BP scraps renewable energy goal after investing $8.3 billion

LONDON -- BP Plc, recovering from an oil spill that may cost it as much as $42 billion, said it hasn’t set a new target for investing in renewable energy after investing $8.3 billion in the business.

The company in 2005 set a target to spend $8 billion by 2015 and achieved that last year, BP said in a report on sustainability issued yesterday. It isn’t setting a new goal. BP has been disposing of assets to pay for the costs of the spill in the U.S. Gulf of Mexico in 2010 and last year put wind farms worth as much as $3.1 billion up for sale. In 2012, it scrapped a four-year old project to spend $300 million on a cellulosic ethanol refinery in Florida, and the year before, it shut its solar power business. It’s keeping biofuel research.

"BP hasn’t made a public commitment on future spending for alternative energy,’’ Phil New, BP’s chief executive officer of alternative energy, said in the report. “The financial commitment we made in 2005 has allowed us to cast a wide net in search of businesses that could be financially self-sustaining, and a good fit for BP. Our biofuels business fits the bill.”

The remarks are a further step away from former BP Chief Executive Officer John Browne’s effort to push BP “beyond petroleum” starting in 1997, when the company became the first major oil producer to encourage precautionary measures to combat global warming.

Oil Drilling

Yesterday, BP also emerged as the most likely winner of its first new leases to drill for crude oil and natural gas in the Gulf of Mexico in two years just a week after the U.S. government lifted restrictions on the company.

The 2010 spill at the Deepwater Horizon drilling rig killed 11 workers and sent millions of barrels of oil into the Gulf, the worst accident of its kind in U.S. history. BP CEO Bob Dudley said this month the Gulf is one of four “key regions” for the company’s growth.

BP has stakes in 16 wind farms, and that share gives it a financial interest in 1,558 megawatts of electricity generation capacity. The total output from the wind farms is enough to power about 780,000 U.S. homes, according to the report.

The company decided to retain the facilities after assessing the market and finding it was the wrong time to sell. It unloaded rights to develop additional wind farms. The oil company will continue to invest in cleaner fuels. Biofuels can be mixed with conventional fuel to cut greenhouse gases. By early 2015, BP plans to have doubled the capacity of its largest sugar cane-based ethanol mill in Brazil. It’s also working to bring the second-generation of biofuels that use non- food crops to market, according to the report.

“It’s an area where we believe BP can make a real impact and will continue to invest where we see high quality opportunities, both in our existing bio-ethanol activities and in advanced biofuels,” New said in the report. It’s focusing on biofuel businesses hat are either financially independent now or will be in the future, the report said.

Copyright 2014 Bloomberg

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