June 21, 2021 • 38 mins
Oil major BP has ambitions to cut its greenhouse gas emissions from its own operations, its oil & gas production, and the products it sells to net-zero by 2050. Also during that time the company plans to ramp up investment in non-oil and gas activities, like renewables, hydrogen, and carbon capture, utilization and storage (CCUS). Today, Switched On's Dana Perkins speaks with Giulia Chierchia, executive vice president of strategy and sustainability at BP about the energy transition from an energy company perspective.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I'm Dana Perkins, and you're listening Switched on the B
and F podcast. Today we have an external guest on
the show, Julia Kerkia, and she is the executive vice
president of Strategy and Sustainability at BP. She talks to
me today about the energy transition from an energy company perspective.
Last year, BP announced a net zero target for the company,
(00:21):
which was organized into five points net zero across BPS
operations on an absolute basis by twenty fifty or sooner.
Net zero on carbon in VP's oil and gas production
on an absolute basis by twenty fifty or sooner. A
fifty percent cut in the carbon intensity of products VP
cells by twenty or sooner, installation of methane measurement at
(00:43):
all of vps major oil and gas processing sites by
three and to reduce methane intensity of their operations by
and lastly, to increase the proportion of investment into non
oil and gas businesses over time. In order to accomplish
these aims, a few new teams were formed, including a
strategy and sustainability team that has led by Julia. So
(01:06):
today we speak with Julia about BP and why she
thinks they are well positioned to achieve this important target,
her views on some of the most discussed technologies in
the energy transition, and a little bit about her and
how she came to find herself last year in this
newly formed role. B and e F research on the
energy transition can be found on the Bloomberg terminal at
(01:26):
benof go, on b NF dot com or the BENF
mobile app. As a quick reminder, we do not provide
investment of strategy advice, and you can hear a more
complete disclaimer at the end of the show. And now
let's speak with Julia about the energy transition. Julia, thank
(01:46):
you so much. It's really good to have you on
the show today to talk about the future of the
energy transition and oil and gas industry. Thank you very
much for having me. It's a pleasure to be here.
I'd love to start with your story and what original
drew you into the oil and gas industry, and then
how you ended up at BP, because you've spent most
of your career working in the consulting with a number
(02:09):
of different stakeholders. So let's start maybe by telling you
a little bit more about myself and how I actually
ended up joining BP. So I think there's like redefining
things in my life. I think the first one is
I'm half a town in half Belgium, grew up from
London and then we moved to Italy from then Spain
(02:30):
bustl Spain. So I think change is really something which
is ingrained in my d NA since I was a child.
The second thing I would say is, yeah, I had
a pretty strong role model and my father who always
told me to not confirm with my comfort zone, and
so challenge is also something that has always been in
my DEA. And the fat thing is I have too
(02:52):
little children thirteen year old natenniar old who are actually
quite demanding in their questions on the energy transition. And
I remember this if I moment when I was working
in McKinsey where we're looking at potential temperature pathways linked
to a potential energy transition paths and there was this
businessess usual case which took us to a pathway of
(03:12):
more than three degrees by and I literally thought, well
twenty six, my children will be in their fifties. And
so I think that has actually contributed over time to
build this significant sense of purpose. And yeah, I spent
fifteen years in McKinsey. I left the firm as a
senior partner. I was leading the global downtre more than
(03:34):
gas practice, working quite extensively with clients to actually shape
energy transition. And I loved it, and I think I
learned a lot of around how do you actually structure
complex topics. But when VP approached me end of twenty
nineteen and Bernard approached me, I jumped on it, and
you know, talk about and I I said, I like change.
(03:55):
There was a brutal change, and there was even more
of a change because then COVID actually hit immediately after
me joining, you know, and then I views one of
the biggest challenges that one can think about in terms
of our generation and probably the next generation to come.
And I was a huge privilege in terms of sense
of purpose to actually have the ability to help contribute
(04:18):
to shaping the PAS gen journey through the energy transition.
So yeah, those are the reasons why I decided to
join the oil and gas industry and then VP very specifically,
I was immediately bought into the new purpose re imagined
energy for people on the planet, which was at the
time being shaped the ambition. And then as I was
(04:39):
talking to the two the leadership team, just that the
buying from everybody on the willingness to actually embark on
this What is it about BP that you think differentiates
them in this space, and that it's it's quite progressive
to say that you're that you think that an oil
and gas firm is the exact right place to be
(04:59):
in looking at decarbonization and the energy transition. I actually
think that if we want to play a critical role
getting to the Paris Alignment and decarbonizing energy systems, we
need to work with energy companies. I think that's the
first element, which is you can't just decarbonize energy systems
(05:19):
by working with green companies. But if we really want
to get to the Paris Alignment, we need to actually
support companies such as OURS, which you know, energy plus
industry plus transport represents so many percent of global emissions.
So we need to really work with companies such as
BP and other willing gas companies to actually help them
decarbonize and go along that journey. So I don't see
(05:43):
joining your company such as VP and annointing gas company
which is committed to actually decarbonizing as a progressive journey.
I think it's actually very much aligned towards the ambition
and the purpose in terms of what is unique about VP.
When I actually had my first conversations with Bernard at
the time when I was actually considering joining, Bernard had
(06:06):
already embarked on a series of multiple conversations with multiple
types of stakeholders, from institutional stakeholders e g. Government stakeholders,
with investors across the world, and with you know less
hope your stakeholders such as NGOs and some of the
most challenging in GEO. So there was a whole process
(06:29):
of listening which was going on, and that process of
listening actually very much shaped his perspective and also the
lt S perspective, the leadership team's perspective. So what I
was actually struck by was the super strong alignment within
the whole leadership team and within the company itself on
this ambition to transition. You know, at the end of
(06:52):
the day, if you're actually working in an oil and
gas company and you're delivering energy to the world, you
also want to feel good about what you're doing. And
in equivocably, we are delivering energy to the world, and
in the frame of the energy transition, we have the
capabilities and the skills to continue doing so through the
energy transition and UH and towards the low Carbonwell, what
(07:14):
sort of things have been done in order to drive
a culture shift within the organization and to really rally
around the net zero target or did it just really
happen very organically at all levels of the business. Well,
I think there were several initiatives, right. It all started
with the announcement when Bernard started on February twelve of
the new purpose like re imagine energy for people on
(07:36):
the planet, the ambition and the aims the net the
reins that was thereafter, if you wish, underpinned by the
strategy which was actually announced on August fourth and then
detailed in September. It was also accompanied by a full
reorganization of BP, which we call reinvent BP, which is
(07:57):
really targeted towards moving away from the upstream downstream model
to an organizational model which aligns to the energy transition.
Right with business lines which are production and operations. Were
focused on our hydrocarbons businesses. Business line on gas and
low common which is really the growth engine in terms
(08:18):
of low carbon customers and products, which is really focusing
on the growth engine around customers and then you know
enablers in terms of trading in terms of digital and
region cities and solutions or integrators as we call them.
What that did was it really reframe the organization towards
alignment with the strategy. So it was really all the
(08:40):
building blocks that came together in terms of ambition, in
terms of integrated strategy, in terms of organization supporting it,
and then a lot of communication around cascading the story
and implications for all of the different people in the organization.
So if you are in production and operations business, yes
we might be in the world worth was we are
(09:03):
reducing production by but you are literally funding the energy transition.
So it really is a game of and we need
you to deliver today to be able to actually transition
the company. So you have a fundamental role to play.
At the same time, the growth engines need to deliver.
So we really did an exercise of cascading if that
(09:23):
strategy into what does it mean for the different parts
of the organization. So about a decade ago, BP was
really pushing the limits in terms of a focus on
sustainability with the Beyond Petroleum kind of ambitions and campaign,
and since then specifically focusing on kind of the renewable
assets that PP had. Many of them were sold off
(09:45):
and we went through this period where that was really
not a favorable part of the industry for the business
to be in. Now it seems like there's a look
at renewables again. And my question in this really is
do you think that in order for an oil and
gas for him to transition into an energy company, do
you think that a large percentage of the revenues can
(10:07):
actually come from renewables or is that not the right
way to look at how the company is going to
look to change and grow and diversify. There is no
one size, fit soul strategy in terms of oil and
gas companies decarbonizing. We've seen companies, for example, in the US,
actually focusing very heavily on carbon capture. We've seen other
(10:29):
companies actually focusing more heavily on retail power to consumers.
Our answer is one where we do see low carbon
technologies altogether having to play a critical role in the
energy transition. And I'm talking about really multiple technologies coming
to play. So we have technologies which today, like renewables,
(10:51):
are proven and are extremely cost competitive, and the challenge
is one of how do you accelerate the deployment of
those technologies and rollouts, which talking about moving from one
hundred and fifty gigawatts of added capacity in the recent
years to something like three hundred and fifty or five
hundred and fifty and a well below two debrecent erra
on one point five degresoner. We have other technologies that
(11:14):
are proven but need to be scaled up, and this
is for example, hydrogen or carbon capture. We have technologies
which are more at a pilot level but might have
a very critical role to play, for example in the
carbonizing aviation, such as synthetic fuels or refuels, and then
they still have fossil fuels of having to actually bridge
(11:35):
the energy transition and in particular, as an example, gas
having to provide that firm capacity as renewables come in.
So we don't see this as do you need to
invest in renewables to the sake of renewables. I think
it really is a multi technology strategy where one of
the critical advantages that are companies such as US can
actually bring is the integration of all those different technologies
(11:59):
to provide firm capacity in terms of energy and low
corbon energy. So I don't think this is a renewables
only play, but we definitely see in a world where
renewables actually get to accounts to proximately sixty of power
generation by renewables have a critical role to play, and
(12:19):
they can integrate into hydrogen, they can integrate with gas
to provide that firm capacity. So it's really around that
integration and which these technologies that are still I mean
you're mentioning hydrogen and ccs and synthetic fuels, I mean
very much on the edge in that they're quite expensive
to deploy at this point in time. Which of these
did you say you're most excited about and why From
(12:41):
a technology standpoint, I'm really excited about this notion of
multiple technologies and the integration across multiple technologies because if
you think about it, you know, with renewable penetration increasing significantly,
you have a challenge in terms of how do I
provide flexibility and stability to assist and batteries can provide
(13:01):
it intra day, I need gas to back that or
hydrogen as it actually acceleerates to provide the flexible capacity.
So it's really the first thing ANCE is really excited
about the integration of those technologies. We are therefore so
extremely excited about the renewable acceleration. We are very excited
about hydrogen as a potential technology. Hydrogen could, as I
(13:26):
was saying, get to account for approximately of primary energy
in twenty fifty. We're talking about increasing from seventy million
tons per annum today in terms of hydrogen production to
potentially in a one point five degree scenario six hundred
or north of six hundred and fifty. And that will
have to be clean, be it blue or be it green.
(13:48):
So I think that is an area in which we
are very excited. We see obviously a need to abate
the cost of hydrogen as we look towards twenty thirties
in a world where today blue hydrogen is more expensive
than gray hydrogen and green hydrogen is more expective than blue,
and we expected to be the case for until probably
(14:10):
limit the early thirties. So we will require support to
accelerate hydrogen. But we think hydrogen will be a critical
element to decarbonize hard to eight sectors. In that same line,
I think CCS has a critical role to play. We
see five point five gigatons of c O two emissions
(14:30):
of c O two to be captured through CCS and
and at zero scenario d I a just release a
scenario which talks to seven point six gigatons of c
O two and then at zero scenario. So CCS we
think has a critical role to play, and it also
allows to actually half the cost of the energy transition
(14:51):
as we try to align with the Paris Agreement. And
it obviously has a critical role to play in terms
of blue hydrogen. I think other technologies such as sim
fuels E fields have a role to play. They are
less mature and need to be proven if you wish,
in terms of in terms of adoption, and I think
they will take a bit longer in terms of adoption.
So looking at these technologies, you did mention that some
(15:13):
of them some forms of hydrogen or more expensive than
others and even more more still, so this requires investment
and reinvestment into the business and into technologies and R
and D. What has been the reception by the investment
community and really those shareholders looking at BP saying you know,
maybe I'm not getting the same dividend payments that I
was getting in the past, and you know, yeah, really,
(15:35):
what has been the response regarding bps net zero future.
So I think the response has been very positive. It's
been very positive across eholders, so it's been very positive
for our own employees who very much embarked on the
new purpose and the new strategy. It's been very positive
if you think about external stakeholders and end us, and
(15:58):
I think in terms of investors, we had a very
positive response on the strategic direction and at the same
time and acknowledgements that the focus now is very much
an execution and I think that's what we've been focused on.
And the dialogue with investors is very much one of
ongoing dialogue with individual investors such as well as UM
(16:20):
you know, Climate Action one hundred plus and yeah, just
continuing to show those proof points, continuing to drive transparency
and to some extent help our investors come with us
on the journey. And this is also the reason why
this year we've actually changed our disclosures to actually align
also are disclosures to the new strategy, so that we
(16:41):
can actually help investors understand the value in the different
elements of the strategy. Well, and this might be dry
for many people, but really if you're looking at this,
the different frameworks are important, and the disclosure element is
how you communicate with the investment community. I really want
to know which frameworks you find to be most of
lable and really give the most accurate view of what's
(17:03):
actually happening. It is indeed an area in which we
see quite a multitude of initiatives. So I think when
when you try to answer that question, the way we
actually tack on it is what are we trying to
achieve in terms of in terms of disclosures and metrics
we try to answer that question. I think the first
element is very much transparency, so that we can create
understanding for the investors not only of the risks associated
(17:26):
with a potential company and its transition strategy, but also
the opportunities it actually is exposed to, as well as
comparability across companies. So if those are the two objectives,
then you get into okay, so what do those disclosures
actually need to have? And I think they need to
be simple, yet not too simple, because I do acknowledge
(17:46):
that only in gas industry has a very complex value
chain and there is a risk of ultra simplification, and
they need to be as much as possible standardized. And
so when we look at disclosures. We very much favor
disclosures which obviously have a very strong element on in
terms of carbon and by common we definitely include scope
(18:06):
PREE because in our industry very specifically it represents eight
total emissions and forward looking carbon metrics, so not only
in terms of your own track record and position today,
but you know what are you actually himing to or
targeting too. We're looking for disclosures which include financial lead
indicators which give an indication of how you're actually aiming
(18:29):
to transition the company, such as, for instance, what's your
share of topics into low carbon versus Orno gas. And
we're looking for disclosures which actually also allow us to
showcase some of the qualitative elements such as governance, board composition, incentives,
efforts in terms of advocacy, so we're collaborating with many
(18:51):
different initiatives. I would call out TCFD, I would call
out obviously SASPY, the I I G C C SO
nanzero standard for Ordan gas companies, which we've worked very
extensively with to try and actually shape what those forward
looking metrics could actually apply for, in particular for the
oorin gas industry, and this year we will start also
(19:12):
disclosing along CDP. So disclosure speaks to everyone in the
community is really looking to better understand what's actually going
on in terms of how you're going to get there
and and where you are in the process. And you know,
when I was asking about the traditional investors who maybe
aren't keen on reinvestment, there's the other side, there's the
E s G investors who are or even a step further,
(19:34):
the activist investors. And we've seen this recently with Excen
where they ended up giving multiple board seats after substantial
pressure from activist investors to take it a step further.
And what areas are you getting pressure from E s
G investors to do more that you know you think
might be an interesting place to discover in the future
(19:54):
that maybe BP is not yet ready for. We are
very much engaging with s G investors and non E
s G investors by the way, as we navigate through
the energy transition, and I would say the dialogue is
a very rich dialogue which has also allowed us to
progress and progress together with our investors. So as an example,
(20:18):
in ten we actually got a joint resolution with Climate
Action one hundred plus, which was a resolution on precisely
disclosures and transparency. So I think that engagement is actually
extremely helpful because we value the challenge, right, We value
the challenge and the ability to actually, you know, take
a step back, think through do we have all the
(20:39):
elements embedded within what we're aiming to do. And it
was very much at the core towards one the new ambition,
the net zero aims, as well as a strategy that
we actually announced. So we're actually very much looking forward
to continue that engagement with individual investors as well as
with organizations such as Climate Action one hundred PLUSS as
we continue to execute on the strategy. Now for a
(21:00):
very short break, stay with us, So switching tracks a
little bit. We started off talking about you and then
we went straight into the business. Let's go back to
you and your role within the business. And clearly you
know a lot in regard to you have a lot
to say, that's the right way to phrase it. You
have a lot to say in regard to the different
(21:21):
frameworks the company is looking at in your strategy. And
you're in a role that is new for VP, is
it not, And could you talk to us a little
bit about what that role was designed to accomplish and
and how you see it fitting within the organization. It
is indeed a new role and a new organization. It
was created within the frame of the reorganization of BP
(21:43):
is one of the integrators and what we did create
that role. The role is basically the strategy and sustainability
organization of the group. Is we very much concentrated within
that organization, the group strategy, so we no longer really
have beyond operational strategy of strategy teams within the different
businesses and the same is true for sustainability. So we
(22:06):
were aiming for two things. I think the first thing
was really to bring together strategy and sustainability and policy
living to that. The reason being that as we navigate
through the energy transition and by the way, even more
after and the COVID pandemic, the two are very much
coming together and a sustainable strategy as a strategy which
(22:29):
is resilient for the future. So the first objective was
to bring the two together. The second one was very
much one of actually creating this central BP Strategy and
Sustainability team which would actually basically help the different businesses
and organizations to craft the strategy which would actually take
us through the energy transition and deliver on the aims
(22:51):
which were announced by Bernard. Really optimizing for the group
was breaking a little bit of maybe the upstream downstream
silo that could have been present in the past. So
it's really an organization which is focused on working with
all the different businesses and obviously finance and the and
the functions to actually craft what's the optimal path. And
(23:16):
that optimal path is really an optimal path in terms
of delivering on the aims, the purpose and the ambition,
but also delivering a performance today and our shareholder investor
value proposition. So you joined, then there was a global pandemic,
and how has that changed how you are getting your
(23:36):
job done and maybe even just the scope of the role,
because surely you know the things that you were setting
out initially to do have in some way it's probably
been modified by this. I joined, indeed, and then the
global pandemic hit, and you know, what I thought was
made a pretty interesting challenge became even more of a
challenge because creating an organization and the strategy when you're
(24:00):
working remotely and you do not know necessarily the team
is not something which is the easiest task that one
could actually lay out. It is actually quite incredible how
the organization of raw has adapted to the remote working
and how incredibly efficient we have been in terms of
actually really moving into virtual and driving the reorganization design
(24:25):
and driving the strategy. I think what we've done through
the pandemic is actually the detailed design of the organization
and that has slightly morphed as we were going through
the detailed design, but it would have been the same
vel without pandemic. I think what the pandemic actually did
do is that through the pandemic, I think we have
(24:46):
witnessed an acceleration at these in terms of momentum and
intense in terms of energy transition. And so what the
pandemic had it actually done is it has one confirmed
the strategy that we were shaping, and two helps us
on board the organization on the strategy and on the
need to actually re reorganize along the new structure. So
(25:09):
it sounds like you're actually fairly hopeful, and recently we
looked well. So some forecasts are showing that we may
reach that one point five degree C before pre industrial
levels that that International Planel on Climate Change really put.
Is this line in the sand regarding where that we
think we're going to start to see some more catastrophic
responses to climate Where do you have reasons to be
(25:33):
hopeful within the oil and gas industry that we may
be able to, you know, limit climate change to one
point five C when it looks like that year is
very very near. I think the challenge is indeed very big.
At the same time, I am hopeful, and I'm hopeful
(25:53):
for several reasons. I'm hopeful, first of all, because I
think the world is accelerating. It's celerating in terms of
definitely society towards the energy transition, it is accelerating towards
in terms of regulatory frameworks, policy frameworks. I mean, let's
not you know, needless to mention the new new US
(26:14):
screen deal, the UK Turndpoint Plan, the EU production ambition,
and by twenty thirty China's common Neutrality. By the recent
announcements on call, so I think altogether we are seeing
an acceleration. We also seeing in acceleration as we discussed
(26:35):
in terms of investor focus on the energy transition, and
we're seeing an acceleration in terms of companies. I think
we saw one five hundred new companies commit to net zero.
We are seeing quite some momentum. The other reason why
I'm hopeful is because I think we do have the
technologies right, and some of those technologies, as I was saying,
(26:56):
are really extremely competitive, such as renewables. Other need to
be proven at gale. I think the fab reason I
am actually hopeful is that we are seeing tremendous growth.
So if I look at the last ten years in
terms of renewable penetration, we saw an average of sixty
giga what's added in terms of at IT capacity. In
the last few years, we've already reached one hundred and
fifty gigo what's and yes we need to ramp that
(27:18):
up to more than three hundred and five hundred and
fifty in a well below two degrees or one point
five degrees scenario, but it is still significant acceleration. If
you look at CCS, I think there are twenty six
projects ongoing operating in terms of CCS, and in the
last three years there's been thirty announcements, so almost as
(27:38):
many announcements in the last three years as we have
projects operating to date. At the same time, it is
a challenging journey and I think a lot still needs
to happen from a regulatory and policy standpoint to enable
and accelerate the journey to mention a few We very
much believe in the need for global carbon economy system
(28:03):
which can actually accelerate the transition and in link to
that carbon border adjustment so that that actually becomes more
efficient and effective. We also need to have policy support
for hard to abate sectors as a transition, and that
can actually be either in the form of mandates or
other structures. But if you think about how to abate
sectors av agency of cement, we will need to have
(28:25):
support in terms of policy to make that happen. The
ecosystem will also need to support what we call greening
companies such as ours, as long as they're committed to transitioning,
both because we need those emissions to actually reduce, but
also just in terms of the sheer scale and size
to actually drive the investment into the alternatives. So the
(28:48):
VP is not alone. I mean the oil majors are
looking at this and then getting pressure from the investment community.
Let's so from the national oil companies that aren't getting
that external pressure. In what ways is BP working directly
with some of your competitors and other oil companies around
the world, whether they be oil majors, r n ocs,
(29:09):
on sharing best practices or trying to find a path
forward for these ambitions because to your point, the industry
is going to need to move not just to BP.
We are working indeed across companies to actually try to
enable the transition. And that's a different level. So if
I look at our fruts, clearly O g c I
(29:31):
plays a role. It plays a role in terms of
knowledge sharing and in particular around working among oil and
gas companies to really set the standards and the ambitions
in terms of how do you actually develop hydrocarbons business
which are really low emissions hydrocarbons business. So the o
g c I is an example, has invested with nineteen
(29:54):
investments into projects to reduce methane emissions and projects to
reduce carbon dioxide emissions, into projects to to actually also
look into accelerating technology such as CCS egen at zero
tea side and also setting some of the ambitions right
the methane intensity ambition of zero point to zero percent
is one example. So I think there is a collective
(30:18):
industry effort in terms of actually within that focus trying
to set those practices, standards and advanced solutions towards lower emissions.
So you mentioned methane, which I think is really interesting
because there's so much fixation on the carbon aspect that
methane has talked about so much less in many circles,
(30:38):
but maybe not as much within the oil and gas
base or the energy companies. Do you think that methane
should be talked about more as a potent greenhouse gas
or is the balance about right? I think there is
quite a lot of focus on methane at please within
the oilan gas industry and the energy sector. And yes,
it is definitely are the called topic that we need
(31:01):
to address, and it is one which we have actually
framed as one of our aims. So our aim for
within our net zero aims is very much around deploying
measurement in terms of methane in our operating sites by
twenty three and they're naming to actually half our methane intensity.
And this is actually something which is quite unique because
(31:22):
today methane emissions are calculated on an estimated basis, so
actually a shift from estimated basis to a measure the
basis is a very very strong commitment, but there is
significant collaboration within the industry. There is significant collaboration with
organizations such as e d F in terms of setting
the standards on methane and advocating for mefane regulation, and
(31:45):
I think there is quite a lot of also engagement
with regulators to support mefane regulation, both in Europe as
well as in a geography such as a US. One
potential strategy for a company in order to have their
company appear to be much more environmentally friendly is to
sell off their most polluting assets. What is to stop
companies from doing that? And where do you think there
(32:08):
is a place for leadership in trying to make sure
that that is you know, visible in the industry to
the investors. I think divestments is, as we've shared, one
of the critical elements actually of our strategy. The way
we actually look at divestments as one of the critical
elements of the strategy is that divestments basically helps in
(32:30):
our case, advanced the world towards that zero. And the
reason for it is we're actually divesting assets and we
are reinvesting the proceeds into creating a low carbons supply,
so it's not divestment for the sacred divestments, it's really
divestments and reinvestment into low carbon supply, and so that
(32:51):
actually advances the world in the energy transition in the
sense of actually bring in that capacity, that additional low
carbon capacity in solution online. And I think it also
enables bp TO itself to advance towards its Natzi ra
aim and position in the world, which is paris aligned
in the future. The world is very much evolving towards
(33:15):
increasing transparency on emissions. So I don't really think there
is a world where we can imagine that you know,
buyers of potential divested assets will not be put on
the you know, transparency requirements in terms of emissions reporting
and emissions progress. And while divestments do not take assets
(33:38):
out of a system in terms of aidin gas production,
I think it helps advance in the energy transition. I
think it's also fair to say that if you look
at scenarios and you look at a well below two
degree scenario or one point five degree scenario, he's still
having tent of the primary energy mix, which is actually
linked to point in gas. So we will need to
(34:02):
oil and gas production as we transition and the question
is is really one of who's abist owner for the
assets in the frame of the individual strategies. Well, and
then the other question is for how long? So you
have this zero target? But where do you think the
inflection points are? Because there has been some discussion around
the fact that emissions today are much more impactful than
(34:25):
emissions in three years, five years, ten years. Where do
you think the most important year is? Given that these
are industries that take a long time to turn and
to make these changes, so it can't be six months
from now. What do you think is the biggest inflection
point between now and we have very much shaped it
(34:46):
with a short term, medium term and long term aim
so very completely. You know, we have to look at
on net zero names. We have five ames which are
focused on getting BPT to net zero by sooner. Aim
one is very much around scope on and scope too
from our own operations. Aimed two as a carbon content
of our oil and gas production. Aim free is around
(35:08):
the intensity the carbon intensity of our marketing products. Aimed
for is a methane intensity, as we discussed and named
five as a lead indicator in terms of capets into
low carbon. For each of those we have set a target,
and we have set at twenty thirty am on the
way to the let's see your own for me in
(35:30):
terms of reassuring investors, in terms of and other stakeholders,
in terms of efforts and trajectories, but also just in
terms of actually informing strategies, because a lot of the
decisions that make today will be required to actually frame
where you're trying to actually head to towards twenty and
uh and towards. We believe that in that frame you
(35:51):
actually do need to have short term targets, medium term
as we described them as being ten years, twenty thirty games,
and then the longer term objective. And I think that's
now there's debate, but I think it actually aligns quite well.
Were for instance, when you look at some of the
potential initiatives, which are looking at a five year and
(36:12):
a fifteen tents of fifteen year confering. So it's impossible
to think about the future as a parent without thinking
about your kids. So you talked about your two young children.
I've got two of them as well. They've been probing,
they've been asking you very pointed questions you said around
the future and climate and in your role, what advice
have you given them regarding where they should be looking
(36:33):
in terms of, you know, maybe their future careers or
even education choices. Oh that's the tricky one. In full transparency,
my my children are actually looking into pretty different careers.
So one of them wants to be a criminologist, the
other one wants to be a doctor. It's very it's
actually pretty distant from anything loosely related to the energy
(36:55):
transition now, but I think they do indeed have pretty
probing questions. And the probing questions are literally around elements
such as what car are you driving and for the record,
I don't have a car, Or how is recycling we
do actually contributing as an oil and gas company, what
are you doing right in terms of energy transition? And
(37:15):
and that is actually fueled by both the personal interests,
but what they hear and what they actually also engage
on as activity at school. So I think that's another
reason to be hopeful, Dana, which is I think the
generations to follow are very very much focused in terms
of energy transition, but also more generally sustainability also linked
(37:38):
to just transition and other topics. I would certainly agree
with that. They definitely have grown up with this as
being a focus so a reason to be hopeful about
the future. Well, Julia, thank you very much for sharing
your vision for the future and what's going on at
BP and then your personal journey with us here today.
Thank you very much for having me Dana. Today's episode
(38:04):
of Switched On was edited by Rex Warner with Grace
Stoke Media. Bloomberg Any App is a service provided by
Bloomberg Finance LP and its affiliate. This recording does not constitute,
nor should it be construed as investment advice, investment recommendations,
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Bloomberg an e F should not be considered as information
sufficient upon which to base an investment decision. Neither Bloomberg
(38:25):
Finance LP nor any of its affiliates makes any representation
or warranty as to the accuracy or completeness of the
information contained in this recording, and any liability as a
result of this recording is expressly
I'm Dana Perkins, and you're listening Switched on the B
and F podcast. Today we have an external guest on
the show, Julia Kerkia, and she is the executive vice
president of Strategy and Sustainability at BP. She talks to
me today about the energy transition from an energy company perspective.
Last year, BP announced a net zero target for the company,
(00:21):
which was organized into five points net zero across BPS
operations on an absolute basis by twenty fifty or sooner.
Net zero on carbon in VP's oil and gas production
on an absolute basis by twenty fifty or sooner. A
fifty percent cut in the carbon intensity of products VP
cells by twenty or sooner, installation of methane measurement at
(00:43):
all of vps major oil and gas processing sites by
three and to reduce methane intensity of their operations by
and lastly, to increase the proportion of investment into non
oil and gas businesses over time. In order to accomplish
these aims, a few new teams were formed, including a
strategy and sustainability team that has led by Julia. So
(01:06):
today we speak with Julia about BP and why she
thinks they are well positioned to achieve this important target,
her views on some of the most discussed technologies in
the energy transition, and a little bit about her and
how she came to find herself last year in this
newly formed role. B and e F research on the
energy transition can be found on the Bloomberg terminal at
(01:26):
benof go, on b NF dot com or the BENF
mobile app. As a quick reminder, we do not provide
investment of strategy advice, and you can hear a more
complete disclaimer at the end of the show. And now
let's speak with Julia about the energy transition. Julia, thank
(01:46):
you so much. It's really good to have you on
the show today to talk about the future of the
energy transition and oil and gas industry. Thank you very
much for having me. It's a pleasure to be here.
I'd love to start with your story and what original
drew you into the oil and gas industry, and then
how you ended up at BP, because you've spent most
of your career working in the consulting with a number
(02:09):
of different stakeholders. So let's start maybe by telling you
a little bit more about myself and how I actually
ended up joining BP. So I think there's like redefining
things in my life. I think the first one is
I'm half a town in half Belgium, grew up from
London and then we moved to Italy from then Spain
(02:30):
bustl Spain. So I think change is really something which
is ingrained in my d NA since I was a child.
The second thing I would say is, yeah, I had
a pretty strong role model and my father who always
told me to not confirm with my comfort zone, and
so challenge is also something that has always been in
my DEA. And the fat thing is I have too
(02:52):
little children thirteen year old natenniar old who are actually
quite demanding in their questions on the energy transition. And
I remember this if I moment when I was working
in McKinsey where we're looking at potential temperature pathways linked
to a potential energy transition paths and there was this
businessess usual case which took us to a pathway of
(03:12):
more than three degrees by and I literally thought, well
twenty six, my children will be in their fifties. And
so I think that has actually contributed over time to
build this significant sense of purpose. And yeah, I spent
fifteen years in McKinsey. I left the firm as a
senior partner. I was leading the global downtre more than
(03:34):
gas practice, working quite extensively with clients to actually shape
energy transition. And I loved it, and I think I
learned a lot of around how do you actually structure
complex topics. But when VP approached me end of twenty
nineteen and Bernard approached me, I jumped on it, and
you know, talk about and I I said, I like change.
(03:55):
There was a brutal change, and there was even more
of a change because then COVID actually hit immediately after
me joining, you know, and then I views one of
the biggest challenges that one can think about in terms
of our generation and probably the next generation to come.
And I was a huge privilege in terms of sense
of purpose to actually have the ability to help contribute
(04:18):
to shaping the PAS gen journey through the energy transition.
So yeah, those are the reasons why I decided to
join the oil and gas industry and then VP very specifically,
I was immediately bought into the new purpose re imagined
energy for people on the planet, which was at the
time being shaped the ambition. And then as I was
(04:39):
talking to the two the leadership team, just that the
buying from everybody on the willingness to actually embark on
this What is it about BP that you think differentiates
them in this space, and that it's it's quite progressive
to say that you're that you think that an oil
and gas firm is the exact right place to be
(04:59):
in looking at decarbonization and the energy transition. I actually
think that if we want to play a critical role
getting to the Paris Alignment and decarbonizing energy systems, we
need to work with energy companies. I think that's the
first element, which is you can't just decarbonize energy systems
(05:19):
by working with green companies. But if we really want
to get to the Paris Alignment, we need to actually
support companies such as OURS, which you know, energy plus
industry plus transport represents so many percent of global emissions.
So we need to really work with companies such as
BP and other willing gas companies to actually help them
decarbonize and go along that journey. So I don't see
(05:43):
joining your company such as VP and annointing gas company
which is committed to actually decarbonizing as a progressive journey.
I think it's actually very much aligned towards the ambition
and the purpose in terms of what is unique about VP.
When I actually had my first conversations with Bernard at
the time when I was actually considering joining, Bernard had
(06:06):
already embarked on a series of multiple conversations with multiple
types of stakeholders, from institutional stakeholders e g. Government stakeholders,
with investors across the world, and with you know less
hope your stakeholders such as NGOs and some of the
most challenging in GEO. So there was a whole process
(06:29):
of listening which was going on, and that process of
listening actually very much shaped his perspective and also the
lt S perspective, the leadership team's perspective. So what I
was actually struck by was the super strong alignment within
the whole leadership team and within the company itself on
this ambition to transition. You know, at the end of
(06:52):
the day, if you're actually working in an oil and
gas company and you're delivering energy to the world, you
also want to feel good about what you're doing. And
in equivocably, we are delivering energy to the world, and
in the frame of the energy transition, we have the
capabilities and the skills to continue doing so through the
energy transition and UH and towards the low Carbonwell, what
(07:14):
sort of things have been done in order to drive
a culture shift within the organization and to really rally
around the net zero target or did it just really
happen very organically at all levels of the business. Well,
I think there were several initiatives, right. It all started
with the announcement when Bernard started on February twelve of
the new purpose like re imagine energy for people on
(07:36):
the planet, the ambition and the aims the net the
reins that was thereafter, if you wish, underpinned by the
strategy which was actually announced on August fourth and then
detailed in September. It was also accompanied by a full
reorganization of BP, which we call reinvent BP, which is
(07:57):
really targeted towards moving away from the upstream downstream model
to an organizational model which aligns to the energy transition.
Right with business lines which are production and operations. Were
focused on our hydrocarbons businesses. Business line on gas and
low common which is really the growth engine in terms
(08:18):
of low carbon customers and products, which is really focusing
on the growth engine around customers and then you know
enablers in terms of trading in terms of digital and
region cities and solutions or integrators as we call them.
What that did was it really reframe the organization towards
alignment with the strategy. So it was really all the
(08:40):
building blocks that came together in terms of ambition, in
terms of integrated strategy, in terms of organization supporting it,
and then a lot of communication around cascading the story
and implications for all of the different people in the organization.
So if you are in production and operations business, yes
we might be in the world worth was we are
(09:03):
reducing production by but you are literally funding the energy transition.
So it really is a game of and we need
you to deliver today to be able to actually transition
the company. So you have a fundamental role to play.
At the same time, the growth engines need to deliver.
So we really did an exercise of cascading if that
(09:23):
strategy into what does it mean for the different parts
of the organization. So about a decade ago, BP was
really pushing the limits in terms of a focus on
sustainability with the Beyond Petroleum kind of ambitions and campaign,
and since then specifically focusing on kind of the renewable
assets that PP had. Many of them were sold off
(09:45):
and we went through this period where that was really
not a favorable part of the industry for the business
to be in. Now it seems like there's a look
at renewables again. And my question in this really is
do you think that in order for an oil and
gas for him to transition into an energy company, do
you think that a large percentage of the revenues can
(10:07):
actually come from renewables or is that not the right
way to look at how the company is going to
look to change and grow and diversify. There is no
one size, fit soul strategy in terms of oil and
gas companies decarbonizing. We've seen companies, for example, in the US,
actually focusing very heavily on carbon capture. We've seen other
(10:29):
companies actually focusing more heavily on retail power to consumers.
Our answer is one where we do see low carbon
technologies altogether having to play a critical role in the
energy transition. And I'm talking about really multiple technologies coming
to play. So we have technologies which today, like renewables,
(10:51):
are proven and are extremely cost competitive, and the challenge
is one of how do you accelerate the deployment of
those technologies and rollouts, which talking about moving from one
hundred and fifty gigawatts of added capacity in the recent
years to something like three hundred and fifty or five
hundred and fifty and a well below two debrecent erra
on one point five degresoner. We have other technologies that
(11:14):
are proven but need to be scaled up, and this
is for example, hydrogen or carbon capture. We have technologies
which are more at a pilot level but might have
a very critical role to play, for example in the
carbonizing aviation, such as synthetic fuels or refuels, and then
they still have fossil fuels of having to actually bridge
(11:35):
the energy transition and in particular, as an example, gas
having to provide that firm capacity as renewables come in.
So we don't see this as do you need to
invest in renewables to the sake of renewables. I think
it really is a multi technology strategy where one of
the critical advantages that are companies such as US can
actually bring is the integration of all those different technologies
(11:59):
to provide firm capacity in terms of energy and low
corbon energy. So I don't think this is a renewables
only play, but we definitely see in a world where
renewables actually get to accounts to proximately sixty of power
generation by renewables have a critical role to play, and
(12:19):
they can integrate into hydrogen, they can integrate with gas
to provide that firm capacity. So it's really around that
integration and which these technologies that are still I mean
you're mentioning hydrogen and ccs and synthetic fuels, I mean
very much on the edge in that they're quite expensive
to deploy at this point in time. Which of these
did you say you're most excited about and why From
(12:41):
a technology standpoint, I'm really excited about this notion of
multiple technologies and the integration across multiple technologies because if
you think about it, you know, with renewable penetration increasing significantly,
you have a challenge in terms of how do I
provide flexibility and stability to assist and batteries can provide
(13:01):
it intra day, I need gas to back that or
hydrogen as it actually acceleerates to provide the flexible capacity.
So it's really the first thing ANCE is really excited
about the integration of those technologies. We are therefore so
extremely excited about the renewable acceleration. We are very excited
about hydrogen as a potential technology. Hydrogen could, as I
(13:26):
was saying, get to account for approximately of primary energy
in twenty fifty. We're talking about increasing from seventy million
tons per annum today in terms of hydrogen production to
potentially in a one point five degree scenario six hundred
or north of six hundred and fifty. And that will
have to be clean, be it blue or be it green.
(13:48):
So I think that is an area in which we
are very excited. We see obviously a need to abate
the cost of hydrogen as we look towards twenty thirties
in a world where today blue hydrogen is more expensive
than gray hydrogen and green hydrogen is more expective than blue,
and we expected to be the case for until probably
(14:10):
limit the early thirties. So we will require support to
accelerate hydrogen. But we think hydrogen will be a critical
element to decarbonize hard to eight sectors. In that same line,
I think CCS has a critical role to play. We
see five point five gigatons of c O two emissions
(14:30):
of c O two to be captured through CCS and
and at zero scenario d I a just release a
scenario which talks to seven point six gigatons of c
O two and then at zero scenario. So CCS we
think has a critical role to play, and it also
allows to actually half the cost of the energy transition
(14:51):
as we try to align with the Paris Agreement. And
it obviously has a critical role to play in terms
of blue hydrogen. I think other technologies such as sim
fuels E fields have a role to play. They are
less mature and need to be proven if you wish,
in terms of in terms of adoption, and I think
they will take a bit longer in terms of adoption.
So looking at these technologies, you did mention that some
(15:13):
of them some forms of hydrogen or more expensive than
others and even more more still, so this requires investment
and reinvestment into the business and into technologies and R
and D. What has been the reception by the investment
community and really those shareholders looking at BP saying you know,
maybe I'm not getting the same dividend payments that I
was getting in the past, and you know, yeah, really,
(15:35):
what has been the response regarding bps net zero future.
So I think the response has been very positive. It's
been very positive across eholders, so it's been very positive
for our own employees who very much embarked on the
new purpose and the new strategy. It's been very positive
if you think about external stakeholders and end us, and
(15:58):
I think in terms of investors, we had a very
positive response on the strategic direction and at the same
time and acknowledgements that the focus now is very much
an execution and I think that's what we've been focused on.
And the dialogue with investors is very much one of
ongoing dialogue with individual investors such as well as UM
(16:20):
you know, Climate Action one hundred plus and yeah, just
continuing to show those proof points, continuing to drive transparency
and to some extent help our investors come with us
on the journey. And this is also the reason why
this year we've actually changed our disclosures to actually align
also are disclosures to the new strategy, so that we
(16:41):
can actually help investors understand the value in the different
elements of the strategy. Well, and this might be dry
for many people, but really if you're looking at this,
the different frameworks are important, and the disclosure element is
how you communicate with the investment community. I really want
to know which frameworks you find to be most of
lable and really give the most accurate view of what's
(17:03):
actually happening. It is indeed an area in which we
see quite a multitude of initiatives. So I think when
when you try to answer that question, the way we
actually tack on it is what are we trying to
achieve in terms of in terms of disclosures and metrics
we try to answer that question. I think the first
element is very much transparency, so that we can create
understanding for the investors not only of the risks associated
(17:26):
with a potential company and its transition strategy, but also
the opportunities it actually is exposed to, as well as
comparability across companies. So if those are the two objectives,
then you get into okay, so what do those disclosures
actually need to have? And I think they need to
be simple, yet not too simple, because I do acknowledge
(17:46):
that only in gas industry has a very complex value
chain and there is a risk of ultra simplification, and
they need to be as much as possible standardized. And
so when we look at disclosures. We very much favor
disclosures which obviously have a very strong element on in
terms of carbon and by common we definitely include scope
(18:06):
PREE because in our industry very specifically it represents eight
total emissions and forward looking carbon metrics, so not only
in terms of your own track record and position today,
but you know what are you actually himing to or
targeting too. We're looking for disclosures which include financial lead
indicators which give an indication of how you're actually aiming
(18:29):
to transition the company, such as, for instance, what's your
share of topics into low carbon versus Orno gas. And
we're looking for disclosures which actually also allow us to
showcase some of the qualitative elements such as governance, board composition, incentives,
efforts in terms of advocacy, so we're collaborating with many
(18:51):
different initiatives. I would call out TCFD, I would call
out obviously SASPY, the I I G C C SO
nanzero standard for Ordan gas companies, which we've worked very
extensively with to try and actually shape what those forward
looking metrics could actually apply for, in particular for the
oorin gas industry, and this year we will start also
(19:12):
disclosing along CDP. So disclosure speaks to everyone in the
community is really looking to better understand what's actually going
on in terms of how you're going to get there
and and where you are in the process. And you know,
when I was asking about the traditional investors who maybe
aren't keen on reinvestment, there's the other side, there's the
E s G investors who are or even a step further,
(19:34):
the activist investors. And we've seen this recently with Excen
where they ended up giving multiple board seats after substantial
pressure from activist investors to take it a step further.
And what areas are you getting pressure from E s
G investors to do more that you know you think
might be an interesting place to discover in the future
(19:54):
that maybe BP is not yet ready for. We are
very much engaging with s G investors and non E
s G investors by the way, as we navigate through
the energy transition, and I would say the dialogue is
a very rich dialogue which has also allowed us to
progress and progress together with our investors. So as an example,
(20:18):
in ten we actually got a joint resolution with Climate
Action one hundred plus, which was a resolution on precisely
disclosures and transparency. So I think that engagement is actually
extremely helpful because we value the challenge, right, We value
the challenge and the ability to actually, you know, take
a step back, think through do we have all the
(20:39):
elements embedded within what we're aiming to do. And it
was very much at the core towards one the new ambition,
the net zero aims, as well as a strategy that
we actually announced. So we're actually very much looking forward
to continue that engagement with individual investors as well as
with organizations such as Climate Action one hundred PLUSS as
we continue to execute on the strategy. Now for a
(21:00):
very short break, stay with us, So switching tracks a
little bit. We started off talking about you and then
we went straight into the business. Let's go back to
you and your role within the business. And clearly you
know a lot in regard to you have a lot
to say, that's the right way to phrase it. You
have a lot to say in regard to the different
(21:21):
frameworks the company is looking at in your strategy. And
you're in a role that is new for VP, is
it not, And could you talk to us a little
bit about what that role was designed to accomplish and
and how you see it fitting within the organization. It
is indeed a new role and a new organization. It
was created within the frame of the reorganization of BP
(21:43):
is one of the integrators and what we did create
that role. The role is basically the strategy and sustainability
organization of the group. Is we very much concentrated within
that organization, the group strategy, so we no longer really
have beyond operational strategy of strategy teams within the different
businesses and the same is true for sustainability. So we
(22:06):
were aiming for two things. I think the first thing
was really to bring together strategy and sustainability and policy
living to that. The reason being that as we navigate
through the energy transition and by the way, even more
after and the COVID pandemic, the two are very much
coming together and a sustainable strategy as a strategy which
(22:29):
is resilient for the future. So the first objective was
to bring the two together. The second one was very
much one of actually creating this central BP Strategy and
Sustainability team which would actually basically help the different businesses
and organizations to craft the strategy which would actually take
us through the energy transition and deliver on the aims
(22:51):
which were announced by Bernard. Really optimizing for the group
was breaking a little bit of maybe the upstream downstream
silo that could have been present in the past. So
it's really an organization which is focused on working with
all the different businesses and obviously finance and the and
the functions to actually craft what's the optimal path. And
(23:16):
that optimal path is really an optimal path in terms
of delivering on the aims, the purpose and the ambition,
but also delivering a performance today and our shareholder investor
value proposition. So you joined, then there was a global pandemic,
and how has that changed how you are getting your
(23:36):
job done and maybe even just the scope of the role,
because surely you know the things that you were setting
out initially to do have in some way it's probably
been modified by this. I joined, indeed, and then the
global pandemic hit, and you know, what I thought was
made a pretty interesting challenge became even more of a
challenge because creating an organization and the strategy when you're
(24:00):
working remotely and you do not know necessarily the team
is not something which is the easiest task that one
could actually lay out. It is actually quite incredible how
the organization of raw has adapted to the remote working
and how incredibly efficient we have been in terms of
actually really moving into virtual and driving the reorganization design
(24:25):
and driving the strategy. I think what we've done through
the pandemic is actually the detailed design of the organization
and that has slightly morphed as we were going through
the detailed design, but it would have been the same
vel without pandemic. I think what the pandemic actually did
do is that through the pandemic, I think we have
(24:46):
witnessed an acceleration at these in terms of momentum and
intense in terms of energy transition. And so what the
pandemic had it actually done is it has one confirmed
the strategy that we were shaping, and two helps us
on board the organization on the strategy and on the
need to actually re reorganize along the new structure. So
(25:09):
it sounds like you're actually fairly hopeful, and recently we
looked well. So some forecasts are showing that we may
reach that one point five degree C before pre industrial
levels that that International Planel on Climate Change really put.
Is this line in the sand regarding where that we
think we're going to start to see some more catastrophic
responses to climate Where do you have reasons to be
(25:33):
hopeful within the oil and gas industry that we may
be able to, you know, limit climate change to one
point five C when it looks like that year is
very very near. I think the challenge is indeed very big.
At the same time, I am hopeful, and I'm hopeful
(25:53):
for several reasons. I'm hopeful, first of all, because I
think the world is accelerating. It's celerating in terms of
definitely society towards the energy transition, it is accelerating towards
in terms of regulatory frameworks, policy frameworks. I mean, let's
not you know, needless to mention the new new US
(26:14):
screen deal, the UK Turndpoint Plan, the EU production ambition,
and by twenty thirty China's common Neutrality. By the recent
announcements on call, so I think altogether we are seeing
an acceleration. We also seeing in acceleration as we discussed
(26:35):
in terms of investor focus on the energy transition, and
we're seeing an acceleration in terms of companies. I think
we saw one five hundred new companies commit to net zero.
We are seeing quite some momentum. The other reason why
I'm hopeful is because I think we do have the
technologies right, and some of those technologies, as I was saying,
(26:56):
are really extremely competitive, such as renewables. Other need to
be proven at gale. I think the fab reason I
am actually hopeful is that we are seeing tremendous growth.
So if I look at the last ten years in
terms of renewable penetration, we saw an average of sixty
giga what's added in terms of at IT capacity. In
the last few years, we've already reached one hundred and
fifty gigo what's and yes we need to ramp that
(27:18):
up to more than three hundred and five hundred and
fifty in a well below two degrees or one point
five degrees scenario, but it is still significant acceleration. If
you look at CCS, I think there are twenty six
projects ongoing operating in terms of CCS, and in the
last three years there's been thirty announcements, so almost as
(27:38):
many announcements in the last three years as we have
projects operating to date. At the same time, it is
a challenging journey and I think a lot still needs
to happen from a regulatory and policy standpoint to enable
and accelerate the journey to mention a few We very
much believe in the need for global carbon economy system
(28:03):
which can actually accelerate the transition and in link to
that carbon border adjustment so that that actually becomes more
efficient and effective. We also need to have policy support
for hard to abate sectors as a transition, and that
can actually be either in the form of mandates or
other structures. But if you think about how to abate
sectors av agency of cement, we will need to have
(28:25):
support in terms of policy to make that happen. The
ecosystem will also need to support what we call greening
companies such as ours, as long as they're committed to transitioning,
both because we need those emissions to actually reduce, but
also just in terms of the sheer scale and size
to actually drive the investment into the alternatives. So the
(28:48):
VP is not alone. I mean the oil majors are
looking at this and then getting pressure from the investment community.
Let's so from the national oil companies that aren't getting
that external pressure. In what ways is BP working directly
with some of your competitors and other oil companies around
the world, whether they be oil majors, r n ocs,
(29:09):
on sharing best practices or trying to find a path
forward for these ambitions because to your point, the industry
is going to need to move not just to BP.
We are working indeed across companies to actually try to
enable the transition. And that's a different level. So if
I look at our fruts, clearly O g c I
(29:31):
plays a role. It plays a role in terms of
knowledge sharing and in particular around working among oil and
gas companies to really set the standards and the ambitions
in terms of how do you actually develop hydrocarbons business
which are really low emissions hydrocarbons business. So the o
g c I is an example, has invested with nineteen
(29:54):
investments into projects to reduce methane emissions and projects to
reduce carbon dioxide emissions, into projects to to actually also
look into accelerating technology such as CCS egen at zero
tea side and also setting some of the ambitions right
the methane intensity ambition of zero point to zero percent
is one example. So I think there is a collective
(30:18):
industry effort in terms of actually within that focus trying
to set those practices, standards and advanced solutions towards lower emissions.
So you mentioned methane, which I think is really interesting
because there's so much fixation on the carbon aspect that
methane has talked about so much less in many circles,
(30:38):
but maybe not as much within the oil and gas
base or the energy companies. Do you think that methane
should be talked about more as a potent greenhouse gas
or is the balance about right? I think there is
quite a lot of focus on methane at please within
the oilan gas industry and the energy sector. And yes,
it is definitely are the called topic that we need
(31:01):
to address, and it is one which we have actually
framed as one of our aims. So our aim for
within our net zero aims is very much around deploying
measurement in terms of methane in our operating sites by
twenty three and they're naming to actually half our methane intensity.
And this is actually something which is quite unique because
(31:22):
today methane emissions are calculated on an estimated basis, so
actually a shift from estimated basis to a measure the
basis is a very very strong commitment, but there is
significant collaboration within the industry. There is significant collaboration with
organizations such as e d F in terms of setting
the standards on methane and advocating for mefane regulation, and
(31:45):
I think there is quite a lot of also engagement
with regulators to support mefane regulation, both in Europe as
well as in a geography such as a US. One
potential strategy for a company in order to have their
company appear to be much more environmentally friendly is to
sell off their most polluting assets. What is to stop
companies from doing that? And where do you think there
(32:08):
is a place for leadership in trying to make sure
that that is you know, visible in the industry to
the investors. I think divestments is, as we've shared, one
of the critical elements actually of our strategy. The way
we actually look at divestments as one of the critical
elements of the strategy is that divestments basically helps in
(32:30):
our case, advanced the world towards that zero. And the
reason for it is we're actually divesting assets and we
are reinvesting the proceeds into creating a low carbons supply,
so it's not divestment for the sacred divestments, it's really
divestments and reinvestment into low carbon supply, and so that
(32:51):
actually advances the world in the energy transition in the
sense of actually bring in that capacity, that additional low
carbon capacity in solution online. And I think it also
enables bp TO itself to advance towards its Natzi ra
aim and position in the world, which is paris aligned
in the future. The world is very much evolving towards
(33:15):
increasing transparency on emissions. So I don't really think there
is a world where we can imagine that you know,
buyers of potential divested assets will not be put on
the you know, transparency requirements in terms of emissions reporting
and emissions progress. And while divestments do not take assets
(33:38):
out of a system in terms of aidin gas production,
I think it helps advance in the energy transition. I
think it's also fair to say that if you look
at scenarios and you look at a well below two
degree scenario or one point five degree scenario, he's still
having tent of the primary energy mix, which is actually
linked to point in gas. So we will need to
(34:02):
oil and gas production as we transition and the question
is is really one of who's abist owner for the
assets in the frame of the individual strategies. Well, and
then the other question is for how long? So you
have this zero target? But where do you think the
inflection points are? Because there has been some discussion around
the fact that emissions today are much more impactful than
(34:25):
emissions in three years, five years, ten years. Where do
you think the most important year is? Given that these
are industries that take a long time to turn and
to make these changes, so it can't be six months
from now. What do you think is the biggest inflection
point between now and we have very much shaped it
(34:46):
with a short term, medium term and long term aim
so very completely. You know, we have to look at
on net zero names. We have five ames which are
focused on getting BPT to net zero by sooner. Aim
one is very much around scope on and scope too
from our own operations. Aimed two as a carbon content
of our oil and gas production. Aim free is around
(35:08):
the intensity the carbon intensity of our marketing products. Aimed
for is a methane intensity, as we discussed and named
five as a lead indicator in terms of capets into
low carbon. For each of those we have set a target,
and we have set at twenty thirty am on the
way to the let's see your own for me in
(35:30):
terms of reassuring investors, in terms of and other stakeholders,
in terms of efforts and trajectories, but also just in
terms of actually informing strategies, because a lot of the
decisions that make today will be required to actually frame
where you're trying to actually head to towards twenty and
uh and towards. We believe that in that frame you
(35:51):
actually do need to have short term targets, medium term
as we described them as being ten years, twenty thirty games,
and then the longer term objective. And I think that's
now there's debate, but I think it actually aligns quite well.
Were for instance, when you look at some of the
potential initiatives, which are looking at a five year and
(36:12):
a fifteen tents of fifteen year confering. So it's impossible
to think about the future as a parent without thinking
about your kids. So you talked about your two young children.
I've got two of them as well. They've been probing,
they've been asking you very pointed questions you said around
the future and climate and in your role, what advice
have you given them regarding where they should be looking
(36:33):
in terms of, you know, maybe their future careers or
even education choices. Oh that's the tricky one. In full transparency,
my my children are actually looking into pretty different careers.
So one of them wants to be a criminologist, the
other one wants to be a doctor. It's very it's
actually pretty distant from anything loosely related to the energy
(36:55):
transition now, but I think they do indeed have pretty
probing questions. And the probing questions are literally around elements
such as what car are you driving and for the record,
I don't have a car, Or how is recycling we
do actually contributing as an oil and gas company, what
are you doing right in terms of energy transition? And
(37:15):
and that is actually fueled by both the personal interests,
but what they hear and what they actually also engage
on as activity at school. So I think that's another
reason to be hopeful, Dana, which is I think the
generations to follow are very very much focused in terms
of energy transition, but also more generally sustainability also linked
(37:38):
to just transition and other topics. I would certainly agree
with that. They definitely have grown up with this as
being a focus so a reason to be hopeful about
the future. Well, Julia, thank you very much for sharing
your vision for the future and what's going on at
BP and then your personal journey with us here today.
Thank you very much for having me Dana. Today's episode
(38:04):
of Switched On was edited by Rex Warner with Grace
Stoke Media. Bloomberg Any App is a service provided by
Bloomberg Finance LP and its affiliate. This recording does not constitute,
nor should it be construed as investment advice, investment recommendations,
or a recommendation as to an investment or other strategy.
Bloomberg an e F should not be considered as information
sufficient upon which to base an investment decision. Neither Bloomberg
(38:25):
Finance LP nor any of its affiliates makes any representation
or warranty as to the accuracy or completeness of the
information contained in this recording, and any liability as a
result of this recording is expressly
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