Climate, Carbon and the Transition Bet

On 4 August 2020 BP set out the most ambitious transition plan any oil major had attempted. Bernard Looney, chief executive since February, had already announced an ambition to reach net zero by 2050. Now he put numbers on it. By 2030 BP would cut its oil and gas production by 40% from 2019 levels, about a million barrels of oil equivalent a day less; it would explore in no new countries; it would raise low-carbon investment tenfold, to about $5 billion a year; and it would own about 50 GW of net renewable generating capacity (company). It halved its dividend, to 5.25 cents a share a quarter. In June it had cut its long-term Brent assumption to about $55/bbl in 2020 dollars and written down about $13.5–17.5 billion after tax (reported). Brent was about $44/bbl. Oil demand had collapsed with the pandemic, and investors, lenders and governments in Europe were pressing the industry to plan for its own decline. BP argued that it could earn unlevered returns of 8–10% on renewables, and that its trading arm and customers would add more (company target, reported).

Five years later the plan was gone. In February 2023, with Brent near $80–85/bbl after Russia's invasion and record industry profits in 2022, BP softened the production cut to about 25% and raised upstream spending. Looney resigned on 12 September 2023 over undisclosed personal relationships with colleagues. BP's shares fell behind Shell's, low-carbon returns came in below oil and gas, and in early February 2025 Elliott Management was reported to hold about 5% of the company. On 26 February 2025 BP announced a "fundamental reset": upstream investment would rise to about $10 billion a year, transition investment would fall to about $1.5–2 billion, more than $5 billion a year below the previous plan, production would be 2.3–2.5 million boe/d in 2030 with room to grow to 2035, and about $20 billion of assets would be sold by the end of 2027 (company, reported). The sales included 65% of Castrol to Stonepeak at about $10.1 billion of enterprise value. Albert Manifold became chair on 1 October 2025; Murray Auchincloss, Looney's successor, left in December; BP suspended buybacks in February 2026; and Meg O'Neill, previously head of Woodside, became chief executive in April 2026.

ExxonMobil had made the opposite bet and been punished for it first. It reported its first annual loss in decades for 2020, about $20 billion of after-tax impairments in the fourth quarter, mostly on gas assets, and borrowed about $20 billion more to keep paying its dividend; on 31 August 2020 it was removed from the Dow Jones Industrial Average (reported). On 26 May 2021 a newly founded activist fund, Engine No. 1, which owned about 0.02% of its shares, won three seats on its board, with the votes of pension funds and, decisively, the largest index funds (reported). The same day a court in The Hague ordered Shell to cut its net emissions, including those of its customers, by 45% by 2030 against 2019, and Chevron's shareholders voted on a proposal on customers' emissions. It looked like the end of the oil major as a growth business. In 2022 ExxonMobil earned about $55.7 billion, and in 2024 it bought Pioneer. The Hague Court of Appeal overturned the order against Shell on 12 November 2024, while holding that Shell had a duty to reduce emissions.