BP Plc (BP) - Get Report said Wednesday it has set 'net zero' target for emissions of 2050, a goal it says will require a "fundamental changes" for Europe's third-largest energy company under new CEO Bernard Looney.
BP said the changes will include a new leadership team, the dismantling of its autonomous business segments -- both upstream and downstream -- and the evolution into four core divisions: production and operations, customers and products, gas and low carbon energy and innovation and engineering.
"The world's carbon budget is finite and running out fast; we need a rapid transition to net zero. We all want energy that is reliable and affordable, but that is no longer enough. It must also be cleaner," said Looney. "To deliver that, trillions of dollars will need to be invested in replumbing and rewiring the world's energy system. It will require nothing short of reimagining energy as we know it."
"This will certainly be a challenge, but also a tremendous opportunity. It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change," he added. "And we want to change - this is the right thing for the world and for BP."
BP shares were marked 1.5% higher in London trading immediately following the surprise announcement, which came at 11:00 am local time, to change hands at 476.8 pence each.
BP said it will cut so-called Scope 3 emissions, which come from the oil and gas products it sells to customers, by 50% by 2050, and install methane measurements at all of its major oil and as processing sites by 2023, with the aim of reducing methane intensity of operations by 50% as well.
Earlier this month, TheStreet's founder, Jim Cramer, attracted attention from Presidential candidate Bernie Sanders, as well as a host of high-level CEOs and global investors, when he said he was "done with fossil fuels" following weaker-than-expected earnings from U.S. majors Exxon X (XOM) - Get Report and Chevron. (CVX) - Get Report
"It’s gotten to the point that Larry Fink, the CEO of Blackrock one of the largest money managers on earth, has said that (climate) concerns are now paramount in stock selection," Cramer wrote in his Real Money column. "He’s got huge holdings in oil and gas. He’s talking about divesting any company that makes more than 25% of its revenue from thermal coal, a big greenhouse gas emitter."
"I don’t think people realized the seriousness of this pronouncement," Cramer said. "No one in this investment firmament carries as much sway as Larry Fink, including the Oracle of Omaha, Warren Buffett."
BP's ambitious climate goals come less than a month after Microsoft (MSFT) - Get Report pledged to erase nearly five decades of carbon emissions with the help of a $1 billion 'Climate Innovation Fund".
CEO Satya Nadella said climate change would have a "devastating" affect on the world economy if global temperatures continue to rise, and vowed to cut carbon emissions from the company's supply chain in half by 2030. By 2050, Microsoft said, it will have removed all the emissions its created -- both directly and indirectly -- since it was founded by Bill Gates and Paul Allen in 1975.