BP's sale of its onshore wind assets sparks debates among industry observers
BP Sells US Onshore Wind Business Amidst Pressure from Investors
UK energy giant BP has announced its decision to sell its $2bn US Onshore Wind Business, a move that some see as a step back from its green promises. The sale, aimed at consolidating BP's renewable energy presence, focuses on solar developer Lightsource bp.
BP's onshore wind assets are old and in need of renewal, according to the planned sale. The company's former CEO, Bernard Looney, had delivered a 2020 Energy Transition Strategy, which included a pledge to reach net zero by 2050 and ramp up the company's renewables business. However, the sale has raised concerns among some investors.
Shareholders, including the LGPS Pool Brunel, are increasingly pressuring BP, Shell, and Exxon to ramp up their renewable energy efforts. The LGPS Pool Brunel has stated they will monitor BP's climate change strategy and cast votes accordingly in 2024. Long-term institutional investors, such as major pension funds, sovereign wealth funds, and large asset managers focused on environmental, social, and governance (ESG) criteria, are likely to put more pressure on BP to implement its 2024 climate protection strategy.
These investors push for transparency, emission reduction commitments, and alignment with the Paris Agreement to manage long-term climate and financial risks. Mark van Baal, founder of Follow This, a shareholder campaign group, has criticised BP for the sale, stating that it endangers the global economy by exacerbating the climate crisis and puts BP's future at risk.
The process of acquiring Lightsource was initiated at the end of last year and is due to be completed later this year. The sale has seen BP's share price rise by 3.5% since the announcement. However, it's important to note that BP's share price dropped by nearly 20% since announcing its energy transition strategy.
BP has promised significant share buybacks for 2025. With oil prices dropping from more than $80 to $70 per barrel within the last year, it remains uncertain whether BP can sustain its strategy. At this year's AGM, asset owners held off from filing a climate activist resolution due to the current CEO being relatively new.
However, the sale of the US Onshore Wind Business is not the only factor that will determine BP's future in the renewable energy sector. The company's commitment to its 2024 climate protection strategy and its ability to adapt to the changing energy landscape will be closely watched by investors and the public alike.
