When BP appointed Bernard Looney as CEO exactly three years ago, climate activists believed they might finally have an ally within Big Oil, after decades of deep distrust of the energy industry. Looney—Irish, from a poor farming family—broke the mold of Britain’s century-old company in more ways than one: He vowed to turn BP into a green energy giant, by drastically cutting oil and gas production and plowing billions into renewables. “This is the first oil major to walk the walk,” Mark van Baal, founder of the Amsterdam-based shareholder activist organization Follow This, told Fortune at the time. “If one oil major breaks ranks, and shareholders reward them for it, others will follow.”
That optimism shattered on Tuesday, when BP became the latest oil supermajor to report record-high profits for 2022—while announcing, at the same time, a sharp rollback of its climate targets.
Thanks in part to soaring gas and oil prices over the past year, BP’s underlying profits more than doubled in 2022, to $27.7 billion. (Its exit from Russia, where it had a 19.75% stake in Rosneft, cost the company $24 billion, leaving it with a paper loss after taxes of $2.5 billion.)
Dramatic rollback
Despite the bumper year, however, Looney announced BP would dramatically roll back his key climate promise, which he made in 2020. That year, Looney pledged 40% cut in carbon emissions from BP’s oil and gas production by 2030. He argued that those dramatic shifts were urgent. “Without action, it is a rather bleak future for the world,” he told Fortune in 2020, echoing a central point that environmentalists had made for years.
But on Tuesday, he said that BP’s drop in emissions would likely be a more modest 20% to 30%. “We need continuing near-term investment into today’s energy system,” Looney said, adding that the energy transition has to be “an orderly one.” The company also said it would invest about $1 billion a year in oil and gas production—an apparent about-face from Looney’s earlier statement that the company would steadily reduce its involvement in fossil fuels.
To climate activists, that felt like a knife in the back. “BP’s aim to reduce absolute emissions from their own production was one of the few tangible targets in the entire oil industry,” van Baal told Fortune on Tuesday. “They made enormous profits, and they’re back in their comfort zone,” he says. “They want to hang on to their old business model as long as possible, because it is profitable.”
'Back in their comfort zone'
Van Baal says he will push for far-reaching cuts in fossil-fuel production, in resolutions that Follow This will put forward during Big Oil’s annual shareholder meetings this spring. In a meeting in late 2019, Looney persuaded Van Baal to withdraw a similar resolution, saying he wanted to work with him to roll out climate action within BP, according to Van Baal. Activists believe such resolutions have prompted oil companies to set carbon-emission targets for fear of alienating investors, who increasingly regard climate change as a major risk factor.
BP’s earlier commitments suggested that “the pressure climate-conscious investors were putting on the industry was having an impact,” said Kathy Mulvey, of the Union of Concerned Scientists, an environmental group in Cambridge, Mass. Now, she says, she believes “BP’s climate pledges have been cynical, empty, and opportunistic.”
'Energy trilemma'
Looney argues that the Ukraine war and rising inflation showed how important it was to have a steady flow oil and gas supplies. In a LinkedIn post, he said BP would focus its oil and gas investments on low-cost production. “The world wants and needs energy that’s secure and affordable, as well as lower carbon,” he said, calling it “the energy trilemma.”
Environmentalists said Looney was sugar-coating his rollback of climate commitments. “I’m sorry to say this is a huge disappointment,” Helena Farstad, cofounder and director of London-based climate branding company This is Agency, said in a response on LinkedIn. “BP has demonstrated its lack of leadership.”
