Oil giant BP stands to lose 5 percent of total earnings from declining petrol sales as the market for green fuel technology expands and regulations to reduce CO2 emissions begin to bite. The startling findings are contained in a report by financial analysts Innovest, which is published today by Greenpeace.
The Report, 'Climate Change and Shareholder Value: Case Study of BP Amoco' looks at the company's vulnerability to moves to curtail global greenhouse gas emissions, to competition from low carbon technologies, and to turbulence in demand for fossil fuel products. It shows that:
- Growth in the renewable energy technology sector is expected to continue, outstripping growth in the larger, more mature oil and gas sectors. Innovest believe that BP is not well placed, relative to several of its competitors, to exploit markets in clean energy technologies such as wind and hydrogen fuel cells.
- BP's efforts to meet its internal emissions reduction targets could be undermined by its upstream expansion strategy. The gap CO2 that will have to be managed away by 2010 if targets are to be met is estimated by Innovest to correspond to $1.5 billion over ten years.
- By 2010 emissions arising from the carbon embedded in BP's products will be over 6 times greater than the company's direct GHG emissions.
Martin Whittaker, Managing Director of Innovest and author of the report, concluded
"The oil industry is particularly vulnerable to any move to any move to curtail global emissions and to competition from low carbon technologies Ultimately, BP's plans to expand upstream oil and gas production may serve to heighten the firm's exposure to climate change-related risks... As such, shareholders would be justified in seeking clarification of the company's risk mitigation strategy.''
The Report is launched today at a seminar for fund managers and energy sector analysts hosted by Greenpeace Business at the London Stock Exchange. The Seminar, 'Climate Change and the Energy Sector: Investment Implications' will examine the wide-ranging measures required to address climate change, both regulatory and technological and their implications for the future profitability of the oil and gas sector. Speakers will also outline how new technologies are already changing energy markets.
Stephanie Tunmore, Greenpeace Climate Campaigner, said
"The findings of this report confirm that BP shareholders stand to lose unless BP begins the transition away from fossil fuels. Investors clearly need to know how BP plans to reduce the financial risk that inevitable changes to fossil fuel markets will bring. The Greenpeace resolution to this year's AGM provides an opportunity for them to ask that question."
Notes to Editors:
(1) Climate Change and Shareholder Value: Case Study of BP Amoco, prepared for Greenpeace UK by Innovest Strategic Value Advisors Inc. The report can be downloaded from the SANE BP website (213k); copies are also available from the Greenpeace Press Office.
(2) Climate Change and the Energy Sector: Investment Implications, a Seminar for Fund Managers and Analysts, hosted by Greenpeace Business, takes place from 9am-1pm on Wednesday 21 March 2001, 9am-1pm, at The London Stock Exchange. Admission is by prior registration only.
(3) Greenpeace has submitted a resolution to BP's April 19 AGM, calling on the Board to publish a report, by the end of 2001, outlining how BP will make the transition from fossil fuels to renewable energy. The resolution is supported by more than 130 shareholders holding over 11 million shares. Supporters include the London Boroughs of Hounslow and Islington, Derbyshire County Council, and the WorldWide Fund for Nature.
Further information:
Contact:
Greenpeace Press Office, 020 7865 8283
