Just over a week ago, oil giant BP announced that it would be aiming to be ‘net carbon neutral’ by 2050.

For a company that currently produces little other than oil and gas, this is an exceptionally ambitious target.

The radical aims were important enough to make the front page of the Financial Times, and were announced by the company’s new CEO, Bernard Looney.

Whether there is an element of ‘greenwashing’ in this remains to be seen.

Looney has taken over from Bob Dudley, the abrasive CEO who got the company back on track after the Macondo explosion and Gulf of Mexico oil leak of 2010, and the collapse in the oil price in 2014. Looney is perhaps a Chief Executive more suited to the difficult world that BP is now negotiating, in which the climate change debate has moved massively up the agenda.

Looney admitted that BP has thus far been a laggard in addressing climate change, but declared that it will in future become a leader on these issues.

The vastness of the challenge was highlighted by the FT, which stated that ‘Big oil is facing an existential struggle’.

It certainly is. A quick look at BP’s website shows that it has little presence in renewable or alternative energy at the moment.

A division called Lightsource BP, which produces power from solar panels, has doubled the number of countries it operates in since 2017, but in terms of power production this will be a mere speck.

It has a joint venture in ethanol from sugar cane in Brazil (70% lower emissions than conventional fuel), and another which derives fuel from corn in the US.

It also has onshore wind assets (nine sites in six states in the US), producing 1 GW of electricity – or ‘enough to power a city the size of Dallas’.

In other words, not much.

The new CEO claims that BP’s own operations will produce no net CO2 emissions by 2050, and will also cut the amount of carbon in the products it sells by 50%.

That means offsetting 415m tonnes of emissions (or 55m from its own operations and 360m from the carbon content of its products), a colossal ask.

Inevitably the company will have to invest more in low carbon activities and less in oil and gas (O&G). But last year it spent only $500-750m on renewables, and $14bn of capex on traditional O&G.

The situation is similar at Royal Dutch Shell, where 95% of capex is still going on traditional O&G, despite the company aiming to cut total emissions by 50% by 2050.

Thus far, BP has announced few details of how it will achieve the targets. It will reframe relations with trade associations, some of which deny climate change, and exit them where appropriate. It will also increase the climate element in staff annual bonuses. It is likely to make use of carbon offsetting and capture measures. The ‘Upstream’/’Downstream’ structure will also disappear.

Production is likely to fall from 3.6m barrels of oil equivalent per day. This raises the question of how it will continue to fund its annual $8.4bn dividend.

BP’s targets are ambitious, and outstrip those of the other majors bar Repsol, which is a much smaller company.

BP has been through a hell of a time over the past 20 years. First, there was the Texas oil refinery disaster of 2005. Then there was the Macondo well explosion. Then, as already mentioned, there was the oil price collapse of 2014-2016.

The climate change activism it is now facing up to could be every bit as difficult a hurdle for it to climb as the others.

Disclaimer: The views thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

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