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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Investing in today’s energy system AND – not OR – the transition
5 min read
BP CEO Bernard Looney’s attendance at International Energy Week 2023 attracted attention from climate activists on the first day of the conference. Nevertheless, he delivered a robust speech and explained why the company believes it needs to continue to invest in both oil and gas and ‘transition growth engines’ as part of an ‘orderly transition’. Here follows a transcript.
It is exactly, I’m told, three years and one day since I last had the privilege of speaking at this event – when we still called it International Petroleum Week.
And as we all know, the world has changed significantly since then.
We’ve had a global pandemic, we’ve had a war, we have had a cost-of-living crisis. And I think all of this has made one thing clear – clearer maybe more than ever. And that is that energy is the lifeblood of society.
Now, three years ago if you asked people what they wanted from energy – people in this room for example – chances are they would have said lower-carbon energy. Ask people today what they want from energy, and the answer is more likely to be: an energy system that works. What do they – what do we – mean by that?
An energy system that works is one that provides energy that is secure and affordable, as well as lower carbon. What’s known as the ‘energy trilemma’ – or what the Energy Institute calls the triple energy crisis. It is a complex – and indeed – a massive challenge.
To solve it, action is clearly needed to accelerate the energy transition. At the same time, that transition has got to be orderly. We need to do both. We need to invest in the energy transition. And – not or – we need to invest in today’s energy system – which is predominantly an oil and gas system. Governments all around the world are looking to companies like ours to do this – to do both.
And to be clear – we should be clear – orderly is not another word for slow. What it does mean is keeping affordable energy flowing where and when it’s needed. Investing in the transition and investing in energy security. And this is exactly what we designed BP’s strategy to do three years ago.
Now, three years ago if you asked people what they wanted from energy – people in this room for example – chances are they would have said lower-carbon energy. Ask people today what they want from energy, and the answer is more likely to be: an energy system that works.
It’s early days still of course, but for us the strategy is working – and earlier this month, we leaned further into that strategy. We are putting up to $8bn more into today’s energy system. And – not or – we announced up to $8bn more investment into what we call our transition growth engines – bioenergy, convenience, EV [electric vehicle] charging, hydrogen and renewables and power. That’s in total, up to an additional $16bn into the energy system by 2030, given the right opportunities.
On the transition – we’ll focus on quick, near-term solutions that can help people and businesses decarbonise sooner; like EV charging and sustainable aviation fuel. On oil and gas – we’ll focus on high-quality options where we can deliver quickly to support affordability and security now, where it’s needed the most… targeting existing infrastructure for speed of development, lower costs and lower additional emissions.
We’re putting plans into action – or as I like to say, having grown up on a farm – we’re putting shovels in the ground. And we’re putting our money where our mouth is. In three years, the capital we’ve invested in our transition growth engines has gone from 3% to 30%.
So what does all of this look like in practice?
The UK – our home – is a good example. It’s a microcosm in many ways of the BP strategy as a whole. We are planning to invest up to £18bn here through the decade. And that is going into oil and gas and into our transition growth engines – creating new jobs, developing skills and generating export opportunities.
It’s paying for crews and a drilling rig to add new wells in the Schiehallion area, west of Shetland. It’s paying for crews and ships out on the North Sea and Irish Sea doing our biggest UK integrated offshore survey ever – so we can install wind turbines in the best locations. It’s paying for the teams that are designing two new hydrogen plants on Teesside – and one of the UK’s first power plants with carbon capture.
As we just heard from [the Rt Hon] Chris [Skidmore, OBE, Chair of the Net Zero Review and a UK Member of Parliament, in an earlier International Energy Week talk] – and as he says in his report – ‘net zero is a new era of opportunity’. It is a massive opportunity for companies like ours.
And we are starting to see policies globally that are bringing about an acceleration in the transition – with hopefully more to come. Policies that address demand for different energy sources as well as supply. Policies that encourage the development and rapid adoption of alternatives to hydrocarbons along with new infrastructure.
Support for faster permitting for low-carbon technologies like wind and solar. Support for battery and hydrogen storage to balance supply and demand. Support for new pipelines that can deliver low-carbon hydrogen to where it’s needed – and that can take those captured emissions away to secure storage facilities. And for policies that support rapid expansion of transmission networks.
So, let me begin to close. As I said here three years ago – I am an optimist. And that does not however mean that we don’t need to be cautious. As the events of last year demonstrated, the sudden loss of even a small part of the world’s oil and gas can have severe economic and social costs. Reducing supply without also reducing demand inevitably leads to price spikes.
Price spikes lead to economic volatility. And there’s a risk that volatility will undermine popular support for the transition – an outcome which nobody wants. We avoid that outcome by investing in today’s energy system as well as investing in the transition. And – not or – we have a way to go, but there are a growing number of reasons, I think, for why we can and should be optimistic.
Low-carbon investment is now over $1tn – for the first time ever. Investment in clean energy is now the same as investment in hydrocarbons – for the first time ever. The role of natural gas is becoming more accepted as part of the solution.
Conversations are increasingly taking account of the energy trilemma – of security and affordability as well as low carbon. These are exactly the things we need for an orderly transition. Hence the optimism – and it adds up, we believe, to a huge opportunity for everyone here, for our whole industry.
Thank you very much.
Learn more about what BP is doing to meet the world’s energy needs here.
The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.