BP has called on governments to “press ahead” with commitments to tackle climate change even if they find their budgets under strain in the aftermath of the coronavirus pandemic.
Brian Gilvary, BP’s chief financial officer, said it was critical countries act with “the speed we need” to avert a catastrophic rise in global temperatures but that he feared they would be too focused on tackling the financial fallout from the crisis.
“We have got to do the energy transition — this isn’t an option,” Mr Gilvary told the FT Global Boardroom online conference.
“I fear that as countries rebuild their balance sheet we won’t press ahead with the pace that we have to if we’re going to hit the 2-degree scenario.”
The debate over a “green recovery” from the coronavirus pandemic has intensified in recent weeks, as policymakers grapple with the sharpest economic downturn in a generation.
Many believe the pandemic should serve as a warning over the fragility of the ecosystem, arguing stimulus programmes should be directed towards boosting alternative energy and other measures to reduce pollution.
Others see green investment slowing as cheaper energy becomes a necessity to recover from recession.
BP committed in early February to become a “net zero” emissions company and has since been joined by Royal Dutch Shell and France’s Total, despite the oil industry facing one of its gravest ever challenges. Oil prices have plummeted over the past three months as lockdowns across the globe slashed demand for fuel.
BP has cut spending and costs, issued debt and delayed projects but Mr Gilvary reiterated a pledge made by the company’s new chief executive, Bernard Looney, that the company is “absolutely committed to net zero and we will get to net zero by 2050”.
“With 85 per cent of our energy coming from hydrocarbons and the impact that we know that’s having based on 50 years worth of data, the energy transition has got to proceed,” Mr Gilvary said.
Energy analysts have questioned how BP will be able to maintain its large dividend, curb a giant debt pile that is among the largest in the sector and invest meaningfully in the energy transition with finances under strain. But Mr Gilvary said it was increasingly demanded by investors.
“ESG [environmental, social and governance] investing is only heading in one direction,” he said.
But Mr Gilvary added that the volatile nature of the oil market had only “reinforced the case for diversification” away from oil and gas.
The company still generates the bulk of its cash from its traditional oil and gas divisions but says it will spend more on renewables in the years to come and over time transform the business.