What's going on?
Oil major BP announced this week that it’s bought a stake in one of the world’s biggest green energy projects.
What does this mean?
BP knows full well that it needs to diversify away from traditional oil and gas projects if it wants to keep investors on side. So that’s exactly what it’s been doing, both by expanding its solar and wind businesses and by targeting a 10% share of the hydrogen market by 2030. But this latest move really sets out its stall: the company said this week that it’s acquired a 41% stake in a solar, wind, and green hydrogen project in Australia – one that’ll cost over $30 billion to develop. The project’s stakeholders are hoping it’ll produce the equivalent of a third of Australia’s entire generating capacity, along with 1.6 million tons of green hydrogen – a renewable alternative to gas-generated “blue” hydrogen – every year.
Why should I care?
Zooming in: “When they go low, we go with hydrogen.”
This is part of a wider trend where governments and companies are investing billions into zero-emissions fuels. Take French oil and gas major TotalEnergies, which said on Tuesday that it’s planning to buy a 25% stake in green hydrogen business Adani New Industries. This sudden push might be why analysts are expecting the global output of green hydrogen to jump 18-fold to about 12 million tons a year by 2030 (tweet this).
The bigger picture: Little brother syndrome.
BP also said this week that it’s sold its stake in one of the biggest oil reserves in the world – the Canadian oil sands – for around $1 billion. It’s the latest in a string of producers to have sold heavily polluting projects in the region, and analysts don’t think it’ll be the last: smaller local producers are flush with cash as the oil price continues to boom, and they’re more than happy to buy the majors’ hand-me-downs.