Oil giant BP will reduce its investments in renewable energy. The money – 30 billion Danish kroner – will instead be used to extract more oil.
Oil giant BP – formerly British Petroleum – will cut its investments in solutions based on renewable energy. Specifically, by an amount equivalent to 34 billion Danish kroner.
The company will reduce its focus on renewable energy and instead increase investments in oil and gas production.
Reuters writes.
The change comes after BP previously told the public about ambitious goals for the green transition. These are the plans it is now backing away from.
The investments, which are now decreasing, were supposed to be spent on so-called renewable fuels, among other things. Conversely, BP is not the only energy company to falter on that front.
Renewable energy cannot replace oil – not even in 2040
"It's a radical change," Murray Auchincloss, BP's chief executive, told the news agency.
He justified the change with a desire to create "long-term value for shareholders."
According to Auchincloss, the reduction in investments in renewable energy is due to the energy transition being slower than BP had originally expected.
Furthermore, the company believes that investments in renewable energy have generally gone "too far, too fast."
BP estimates that demand for oil and gas will remain relevant for many decades to come. That is why it is now ramping up the hunt for fossil fuels.
The decision is not unique in the energy sector. Several similar companies are busy reassessing their otherwise long-term investments in energy sources other than oil and gas.
Not everyone believes that demand for oil is actually starting to decline in earnest. At least not right now.
But oil demand is not expected to decline until after 2040 at the earliest. This is the assessment of Vitol, the world's largest independent energy trader.
Although demand for oil for gasoline will decline towards 2040, Vitols points out that industry in particular will not change its consumption patterns. There will still be demand for oil.
