bp to limit future hydrogen projects amid green energy pullback

bp will limit further hydrogen and carbon capture projects as part of its major strategic reset prioritising oil and gas expansion.

The British energy major revealed it would increase its oil and gas investments by about 30% to $10bn a year while cutting planned renewables funding by over $5bn.

As part of that, bp says it will adopt “disciplined investment” in green energy, with selected investments in biogas, biofuels and EV charging; “capital light” partnerships in renewables; and “focused investments” in hydrogen/CCS.

It follows similar moves from Shell and Equinor, which have also scaled back green energy investments amid investor backlash against declining profits.

“This is a reset bp, with an unwavering focus on growing long-term shareholder value,” said bp CEO, Murray Auchincloss.

bp targets cutting its annual CAPEX to $13-15bn by 2027 with cost reductions of $4-5bn in the same period. This will include $20bn worth of divestments.

Just five years ago, bp planned to cut its oil and gas production by 40% by 2030, while ramping up renewables investments. That oil and gas reduction goal was reduced to 25% in 2023.

However, that strategy coincided with underperforming stock – with shareholders receiving total returns including dividends of 36% – compared to Shell’s 82% and Exxon’s 160%.

“This new direction places free cash flow growth, returns and value at its heart,” said Helge Lund, bp chair.

The reset comes just two months after the company took the final investment decision (FID) on its 100MW Lingen green hydrogen plant in Germany, which will supply its refining processes.

Read more:bp takes FID on 100MW Lingen green hydrogen plant, commissioning set for 2027

Previously, bp said it had stopped 18 early-stage hydrogen projects.

However, what the move could mean for bp’s other hydrogen projects remains unclear.