Oil giant BP is latest to pledge net zero emissions by 2050

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BP PLC, under new leadership, has set an ambitious plan to eliminate or offset all carbon emissions from the oil and gas its produces by 2050 and cut the carbon intensity of the energy it sells by 50% over the same stretch.

It’s only the latest of major oil and broader industry names to pledge action to curb the environmental impact that critics say corporations dodged for decades.

London-based BP BP, +1.18%   said it would reorganize operations to make sure the company is focused on achieving its carbon-cutting goals while also ensuring it continues to meet shareholder demands.

“Our historic structure has served us well but, in order to keep up with rapidly evolving customer demands and society’s expectations, we need to become more integrated and more focused,” newly seated CEO Bernard Looney said in a statement.

“It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change. And we want to change — this is the right thing for the world and for BP,” said Looney, who replaced former CEO Bob Dudley earlier this month.

Shifting investor demands have not been lost on the oil majors, although not all have been quick to adapt.

“Investors are demanding that oil and gas companies align their strategies with the goals of the Paris Agreement [to slow the rate of global temperature change], which means bringing their Scope 3 emissions to net zero by mid-century,” said Andrew Logan, senior director of oil and gas with sustainable investing advocate Ceres. Scope 3 emissions are indirect emissions that occur in the value chain of a company. Read more about emissions classifications.

“Now that BP, the last significant European holdout, has committed to setting Scope 3 targets, there is no reason that Exxon XOM, +0.66%   and Chevron CVX, +0.72%   can’t follow suit,” Logan said.

For example, Anglo-Dutch Shell RDS.A, +0.77% RDS.B, +0.97%  had already announced plans spend $300 million over the next three years on initiatives like planting more than 5 million trees in the Netherlands and Spain, supporting forest regeneration in Australia and potentially engaging in conservation in Malaysia. The company will invest in electric vehicle battery charging stations and a fuel program to help drivers offset carbon pollution.

As part of its program, BP said it would work to cut the amount of greenhouse gas emissions from its products in half by 2050 and install monitoring equipment at oil CL00, +2.86%   and gas processing plants by 2023 as it seeks to reduce the amount of methane leaks by 50%. The company also said it will increase investment in non-oil and gas businesses.

In addition, BP said it will stop “corporate reputation advertising’’ and shift that spending toward promoting carbon-reduction policies.

Looney said that even with the environmental moves, the company plans to keep growing its cash flow and shareholder distributions over the long term.

Environmental concerns said the pledge is a step in the right direction but likely undershoots.

“BP is one of the companies most responsible for the climate emergency. They say they want their business model to align with the Paris Agreement, but simply put, it is not possible to keep to a 2 degree warming limit — let alone 1.5 degrees — while continuing to dig up and burn fossil fuels,” said Ellen Gibson, the U.K. organizer for global environment nonprofit 350.org.

“Unless BP commits clearly to stop searching for more oil and gas, and to keep their existing reserves in the ground, we shouldn’t take a word of their PR spin seriously,” she said.

A comprehensive investigation by the Guardian last year, before the CEO change at BP, revealed that the oil company planned to grow its production of oil and gas by about a fifth between 2018 and 2030.

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