The head of the energy giant BP has announced he plans to cut back on renewable energy projects and stick with oil and gas investments after fossil fuel energy raked in record profits in 2022. Bernard Looney, chief executive of BP, said that wants to “dial back” on the company’s green energy push, and is reportedly concerned about the lower returns from its investments in renewables such as wind and solar, which it launched in a bid to rebrand its business as a green energy champion. Over the past year, energy giants have reported record profits as wholesale oil and gas prices went through the roof following Russia’s invasion of Ukraine.
While BP has not yet published its annual financial results yet, another oil major Shell announced yesterday that it has raked in a record $84.3billion (£68.1 billion) in profits in 2022.
Earning a staggering 53 percent increase in profits, the London-based oil major reported adjusted earnings of $39.9 billion (£32.2 billion) for 2022, the highest in its 115-year history.
Over the past year, wholesale oil and gas prices have skyrocketed, thanks largely to Russia’s invasion of Ukraine. As a result, many energy producing firms, particularly the fossil fuel supermajors, have been accused of profiting off the energy crisis, while millions of families struggle with fuel poverty.
After initially pitching BP as a green champion, Mr Looney is now looking to narrow the company’s focus and persuade shareholders that it is committed to maximizing profits, according to the Wall Street Journal.
Russia’s invasion of Ukraine prompted increased support for oil and gas developments, as countries in Europe scrambled to boost their energy security.
However, they have also doubled down on their investments in renewable energy development, which has been up to nine times cheaper than fossil fuel prices over the past year.
One BP investor noted that shareholders were carefully watching the performance of renewable investments, adding that societally, people have been more focused on energy security than climate change over the past year.
They said: “So we’ve got to be mindful that as we run up the new system of renewables, you can’t run down the old system too aggressively; it’s a transition, it’s not a step change.”
READ MORE: North Sea boost as energy giant says oil and gas crucial for decades
Responding to this news, Friends of the Earth’s head of policy, Mike Childs, told Express.co.uk: “It’s our reliance on gas and oil that’s fueling the cost-of-living crisis and destabilizing our climate.
“Greater investment in renewables is essential for boosting energy security, bringing down soaring bills and tackling the climate crisis. Energy giants like BP continue to prioritize profits, shareholder pay-outs and investment in planet-warming fossil fuels over clean renewable energy.
“The government must pull the plug on new North Sea gas and oil licenses and increase the windfall tax on energy firms’ bumper profits – using the money raised to fund a nationwide insulation program and renewable energy drive. Lower bills, warmer homes and a reduction in harmful emissions must be prioritized over the greed of fossil fuel giants.”
Meanwhile, earlier this week BP warned that without continued investment in the oil and gas sector over the next three decades, the world faces increased risks of energy price swings and shortages.
The fossil fuel major published its annual energy outlook on Tuesday, where it argued that existing oil fields around the world face a natural decline, which means that further exploration and development will still be necessary.
Spencer Dale, BP’s chief economist said: “The scale of the economic and social disruptions over the past year associated with the loss of just a fraction of the world’s fossil fuels has also highlighted the need for the transition away from hydrocarbons to be orderly, such that the demand for hydrocarbons falls in line with available supplies, avoiding future periods of energy shortages and higher prices.
“Natural declines in existing production sources mean there needs to be continued upstream investment in oil and natural gas over the next 30 years.”
However, despite calling for continued investment in fossil fuels, the energy giant has decreased its outlook for oil and gas demand, adding that Russia’s invasion of Ukraine sparked a major upheaval in many countries.
Mr Dale continued to say: “The experience from the major energy supply shocks of the 1970s suggests that events that heighten energy security concerns can have significant and persistent impacts on energy markets.
“Most importantly, the desire of countries to bolster their energy security by reducing their dependency on imported energy – dominated by fossil fuels – and instead have access to more domestically produced energy – much of which is likely to come from renewables and other non-fossil energy sources – suggests that the war is likely to accelerate the pace of the energy transition.”