Underinvestment in oil and gas exploration could have “serious implications” for financial instability as constrained supply could lead to price rises.
That’s the view of BP Chief Executive Bob Dudley, who believes oil and gas divestment could also lead to a slowing of global economic growth.
He said campaigners calling for financial organisations to divest from oil and gas companies to avoid so-called ‘stranded assets’ are “underestimating the international oil companies’ flexibility to reshape their businesses”.
While they are driven by “good intentions”, he is concerned it could threaten energy security, particularly for some of the most vulnerable people in the world.
Mr Dudley said continued investment in oil and gas is essential to meeting the dual challenge of providing people with more energy globally while “drastically” lowering carbon emissions and helping meet the Paris climate goals.
Outlining flaws in the divestment argument, he added: “It underestimates the continuing contribution needed from oil and gas in the low carbon energy transition. BP sees remarkable growth in the renewable energy sector, as shown by a string of recent investments, with positive estimates suggesting renewables could meet a third of energy demand by 2040. That would still leave other fuels, including oil and gas, making up the remaining two-thirds.
“Although their share of the fuel mix would fall proportionally from today, there would still be substantial amounts of oil and gas in absolute terms.”
However, the BP chief believes the energy system, including oil and gas, must change and the company is investment in renewables such as solar, wind, bioenergy and technologies enabling vehicle electrification as well as batteries.
The energy giant is also working as part of the Oil and Gas Climate Initiative (OGCI) to develop carbon capture, use and storage (CCUS) and reduce methane emissions by 0.20% by 2025.
Mr Dudley went on: “I’m confident our industry can continue to help power the world, lift people out of poverty and keep society advancing – while, at the same time, contribute to dramatically reducing emissions to meet the Paris goals.
“So long as we choose the path of collaboration and innovation over the path of division and exclusion, both our industry and the world have a great future ahead.”
Can businesses make the low carbon world work for them? SSE will discuss this among many other topics at the Energy Live Expo event on 31st October in London.
To book your place (free if you are an end user), you can e-mail [email protected].