BP is expected to abandon its target of significantly increasing renewable energy generation by 2030 as it shifts its focus back to fossil fuels, according to reports ahead of its strategy presentation to investors this week.
BP’s chief executive, Murray Auchincloss, is reportedly set to inform shareholders that the company will no longer pursue its goal of expanding renewable energy generation from 2019 levels to 50 gigawatts by 2030—a 20-fold increase—according to Reuters.
Additionally, BP is expected to drop its previous target of reaching $49 billion (£38.8 billion) in underlying profits this year. Instead, it will likely set an annual percentage growth target. The company had already hinted at this change in a recent call with analysts after failing to meet its 2024 profit target of $40.9 billion.
At its investor day in London on Wednesday, BP is expected to announce plans to sell off assets and cut other low-carbon investments in an effort to reduce debt and boost returns, following growing pressure from shareholders.
Investor Concerns and Share Performance
BP’s stock has underperformed compared to its rivals in recent years, leading to increasing concerns among investors about the direction of the 120-year-old company. Over the past two years, BP’s market value has declined by nearly 25%.
Two weeks ago, Auchincloss pledged to “fundamentally reset” BP’s strategy after the company reported a steep decline in 2024 profits, which fell from $14 billion in 2023 to $8.9 billion.
This announcement followed reports that Elliott Management, a major activist investor, had acquired a substantial stake of approximately 5% in BP.
BP Company
The New York-based hedge fund is expected to use its position as a key shareholder to push for significant changes, including potential boardroom shake-ups and even the possible breakup of the company.
Shift Away from Climate Targets
BP had already begun scaling back its target for reducing oil and gas production, which was originally set by Auchincloss’s predecessor, Bernard Looney.
When BP last updated its long-term strategy in 2020, it aimed to cut oil and gas output by 40% by the end of the decade. However, in 2023, it revised that goal to a 25% reduction. Further revisions to this target are expected on Wednesday.
BP declined to comment on these reports, dismissing them as speculation ahead of its investor day. The event, originally scheduled for February 11 in New York, was postponed and relocated to London as Auchincloss recovers from a medical procedure.
Industry Trends and Policy Shifts
BP is not the only energy company returning its focus to oil and gas. Shell and other major players have also shifted their priorities in pursuit of higher returns, particularly as fossil fuel prices rebounded from their pandemic-era lows and following Russia’s full-scale invasion of Ukraine three years ago.
The broader investor landscape has also evolved, especially with the re-election of U.S. President Donald Trump, who has been a strong proponent of fossil fuels.
Since taking over—first on an interim basis in September 2023—Auchincloss has scaled back BP’s investments in renewables and diluted the company’s climate commitments. He is also overseeing $2 billion in cost-cutting measures, which include eliminating thousands of jobs and reducing BP’s contractor workforce by 5%.
