BP to cut renewable investments and expand oil and gas production

BP is expected to announce a major strategic shift, cutting its renewable energy investments while ramping up oil and gas production. The move comes amid pressure from investors dissatisfied with the company’s financial performance compared to its industry rivals.

The energy giant will unveil its revised strategy following similar decisions by competitors like Shell and Norwegian company Equinor, both of which have scaled back their green energy ambitions. Meanwhile, pro-fossil fuel rhetoric, including former U.S. President Donald Trump’s “drill baby drill” stance, has encouraged investment in traditional energy sources over low-carbon alternatives.

BP had previously set some of the most ambitious decarbonization targets among major oil firms. In 2020, the company pledged to cut oil and gas production by 40% by 2030 while significantly increasing investment in renewables. However, in 2023, it lowered that reduction target to 25%, and now it is expected to scrap it entirely. Reports suggest BP will also slash its renewable energy investments by more than half in what Chief Executive Murray Auchincloss has described as a “fundamental reset.”

Financial pressures have played a significant role in BP’s shift in strategy. The company’s net income fell to $8.9 billion (£7.2 billion) in 2024, down from $13.8 billion the previous year, according to sources.

Not all shareholders are in favor of BP’s radical course correction. Last week, a coalition of 48 investors urged the company to allow a shareholder vote before making any further deviations from its renewable energy commitments. Royal London Asset Management, one of the signatories, acknowledged BP’s past efforts toward energy transition but expressed concerns about its continued investment in fossil fuel expansion.

Environmental groups have also strongly criticized BP’s expected policy shift. Greenpeace UK warned that the company could face significant opposition from shareholders and activists alike if it doubles down on fossil fuels. Senior climate adviser Charlie Kronick highlighted the growing political and financial risks associated with fossil fuel expansion, noting that policymakers may increasingly look to energy companies to fund recovery efforts from extreme weather events linked to climate change.

Industry analysts have described the move as one of the most significant moments for BP in recent years. AJ Bell analyst Russ Mould stated that the company must now demonstrate a clear strategy to regain investor confidence after a period of underwhelming share price performance.

In addition to the renewed focus on oil and gas, BP has already restructured parts of its renewable energy portfolio. It has placed its offshore wind business in a joint venture with Japan’s Jera and is reportedly seeking a partner for its solar business. Insiders suggest that BP may also sell off other “non-core” assets as part of its shift.

Over 20 years ago, former BP Chief Executive Lord John Browne rebranded the company as “Beyond Petroleum,” signaling its early efforts to move away from oil and gas. Today’s shift could be seen as a return to its roots what some may call “Back to Petroleum.” While certain shareholders may welcome the move, others are raising serious concerns about the company’s long-term strategy in an era of accelerating climate action.