BP plc has established a $100 million fund to further reduce greenhouse gas (GHG) emissions in its upstream oil and natural gas operations.
The Upstream Carbon Fund announced Tuesday is designed to support BP’s work to generate “sustainable emissions reductions” across its operations. Last year, the London-based major set near-term and specific targets to reduce carbon dioxide (CO2) emissions to advance an “energy transition” from long-term use of fossil fuels.
“A year ago we challenged everyone at BP to reduce emissions in our operations and they have responded overwhelmingly,” upstream chief Bernard Looney said. “This $100 million investment is designed to build on that momentum. It will fund ideas both big and small because everything counts in our transition to a lower carbon future and everyone at BP has a role to play.”
BP’s goal last year was to cut an estimated 3.5 million metric tons (mmt) of emissions from operations between 2016 and 2025, with a methane intensity target of 0.2%. During 2018, BP estimated the total direct GHG emissions had fallen by about 1.7 mmt CO2 equivalent, even as upstream production increased 3% on the same basis.
Between 2016 and 2018, BP estimated it had generated 2.5 mmt of sustainable emissions reductions throughout its businesses. The methane intensity for 2018 also was in line with its target at 0.2%.
Under the new initiative, funding would be made available over the next three years to support new upstream projects in reducing more emissions. Businesses and employees throughout the upstream operating businesses were invited to propose projects for the funding.
“We as leaders don’t have all the answers,” Looney said. While BP has “a resilient and flexible strategy” and “can do things at scale where it makes sense…a lot of the power of change resides in our people.”
The new fund is in addition to the estimated $500 million a year spent by BP on low carbon investments, including venturing activities and its alternative energy business. BP is also a founding member of the Oil and Gas Climate Initiative, a collaborative of 13 of the world’s largest energy companies, which set up a $1 billion investment fund to address methane emissions and other issues.
BP’s targets for reductions in operational emissions are part of its “reduce-improve-create,” or RIC, approach to the energy transition, whose aim is to improve its products, which in turn may allow customers to reduce their emissions, as well as create new low carbon businesses. The projects that are awarded funding would help to deliver the further emissions reductions necessary to achieve the RIC targets.
Progress toward the sustainable emissions reductions target has been incorporated as a factor in the remuneration of 36,000 employees across the BP Group, Looney noted.
Employees “have been quick to embrace digital technology and agile ways of working as part of our transformation agenda, and I would love to apply the same thinking to how we solve the lower carbon challenge. And to help make that closer connection between our low carbon goals and how we perform as individuals, the pay of more than 35,000 employees, as well as myself and other executive directors, is now linked to BP’s progress against our sustainable emissions reduction target.”
At the recent CERAWeek by IHS Markit conference in Houston, BP CEO Bob Dudley urged his peers to work on energy systems that were “cleaner, better and kinder to the planet…We need to demonstrate that we share the common goal of a low carbon future and that we are in action toward it. The stakes are too high not to.”
Other oil and gas majors are also stepping up their investments to add more alternative energy sources and reduce emissions. In 2017, BP joined other majors in signing a set of guiding principles to methane emissions across the natural gas value chain.
Chevron Corp., ExxonMobil Corp. and Royal Dutch Shell plc are among many majors that have announced methane leak target reductions and expansion into alternative energy.
For example, Shell recently acquired Greenlots, a California startup that builds software to network electric vehicle fueling stations. Shell also has invested in a vehicle battery company, and it has secured a partnership with Google to test a wind generator.
Shell’s New Energies division, which aims to spend $1-2 billion a year on renewable and alternative energies, recently agreed to buy German-based Sonnen GmbH, a home battery manufacturer, which has installed batteries in thousands of European homes. Sonnen is expected to compete in the marketplace with Tesla Inc., whose Powerwall is a U.S.-based home battery business.
Meanwhile, Norway’s Equinor ASA, which rebranded from “Statoil” to acknowledge its expansion into all things energy and beyond fossil fuels, has made some big investments, including into offshore wind with partner Masdar. The Hywind Scotland project, the world’s first floating wind farm, has 30 MW capacity and can provide electricity for about 20,000 households.
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