London — BP CEO Bob Dudley on Wednesday condemned moves to outlaw natural gas as a heating source for new buildings as well as in power generation, saying that excluding gas from efforts to decarbonize the economy was a "huge and unnecessary risk."
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Speaking at the Oil & Money conference, Dudley took aim at a campaign by former New York mayor Michael Bloomberg to sideline gas in power generation, and initiatives by at least a dozen large US cities to stop construction of new buildings with gas as a heating source. He also criticized a UK government commitment to end gas heating in new homes by 2025.
Bloomberg in June pledged funding for a campaign to close all coal-fired US power stations and halt the growth of gas.
But Dudley described gas as abundant, flexible and affordable, and a back-up for renewable energy sources, and said: "We need every tool at our disposal."
"Gas has a vital role to play in the energy transition. To exclude gas, when so much is at stake, is to take a huge and unnecessary risk," he said. "Gas is being increasingly marginalized, even vilified and demonized."
Campaigns such as those mentioned "may be well-intentioned, but they are misguided. They rest on a false equivalence between gas and coal. And an assumption that an all-electric economy will emerge just as soon as we close the alternatives," Dudley said.
"It's by switching from coal to gas that the world has cut more than 500 million mt of CO2 this decade alone," he added.
BP is seen as having been more oil-focused, and slower to develop its LNG business than some competitors. Dudley's successor, current upstream chief Bernard Looney, who takes over in February, is seen as possibly bringing a new approach.
Dudley, however, highlighted innovations such as carbon-neutral synthetic gas, and the potential for hydrogen, as well as carbon capture and utilization projects BP is involved in.
"The biggest obstacle to decarbonized gas is not technical. It's political," he said.
SHELL RENEWABLES FINANCIAL GOALS
At the same event, Shell CEO Ben van Beurden said Europe's largest oil company by production aimed to develop a lower-carbon, gas-rich upstream portfolio, as well as its emerging power sector business. The latter would have to demonstrate success by 2025, he said.
Shell plans to invest $13 billion-$15 billion/year in its "Transition Themes" of LNG, oil products and chemicals in 2021-2025, compared with $11 billion-$13 billion/year on its core upstream oil and gas portfolio over the same period. Some investors remain skeptical however of the competitiveness of Shell's low-carbon spending.
Van Beurden said Shell is targeting 8%-12% returns from its investments in the power sector, fed by renewable energy, and wants to see "proof" the target is achievable by 2025.
"If you don't have clear proof points by the middle of the next decade that we can meet that target I think we'll have difficulties putting our foot down on the accelerator," he said.
However, achieving that target would be "a massive accelerator, because it will unlock renewable investment at scale," he said.
In the case of BP, Dudley said the major's longstanding investments in biofuels and more recent creation of Europe's largest solar development company was not providing returns competitive with BP's oil and gas business. Returns from BP's renewables investments are still not in "double-digits," Dudley said.
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