BP Rolls Back on Net Zero Goals, Bets $10B on Fossil Fuels: A Smart Move or a Climate Setback?

BP has announced a major shift in its strategy, cutting back on renewable energy investments and increasing its focus on oil and gas. The company plans to invest $10 billion annually in fossil fuels while slashing more than $5 billion per year from its energy transition spending.

This move marks a sharp reversal from its previous commitment to cut emissions and transition toward greener energy. So, what prompted the energy giant to go back on its climate goals?

Why Is BP Changing Its Strategy?

BP’s leadership cited slower-than-expected progress in the energy transition as a key reason for the shift. CEO Murray Auchincloss said the Ukraine war, the pandemic, and unstable energy markets have slowed the shift to renewables.

He acknowledged that BP was too optimistic in its early climate targets, saying,

“Our optimism for a fast transition was misplaced, and we went too far, too fast…We will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset BP, with an unwavering focus on growing long-term shareholder value.”

The company also pointed to strong demand for oil and gas, which remains higher than expected.

As a result, BP now aims to increase oil and gas production to between 2.3 million and 2.5 million barrels of oil equivalent per day (boepd) by 2030—up from its current 2.36 million boepd.

BP’s New Investment Plans

BP plans to spend between $13 billion and $15 billion each year until 2027. Most of this money will now go toward traditional fossil fuels. The company has also announced that it will:

Cut energy transition spending to $1.5 billion to $2 billion per year, down from previous forecasts of $8 billion in 2025 and $9 billion in 2030. BP’s big cut shows it expects slower returns on renewables. So, fossil fuel projects are now its main focus.
Increase its dividend by 4% each year to draw in investors. This shows confidence in profits, even as green investments decline.
Reduce operating costs and divest $20 billion worth of assets by 2027, including parts of its renewables business. BP says these divestments will simplify operations and bring in cash quickly.
Sell a 50% stake in Lightsource BP, its solar business, and shift to a capital-light renewable energy model. BP will not fully develop its green energy projects. Instead, it will depend on outside capital and partnerships. This approach cuts its financial risk but keeps BP involved in renewables.

Dialing Down Climate Commitments

The energy major’s combined Scope 1 and 2 emissions were 32.1 MtCO2e in 2023. This is a decrease of 41% from its 2019 baseline. This means they’ve already surpassed their 2025 target of 20% emission reductions against the baseline.

BP ghg emissions 2023 — Source: BP Sustainability Report

BP has changed its strategy. It has lowered its climate goals and moved away from its earlier decarbonization plans. The company’s revised targets include:

Cutting Scope 1 and 2 emissions (from its own operations) by 45%-50% by 2030, down from the original 50% goal. This slight reduction reflects BP’s decision to keep oil and gas production at higher levels than originally planned.
Reducing the carbon intensity of its products by 8%-10% by 2030, compared to the previous 15%-20% target. This weaker target shows that BP is focusing on short-term profits instead of making bigger cuts in emissions from its fuel products.
Eliminating its absolute Scope 3 emissions reduction target, which previously aimed for a 20%-30% cut by 2030. Scope 3 emissions make up most of an oil company’s total carbon footprint. They arise from how people use its products, not from the company’s direct operations. Critics say BP’s decision to remove this target signals a major retreat from its climate commitments and a lack of accountability for downstream emissions.

BP net zero pathway — Note: This chart is intended to be illustrative of a range of contributions that individual aspects of our plans may make relative to others. They should not be taken to represent specific expectations of actual impacts of actions driving delivery.

BP’s aim 1 means to be net zero across its entire operations on an absolute basis by 2050 or sooner.

The energy giant’s new climate goals show a shift seen in many big oil companies. Many of them are slowing down their green efforts due to economic uncertainty. By abandoning absolute Scope 3 targets, BP avoids binding commitments to reduce emissions from its gasoline and diesel sales, which make up the bulk of its carbon footprint.

RELATED: Big Oil’s Showdown: How Shell, Chevron & ExxonMobil Balance Big Profits with Net Zero?

Investor Pressure: Chasing Profits Over Sustainability?

BP is reducing its focus on renewable energy. This change follows pressure from Elliott Investment Management. They want BP to boost its financial returns.

BP has also underperformed compared to competitors like Shell, Exxon, and Chevron, leading to dissatisfaction among investors.

oil majors annual profit — Image from Reuters

Following the announcement, BP’s share price fell by 1.8%, reflecting mixed reactions from the market. Some investors like the new focus on profits. But others think BP is giving up on long-term sustainability.

BP’s move could also have regulatory implications as governments worldwide tighten emissions standards. With climate policies evolving, companies that fail to adapt may face higher compliance costs in the future.

Environmental Groups Call Out BP’s ‘Climate U-Turn

BP’s return to fossil fuels has angered environmental groups. It has also worried investors who care about sustainability. Greenpeace UK called the decision “proof that fossil fuel companies can’t or won’t be part of climate crisis solutions.”

Meanwhile, Global Witness criticized BP. They claimed the company cares more about quick profits for shareholders than protecting the environment in the long run. The group held a protest in London. They used mobile billboards to call out BP’s leaders for their “flip-flop” climate policy decisions.

BP’s move also raises concerns about its alignment with global climate goals. The International Energy Agency (IEA) states that new fossil fuel projects can’t help limit global warming to 1.5°C. By increasing oil and gas production, BP may stray from the global net-zero goal.

What This Means for BP’s Future

BP’s shift signals a clear return to traditional fossil fuel business models, with a reduced emphasis on clean and renewable energy. While this move may generate higher short-term profits, it raises concerns about BP’s ability to adapt to a decarbonizing world.

Many experts believe that, over time, stricter climate regulations and changing energy markets will force oil companies to prioritize renewables once again.

BP’s shift in priorities could also affect its reputation among environmentally conscious investors and consumers. Companies that continue investing in fossil fuels at the expense of renewables may struggle to attract younger, sustainability-focused investors who prioritize long-term climate goals over immediate financial returns.

For now, BP is betting on oil and gas—but whether this strategy pays off in the long run remains uncertain. As the world moves toward net-zero goals, its decision to step back from renewables could impact its standing in the energy sector in the years ahead.

The question remains: Will BP’s return to fossil fuels prove to be a wise financial move, or will it leave the company behind in an increasingly green-focused world?