BP backs down on climate pledges despite soaring profits

BP revealed it earned $28bn (£23bn) in 2022, following the sharp increase in fuel prices brought about by Russia's invasion of Ukraine. 

The company also announced it would be scaling back on its plans to reduce the amount of oil and gas it produces by 2030. BP now expects its fossil fuel production to fall by 25 per cent by 2030, compared to a previous expectation of 40 per cent.

BP was one of the first oil and gas giants to announce an ambition to cut emissions to net zero by 2050, and had previously promised that emissions would be 35-40 per cent lower by the end of this decade.

The change in policy has been justified by chief executive Bernard Looney, as part of a plan to address energy security following the disruption to oil and gas markets caused by Russia’s war on Ukraine.

BP is also increasing its investment in greener energy, planning to invest up to $65bn (£54bn) between 2023 and 2030 into products such as bioenergy, electric car charging, wind and solar power and hydrogen.

“We need continuing near-term investment into today’s energy system, which depends on oil and gas, to meet today’s demands and to make sure the transition is an orderly one,” Looney said.

“We will prioritise projects where we can deliver quickly, at low cost, using our existing infrastructure, allowing us to minimise additional emissions and maximise both value and our contribution to energy security and affordability.”

The oil and gas giant made £7.1bn between July and September alone, which amounts to more than double its profit for the same period last year.

The discrepancy between the company's huge annual profits and its commitment to reduce its emissions – particularly during a cost-of-living crisis – has faced criticism and led to renewed calls for a toughened windfall tax. 

“Not only will BP’s new strategy fail to deliver much-needed energy security in the UK but it will ensure that people across the globe already battling devastating droughts, floods and heatwaves, will continue losing their lives and livelihoods," said Greenpeace UK’s head of climate justice Kate Blagojevic. 

Friends of the Earth added BP’s profits “will be yet more salt in the wound for millions of people who’ve struggled to afford to stay warm and well this winter”.

Trades Union Congress general secretary Paul Nowak said: “As millions struggle to heat their homes and put food on the table, BP are laughing all the way to the bank."

Labour has joined this criticism, with Labour shadow climate change secretary Ed Miliband saying: “What is so outrageous is that as fossil fuel companies rake in these enormous sums, Rishi Sunak still refuses to bring in a proper windfall tax that would make them pay their fair share."

BP is far from being the only company that has profited from rising fuel costs. Earlier this week, Shell revealed it had recorded its highest-ever profit in the energy giant’s entire 115-year history, as its core profits skyrocketed to £68.1bn ($84.3bn) in 2022. 

These "extraordinary" profits made by energy companies led the government to introduce in 2022 a windfall tax – called the Energy Profits Levy. The rate was originally set at 25 per cent, but has now been increased to 35 per cent. 

The EPL is predicted to raise £5bn in its first 12 months, and the profits are set to be used to provide a £400 discount on millions of households' energy bills. 

As a result, BP said its UK business, which accounts for less than 10 per cent of its global profits, will pay $2.2bn in tax for 2022, including $700m (£584m) solely due to the Energy Profits Levy.

In September 2022, a Greenpeace investigation found that BP had failed to report massive flaring emissions from one of its projects in Iraq – equivalent to the annual emissions of over 970,000 petrol cars.

In August, a UK oil and gas body said that the windfall tax on energy firms should be scrapped by 2025 or it will have a “detrimental impact” on investment in the domestic sector.