BP is expected to announce a drastic reduction in its renewable energy investments as it pivots back to prioritizing oil and gas production. This marks a significant reversal from its earlier commitments to carbon reduction and clean energy, a move influenced by investor pressure and underwhelming financial performance compared to industry rivals.
The energy giant had once positioned itself as a leader in the transition to green energy, setting ambitious targets to cut oil and gas production by 40% by 2030. However, in 2023, that goal was revised to a 25% reduction. Now, under CEO Murray Auchincloss, BP is expected to abandon the target altogether while slashing its renewable energy investment by more than half. Auchincloss has framed this shift as a “fundamental reset.”
The decision comes as BP struggles to match the profitability of competitors like Shell and ExxonMobil. In 2024, BP’s net income fell to $8.9 billion, down from $13.8 billion the previous year. Meanwhile, its total shareholder returns, including dividends, have reached only 36% over the past five years far below Shell’s 82% and Exxon’s 160%. Some shareholders, including the activist investment firm Elliott Management, which recently acquired a near £4 billion stake in BP, have pushed for a stronger focus on fossil fuels to boost returns.
BP’s strategic shift follows similar moves by Shell and Norwegian energy firm Equinor, both of which have scaled back renewable energy investments. The broader energy landscape has also been shaped by U.S. policy shifts, with former President Donald Trump’s “drill baby drill” rhetoric influencing investment decisions in fossil fuel sectors.
Not all investors support BP’s return to oil and gas. A coalition of 48 investors recently called for a shareholder vote on any major deviations from the company’s renewable commitments. Environmental groups like Greenpeace UK have also warned that BP will face strong opposition if it doubles down on fossil fuels, not just from activists but from climate-conscious investors.
BP has already restructured parts of its renewable energy portfolio, placing its offshore wind business in a joint venture with Japanese company Jera and seeking a similar arrangement for its solar assets. Additionally, the company may sell off non-core businesses to streamline operations.
Over two decades ago, BP’s then-CEO Lord John Browne rebranded the company as “Beyond Petroleum.” Today, BP’s strategy shift signals a return to its fossil fuel roots a move welcomed by some investors but criticized by others as a short-term gamble at the expense of long-term sustainability.
