BP risked a further backlash after revealing that it will scale back its climate change targets despite doubling annual profits to a record $27.7 billion (2021: $12.8bn).

The company, which has adopted the slogan “performing while transforming” has pledged to invest up to $8bn into each division by 2030.

The strategy will see BP set aside 50% of its total investment for green energy by the end of the period.

It said it will increase its investment into the technologies that will help its transition to greener fuel, including renewable energy sources, electric vehicle charging points, hydrogen power, and bioenergy infrastructure.

However, it said it has pulled back on a commitment to cut oil and gas production by up to 40% by 2030. It will now have a 25% target.

A further $8bn will be invested into more into oil and gas projects with a focus on those with short lead times.

Shareholders will benefit from a 10% increase in dividend for the fourth quarter, representing 21% growth from 4Q 2021.

BP is also repurchasing $2.75bn of shares over the next three months which aims to boost the share price. After the statement, shares rose by more than 4%.

BP said it was paying $15.1bn in worldwide taxes — its highest annual total – with $2.2bn due from its North Sea business, including $700 million from the Energy Profits Levy.

The figures follow Shell’s record profits of $40bn.

The company took a $24.4bn hit when it was forced to write off its 19.75% stake in Russian energy giant Rosneft shortly after the Ukraine invasion.

BP chief executive Bernard Looney said: “We need continuing near-term investment into today’s energy system – which depends on oil and gas – to meet today’s demands and to make sure the transition is an orderly one.

“We have high-quality options throughout our portfolio, allowing us to choose only the best. We will prioritise projects where we can deliver quickly, at low cost, using our existing infrastructure, allowing us to minimise additional emissions and maximise both value and our contribution to energy security and affordability.”

Ed Miliband, the shadow Climate Secretary, said the government should bring forward what he called a “proper” windfall tax on energy companies.

But Offshore Energies UK, the trade body, said such a levy risked breaching global tax agreements and so could never be implemented.

Mike Tholen, OEUK’s director of sustainability, said it was wrong to offer false hopes to hard-pressed consumers.

“These calls for an increase in the UK windfall tax, linked to the global profits of energy producers, are deliberately misleading,” he said. “The UK is subject to global tax agreements which say that it cannot tax profits made by companies outside of the UK. That means such a tax could never be implemented. It is irresponsible to pretend otherwise.”

AJ Bell investment director Russ Mould, noted that the company is raising its spending in all areas, indicating the net zero deadlines will be challenging.

“While the profits, dividend, buybacks and debt reductions will grab a lot of the headlines, perhaps the most interesting number in BP’s full-year results statement is capital expenditure, because the firm is nudging up its spending plans on both renewables and oil and gas,” he said.

“The increase in drilling and exploration work may be an acknowledgement that fossil fuels could be with us for longer than we would like or hope and also explain why oil equipment and services stocks are outperforming oil producers. Perhaps they are the biggest winners of all out of BP’s statement, even more than HMRC.

“As the globe focuses more on energy security, and looks to wean itself off Russian supplies, it may be that oil firms feel able to invest more in oil and gas production, even as they look to transition to more renewable sources over time.

“Their bumper profits and cashflows help, too, as do lingering concerns over whether the world is ready to make the switch as fast as we would like.”

See also:

‘Joined up approach’ needed for energy transition

Comment: Sunak seeks to take steam out of energy debate