As you walk into BP World, be prepared to have an ideological transplant. Be prepared to have hopes dashed and disappointments bittered. Be prepared, above all, to have unrecognisable narratives thrust upon you, with all the reinforcements that money can lobby for.
This is my initial reaction upon reading the words of Bob Dudley, outgoing Chief Executive Officer of BP, reported yesterday by Bloomberg, and carried on the wires elsewhere, for example :-
https://www.msn.com/en-us/finance/markets/outgoing-bp-ceo-warns-of-moving-too-fast-on-climate-change/ar-BBZom91
https://www.energyvoice.com/otherenergy/220661/outgoing-bp-ceo-warns-of-moving-too-fast-on-climate-change/
https://www.rigzone.com/news/wire/bps_dudley_warns_of_moving_too_fast_on_climate_change-28-jan-2020-160921-article/
In the article, headlined, “Outgoing BP CEO Warns of Moving Too Fast on Climate Change”, Bob Dudley “warned Big Oil of moving too fast on investing in new technologies to counter climate change, because their failure could lead to financial ruin. ‘If you go too fast and you don’t get it right you can drive yourself out of business,’ Dudley said in a Columbia Energy Exchange podcast with Professor Jason Bordoff.”
I suppose that sentiment would be valid if the “new” technologies he is probably referring to were genuinely radical. The thing is, wind power and solar power, the two key technologies that have been causing an explosion in renewable energy, are tried and tested, so they are definitely not “new”; and also, there’s no significant failure that could reasonably be anticipated now.
What is it with BP and Renewable Energy ? Why the long faces ? It probably has to do with the BP Solar venture, that was properly amazing at the time, although it transpired that BP was making it all work with subsidies, which obviously is not sustainable, and there was strong competition from Chinese manufacture, so it was all closed down.
The real issue here could be said to have been market manipulation; but when the markets started functioning properly, over-subsidised, cost-inefficient technologies could no longer compete.
Market rigging doesn’t really work, except to kickstart technology adoption, and so it’s a bit of a mystery why BP still clings to carbon pricing as their preferred ask, “‘I cannot imagine how we’re going to get there without a price on carbon.'”
Now that wind power and solar power are within reach at increasingly reasonable capital expenditure levels, and many power companies increasingly depend on the cheap wind and solar electrons, why does Bob Dudley still maintain renewable energy technologies cannot be assets instead of liabilities, where for example, he said, “It does have a lower return profile, there’s no question about it.” ?
And further, he says he has been taunting shareholders with what he believes – that there is a lack of financial returns from renewables, “[…] they say ‘we would like you to move really quickly into renewables.’ I say, ‘we can do that, would you like us to cut the dividend?’ They go, ‘no, no, don’t do that.’
Bob Dudley seems to be making reference to an alternative reality, because this is not how things work in this current universe. Wind power and solar power are making real money, these days.
Also, Mr Dudley still seems unconvinced that renewable electricity technology is already viable, “‘Technology has not yet been cracked that will make the big movement on climate change. Renewables are fantastic. They’re one way to do it, but we’re going to come through with some solution.'”; and “‘Oil companies must […] invest when game-changing technologies are developed.'”
There’s no need to look to the future, though. All the technologies we need, we already have.
Bob Dudley seems to suffer from a lack of insight into what could be possible within BP’s current core business. “‘Oil companies must retain a strong financial footing to be able to invest when game-changing technologies are developed’, he said.” He is implying that BP must keep their social licence to pump crude petroleum oil and Natural Gas, in order to keep their balance sheet healthy enough to invest; yet the technologies he is thinking of have nothing to do with BP’s mining and refining activities. He mentions “some sort of nuclear capability that’s much safer”, by way of an example.
He’s also leaving this shift to the future – to things not yet known or done – leaving BP drilling fossil carbon for decades.
He neglects to address what could be possible in BP’s own house, with green chemistry, to bring about a massive reduction in net carbon dioxide emissions to air.
And about this social licence to drill : “‘If we understand where the technologies are going and we invest, the best thing we can do strategically is have a strong balance sheet. When it becomes really clear certain technologies are going to move very quickly and be profitable, then we’ll be able to make that shift.'” But, but, we can’t wait for BP to jump, when they think the market’s right to act on climate change. They do need to be acting right now.
So, not really inspiring, and rather disparaging.
But here’s where I agree with Bob, “‘We should not shut down what we’re doing or sell our assets to somebody else and go all into renewables'”, he is quoted as saying, and I totally agree. Why should BP try to do anything apart from what they’re really good at – chemical engineering ?
“‘We want to be leaders in this and we do enormous amount as companies’, such as in developing technology and reducing emissions from their own operations. But ‘we’re not the epicenter of these issues.'” Again, too right. BP is not the epicentre of solar power and wind power development, it’s not really their thing. Even so, they should be very central in the global response to climate change. Nobody should shrug.
And again, I agree with Bob when he says, “‘I don’t know how the world can get to the goals of [the] Paris [Treaty, agreed by UNFCCC] without a very major role for natural gas.'” No, indeed. Methane, the main constituent of Natural Gas, is a fine energy vector, and high flexible. It’s just that I think BP should be focussing on Renewable Methane, instead of Natural Gas, in future, and need a strategy to make that transition out of Natural Gas happen.
Bob Dudley thinks we should be resigned about the reign of King Oil, “‘If we were all driven out of business that oil would still be produced’ by national oil companies and other countries.”, which is a major abdication of responsiblity. Where is the compact between companies and countries to take up green chemistry, and elect to cease and desist from digging up fossil fuels ?
I think there is room for a breaking of paradigms. It might be too much to hope for a non-white person, or a woman, or even a person not wearing a suit and tie to be the new head of BP, but I have a vague idea there’s some traction in arguing for BP to return to their 1970s glory days of fuel synthesis.
