The publication of the latest annual report from BP on the future of energy lays bare just why the company is so keen to transition away from fossil fuels.
“Its economists don’t have a crystal ball but it is striking to see them predict that oil demand may already have peaked.
“Essentially the argument seems to be that Covid-19 has accelerated trends that were already in motion – in this case a shift away from oil and gas due to mounting environmental concerns among the public, politicians and investors.
“The argument in favour of BP and other big oil companies being the ones to lead the energy transition is that they are probably the best custodians of existing oil assets and that they have transferable expertise which can be applied to other, cleaner forms of energy.
“BP’s recently-announced $1.1 billion investment in offshore wind assets in the US was the latest step in reshaping its portfolio but the company’s investor event this week is likely to see the credibility of its 2050 carbon neutral target tested.
“Having announced such an ambitious goal at the outset of his tenure the pressure will be on chief executive Bernard Looney to flesh out his plans.
“He still needs to balance the need to move in a greener direction with the fact that many investors still hold the shares for their (albeit reduced) dividends which are underpinned by cash flow from the oil and gas business.”