BP’s green dream collapses: Energy giant returns to oil as activist investors circle
By willowt // 2025-02-27
Copy
 
  • BP's green energy pivot under former CEO Bernard Looney has failed, leading to plummeting profits and a potential existential crisis for the company.
  • The company's financial performance has suffered, with 2024 profits dropping to $8.9 billion from $13.8 billion in 2023, underperforming rival companies like Shell and ExxonMobil.
  • Activist investors, led by Elliott Management, are putting pressure on BP for drastic changes, including cost cuts and a return to oil and gas exploration.
  • BP's struggles reflect a broader crisis in the energy sector, highlighting the challenges of transitioning to renewable energy, particularly in the United Kingdom.
  • The company must now decide whether to fully embrace its oil and gas heritage or risk being overtaken by competitors, with its upcoming strategy announcement expected to include a "fundamental reset."
BP, once a pioneer in the oil and gas industry, now finds itself at a crossroads after its ambitious green energy pivot backfired spectacularly. The company’s decision to embrace renewable energy under former CEO Bernard Looney has left it vulnerable to activist investors, plummeting profits and a potential existential crisis. As BP prepares to announce a dramatic shift back to its fossil fuel roots, the energy giant’s struggles serve as a cautionary tale for the global push toward Net Zero.

The green pivot that went wrong

In February 2020, Bernard Looney stood before journalists and executives at London’s Royal Lancaster Hotel, urging them to “reimagine” BP as a champion of green power. Looney pledged to cut oil and gas production by 40% by 2030, replacing lost revenue with investments in wind farms, solar parks and biofuels. “BP has been an international oil company for over a century… Now we are pivoting to become an integrated energy company,” he declared. The plan was bold, with precise targets: a tenfold increase in renewable energy investment to $5 billion annually, 50 gigawatts of renewable capacity by 2030 and a sharp reduction in refining throughput. But five years later, BP’s green dreams have crumbled. Few of the promised renewable projects have materialized, and those that have—like its 10 U.S. wind farms—are being sold off. BP Lightsource, its solar subsidiary, builds solar farms only to sell them, leaving no long-term income stream. The financial toll has been severe. BP’s 2024 profits plummeted to $8.9 billion, down from $13.8 billion in 2023—its worst annual result since the pandemic. Shareholders have watched their returns underperform rivals like Shell, TotalEnergies, Chevron and ExxonMobil. “We have completely decapitalised renewables,” admitted current CEO Murray Auchincloss, signaling a full retreat from Looney’s green agenda.

Activist investors and the siege of BP

The company’s woes have attracted the attention of Elliott Management, a Florida-based hedge fund known for its aggressive tactics. Elliott has built a £3.8 billion ($4.8 billion) stake in BP and is pushing for drastic changes, including cost cuts, asset sales and a sharper focus on profitability. The pressure comes as BP’s share price languishes near historic lows, with veteran Wall Street analyst Paul Sankey calling for the board to be fired. Auchincloss now faces the daunting task of convincing skeptical investors that BP can recover. At its upcoming capital markets day, he is expected to announce a “fundamental reset” that includes a return to oil and gas exploration. Plans are already underway for new projects in the Gulf of America, Iraq, India, Brazil, Egypt and the U.K.’s North Sea. BP’s oil production is projected to rise by 2-3% annually until 2030, a stark reversal of Looney’s Net Zero commitments.

A broader crisis for the energy sector

BP’s struggles are emblematic of a larger crisis facing the energy sector as it grapples with the transition to renewables. The push for green energy has been fraught with challenges, from the intermittent nature of wind and solar power to the high costs of infrastructure development. In the U.K., Energy Secretary Ed Miliband’s relentless Net Zero crusade has further complicated matters, with decisions like blocking production at the Rosebank and Jackdaw offshore developments sending shockwaves through the industry. The contrast with the United States is stark. Under President Donald Trump’s “drill, baby, drill” agenda, the U.S. oil industry is experiencing a resurgence, while the U.K. risks being left behind. As BP and Shell face mounting pressure, speculation about a potential merger between the two British giants has resurfaced. Such a move could provide the scale needed to navigate the turbulent energy landscape, but it would also mark the end of an era for two of the U.K.’s most iconic companies.

The road ahead

BP’s retreat from renewables raises critical questions about the feasibility of the global Net Zero agenda. While the pursuit of environmental preservation is noble, the costs—both financial and strategic—are becoming increasingly apparent. For BP, the immediate priority is survival. The company must rebuild investor confidence, boost profitability and decide whether to fully embrace its oil and gas heritage or risk being overtaken by more agile competitors. As Auchincloss prepares to unveil BP’s new strategy, one thing is clear: the energy giant’s green dream has turned into a nightmare. The lessons from BP’s misadventure will resonate far beyond the company, serving as a stark reminder of the challenges and trade-offs inherent in the transition to a low-carbon future. For now, BP is betting big on oil—but whether that bet will pay off remains to be seen. Sources include: WattsUpWithThat.com Telegraph.uk Yahoo.com
Copy