“We must make sure that the energy transition is both rapid and orderly,” Looney said. “It needs to be rapid because every year since Paris (climate agreement), the emissions have risen in the world with the exception of the pandemic.” If the transition is not orderly, he said, it would “impact the pace of the transition”.
Looney cited last year’s natural gas market shock when prices rose sevenfold, forcing people to spend a higher share of their disposable income on energy. “Normally, governments spend between 10 and 12% of their GDP on energy, but last year that number was 20%. And if that number is that high, that’s going to leave very little for investment in the transition,” he said.
High prices and tighter gas supply also pushed up consumption of cheaper but more polluting coal last year, the BP CEO said.
Looney also stressed the need to work with the hard-to-abate industries such as steel, cement and shipping. “We have to go where the emissions are,” he said, arguing that merely setting up solar and wind farms won’t help those sectors. BP has the operational and financial capability to set up new value chains for sustainable fuels for aviation and other industries, he said.BP plans to invest $55-65 billion this decade in energy transition, Looney said. In 2019, the company spent just 3% of its capital outside the oil and gas sector. The percentage has risen to 30% in three years and will increase to 50% by the end of the decade, he said.
