AUS
NZ
UK
CA
USA
IND
Summary
- Investors have questioned BP championing of gas, saying that it may be at odds with the oil major’s promise to support the Paris Agreement.
- Analysts have said that since there is no clear-cut blueprint for what the Paris agreement-aligned actually implied, there was not much of a problem with the BP response.
- Natural gas produces roughly 50 per cent of the carbon dioxide emissions of coal when burned in power plants.
Oil company BP Plc (LON: BP.) is lobbying with the European Union to support natural gas. It recently said that it supported the EU’s climate goals and that natural gas was an enabler for a transition away from coal.
However, the investors have questioned BP championing gas, saying that it may be at odds with the oil major’s promise to support the Paris Agreement. The firm has committed lowering its net emissions to zero by 2050. It had also pledged to align its lobbying activities to support its net-zero carbon policies.
Also Read: Lens on BP Plc and Powerhouse Energy Amid Divergent Climate Change Developments
What’s the rift?
Natasha Landell-Mills, Head - Stewardship, Sarasin and Partners, an asset management firm, said that if BP’s capital expenditure was bending towards complete decarbonisation by the year 2050, then all of the firm’s lobbying should have been aligned with this objective. However, the fact that the firm seems to be pushing the other way looks like an issue.
At the same time, few other analysts have also said that since there is no clear-cut blueprint for what the Paris-alignment actually implied, there was not much of a problem with the BP response.
The wider European dispute is regarding the role of natural gas in the transition to a lower-carbon world. While some nations like Poland, Hungary and the Czech Republic are lobbying to mark gas plants as sustainable, others like Denmark, Spain, Ireland and Brussels are against the move.
The Paris Agreement
The Agreement had targeted to limit global warming to 1.5 degrees Celsius. The EU, on its part, wishes to totally eliminate its net greenhouse gas emissions by the year 2050 with the role of gas dependent on factors like the volume of emissions that could be stored for future and fixing up methane leakage from the infrastructure.
Industry experts have claimed that unabated gas, without carbon capture and storage, is not a part of any key sustainable investment and that the rules should reflect the proper climate science. As a matter of fact, natural gas produces roughly 50 per cent of the carbon dioxide emissions of coal when burned in power plants. However, the natural gas infrastructure is also associated with the emissions of methane.
Experts add that while no one can deny that gas can help the transition to a net zero future, however, it may not imply that it is also Paris Agreement compliant.
Stock performance
The company’s share price was hovering at GBX 314.30, up 0.21 per cent at 2.47 PM today. It’s market capitalisation stood at £63.64 billion.
Last month the company had updated on its progress towards its net debt target, saying that it expected to reach its US$ 35 billion net debt target during the first quarter of 2021.
Also Read: BP Plc Reports Q1 Profit Of $4.7 Bn, Announces $500-Mn Share Buyback
