Backlash after BP reduces climate targets despite record $28bn profits

After announcing that it would reduce its climate change targets, BP found itself in the middle of a political storm. This was despite having doubled its annual profits to a record $28billion.

In the last three months of 2017, oil giant BP generated underlying profits totaling $4.8 billion. After energy prices dropped from their peak in the immediate aftermath Russia’s invasion, the figure was slightly lower than analysts had expected.

BP’s profit for the year was $12.8 billion, which is more than twice the amount of the $12.8 billion last year. This surpasses the 2008 record of $26 trillion. BP shares increased by 4.2% in the early trading.

BP also announced that it had reneged on its industry-leading commitment of cutting oil and gas production by as much as 40% by 2030. According to BP, it is now targeting 2 million barrels per day of oil equivalent by 2030. This would reduce its emissions by 25% compared to 2019 levels.

It also announced plans for a 10% increase in dividends to 6.61 cents per shares and the repurchase of $2.75 trillion worth of shares within the next three months. It stated that it paid $15.1 billion worldwide in taxes, its highest annual total. This includes $2.2 billion from its North Sea business and $700 million from Energy Profits Levy.

BP suffered a $24.4 billion loss when it had to write off its 19.75 percent stake in Rosneft, the Russian energy giant. This was shortly after the invasion of Ukraine. These results are coming days after Shell reported record profits in excess of $40 billion, which were called the “windfalls from war” by Labour Party.

Shadow climate secretary Ed Miliband said that the government should introduce a “properly” windfall tax on the energy industry.

He stated that it was yet another day of huge profits at an energy giant and the windfalls from war coming out of British citizens’ pockets. It is absurd that Rishi Sunak, despite these huge profits at energy giants, refuses to impose a true windfall tax.

Ed Davey, Liberal Democrat leader added that “Yet Another Oil Giant has been Permitted to Rake in Huge Profits from Putin’s Illegal Invasion of Ukraine, while Families Choose Between Heating and Eating.” The Conservative government must put people first, and not allow energy bills to rise once again in April.

Bernard Looney, BP’s chief executive, stated that the company was responding “securely and affordably as well as with lower carbon” to customer demands.

He stated that “action is required to accelerate the transition.” It is also important to ensure that the transition goes smoothly so that energy is available where it is most needed.

“We are increasing our investment in our transition, while at the same, increasing our investment in today’s energy system.”

BP will invest more in technologies that will enable it to transition to greener fuels, such as renewable energy sources and electric vehicle charging points. Each division will receive an investment of up to $8 million by BP by 2030. BP will set aside 50% of its total investment in green energy for the duration of the strategy.

The FTSE 100 energy giant also announced that it will invest an additional $8 billion in oil and gas projects, with a particular focus on projects with short lead time.

Joseph Evans, a researcher from the IPPR think-tank, stated that while bill-payers in the UK are facing rising costs, BP shareholders are enjoying huge payouts. The oil giant has made record profits and passed an incredible PS9.35 billion to shareholders via share buybacks.

“This is a shameful use of surplus cash that could have been used for lower bills or invested in the green transformation. America and Canada have already taken action against excessive shareholder payouts. It’s long past time for the government of Canada to follow suit and impose a tax on share-buyback schemes.

Kate Blagojevic from Greenpeace UK, head of climate justice, stated: “BP, yet another fossil fuel mega-corporation mining gold out the immense suffering caused by climate and energy crises.

“What’s worse is that their green plans appear to have been severely undermined by the pressure from investors, governments, and other parties to extract more oil and gas money.”