Oil and gas giant BP Plc (NYSE:BP) recently withdrew its involvement with the Western Energy Alliance and is set to split with Western States Petroleum Association and the American Fuel and Petrochemical Manufacturers in the near future. At the heart of BP's move is its new focus on cutting its environmental impact, a recently announced plan by new CEO Bernard Looney with the goal of being a net-zero carbon emissions company by 2050.
No longer aligned with BP's core beliefs
Neither Mr. Looney nor BP provided much detail when announcing the net-zero by 2050 goal, but there are some indicators in the company's move to disassociate from the lobby groups above. According to reports, BP and the Western Energy Alliance have differing views on the regulation of methane emissions.
Methane, the hydrocarbon commonly known as natural gas, is about 10-times more powerful a greenhouse gas than carbon dioxide, and the substantially increased production of natural gas, along with expanded global demand and rapidly growing infrastructure, has many environmentalists worried that escaping methane could be worse for global warming than the benefits of natural gas offsetting coal and oil-based fuels.
For the latter two groups that BP is said to be leaving soon, reports say that the company disagrees with over carbon trade pricing. This move in particular could offer some insight into BP's long-range plans to reach carbon-neutral status. One tool it is likely to use to offset carbon from its operations and from the products it sells is utilizing carbon credits to offset its production.
Looking back to see the future
The use of carbon credits is likely to only be part of BP's plans, but it points at another way BP seems likely to reduce its carbon footprint: Biomethane, or renewable natural gas. In recent years the company has invested to expand its biomethane production footprint, including a 2017 deal to buy Clean Energy Fuels'(NASDAQ:CLNE) renewable natural gas production business.
BP's decision to leave the lobby groups it differs with on carbon pricing is likely tied to its plans to grow its biofuels production to leverage the value of a carbon trade market.