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