. We moved early on renewables and found ourselves ahead of the market and ahead of the policy makers. We lost a lot of money, but we didn’t lose our faith in renewables. In fact, tomorrow morning 5,000 people at BP will get up and go to work at our solar, wind and biofuels businesses.”
Despite that, shareholders are still asking how the company’s strategies relate to the Paris Climate Accord. “There is a rising tide of concern, and anger,” from the public, Dudley said.
Natural gas will be important, but oil will still be part of the energy mix, he said.
Although progress is being made, low-carbon solutions have to compete for investors’—and the majors’—money, he said.
“We get our license to operate from society, but we get our capital from investors and it’s our duty to spend it wisely and deliver the returns they expect, both shorter-term and long term.
“In other words, we have to be progressive for society and pragmatic for investors. At the same time, we need to be ready to move fast as the market changes. We’re not the big hulking ocean liners that some see us as.”
The market and policy signals in areas like solar and electrification are already becoming much stronger and BP is starting to lay down some bigger bets. “You’ve seen us do that with our Lightsource BP solar investment and the Chargemaster vehicle fast-charging acquisition in the U.K.”
Dudley said cleaner energy tomorrow will rely on energy companies of today incubating new ideas and integrating innovations into their business models and offering to consumers. He also encouraged dialogue and listening to young people and leaders of the Green New Deal, and thus “being part of a conversation much wider than one among ourselves.”
A day after Dudley spoke, BP announced a new three-year commitment with the Environmental Defense Fund to advance technologies and practices to reduce methane emissions from the global oil and gas supply chain.
“The agreement enables joint collaboration on projects that test technologies and emerging strategies to continue to improve methane management. Working with universities and third party experts, the initiative has the potential for broad applicability to help the entire oil and gas industry significantly reduce this potent greenhouse gas,” said the EDF.
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