Companies, governments, and investors need to confront short-term trade-offs and make tough choices to alter the world's climate change course.The former boss of UK oil supermajor BP has said around £2.7 trillion needs to be invested in sustainable financing every year for the next decade to limit climate change damage.
Lord Browne of Madingley, who led the oil giant for 12 years until 2007, said the energy transition will pivot the world from a period of “climate crisis into climate correction”.
The ” huge but achievable” investment target, Madingley contended, would be used for clean energy developments as well as building up natural offsetting projects like major forests and mangroves.
Madingley oversaw what has been described as BP’s “golden period of expansion and diversification,” which included headline mergers with US-based petrol and gas station operators ARCO and Amoco.
The former chief penned that companies, governments and investors would need to face up to “short-term trade-offs” and the necessary “tough choices” in the battle to alter the world’s climate change course that would be at best uncomfortable and at worst painful”.
From a cost perspective, Madingley’s pricey estimations have been echoed by other industry analysts.
Consultancy firm McKinsey recently published a report suggesting that in order for the global economy to achieve net zero emissions by 2050, it would require £7.2 trillion in annual average spending on physical assets, roughly £2.4 trillion more than today.
Madingley’s comments come as the fossil fuel industry has come under increasing scrutiny from shareholders and the general public for their role in the energy transition.
His former ward BP is firmly embroiled in the centre of the battle between profitability and climate responsibility.
It trails far behind US rivals Chevron and Exxon and UK peer Shell in terms of investor returns, all of whom have resolutely stuck to the commitment of building out fossil fuel operations.
BP, too, is expanding its reach in the oil and gas space, but chief executive Murray Auchincloss, minted at the start of 2024, is opting to stick by a greener investment plan than his rivals, one that was first laid out by his predecessor Bernard Looney.
Looney resigned at the tail end of last year over failure to disclose inappropriate relationships with colleagues and saw his £32m pay packet clawed back after the board ruled he had behaved with “serious misconduct.”
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By City AM
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