BP to abandon renewable targets, divest assets in shift back to fossil fuels

British oil and gas supermajor BP is expected to announce today its decision to scrap a previous target to ramp up renewable generation capacity 20-fold by 2030, returning instead to a focus on fossil fuels in an effort to mollify investors.

BP’s chief executive, Murray Auchincloss, will reportedly announce the strategic shift during the company’s capital markets day in the UK on Wednesday, according to two anonymous sources speaking to Reuters.

Reported as an effort to address investor concerns over earnings, which have underperformed those of its rivals in recent years, BP had already abandoned its goal to cut oil and gas output by the end of this decade and is now set to complete its about-face with a full-fledged return to fossil fuels.

The British multinational announced in mid-2020 a plan to increase its low carbon investment 10-fold by 2030, resulting in a 20-fold increase in its renewable energy generating capacity by the same time, pushing BP’s renewable generating capacity to around 50GW by the end of this decade.

However, in 2021, BP had only 3.3GW of installed renewable generating capacity globally. In the company’s 2024 earnings report, only 4GW of installed capacity was reported, with a further 8.2GW that had progressed to final investment decision (FID) and a development pipeline of 60.6GW.

This did not include the 62GW development pipeline attributed to Lightsource BP, which BP acquired in full in October 2024.

These development numbers are likely to shift, however, as the two anonymous sources also told Reuters that BP would also announce its plans to divest assets and cut other low-carbon investments as part of an effort to reduce the company’s debt and boost returns.

The U-turn probably comes as little surprise to many, particularly after the company’s former CEO, Bernard Looney, resigned his role in September 2023 as a result of undisclosed “personal relationships with company colleagues.”

Looney had been regarded as the driving force behind BP’s renewable energy and net zero targets, part of a long-term effort to rehabilitate the fossil fuel giant’s long tarnished record and prepare it for the low-carbon economy.

But a challenging economic environment has not helped BP maintain Looney’s legacy, with investors growing increasingly restless over the company’s financial performance in recent years.

As a number of major economic challenges hit the clean energy sectors – including the global COVID-19 pandemic and Russia’s unlawful invasion of Ukraine, both of which resulted in industry-wide supply chain constraints – oil and gas companies have steadily abandoned their clean energy goals and returned their focus to fossil fuels, where profits have been easier to come by.

The timing of BP’s decision to complete its fossil fuel about-face demonstrates the market uproar being caused by the re-election of US president Donald Trump – a vocal opponent of all things related to clean energy, and a boisterous advocate of a plan to “drill, baby, drill.”

It will be some time before the full scale of BP’s reversal out of the clean energy sector becomes clear, but we can also expect to see immediate effects trickle across the larger industry, such as the company’s plans to divest assets and the fate of its gigawatt-scale development pipeline.

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