The Motley Fool

A closer look at BP’s pivotal green push

Image source: Getty Images.

There’s a reason for BP‘s (LSE: BP) new and heavier emphasis on green energy.

It is not just that producing more renewables good for the environment. It also gives the oil giant an opportunity for growth. BP believes renewables will grow faster than any other energy source in the medium term. The company sees renewable shares rising from 4% of all primary energy in 2019 to an estimated 15% by 2040.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The price of oil has been a poor performer over the past 10 years. There are predictions that oil demand might have already peaked last year. So, perhaps trying something new is the right idea. This assumes good execution, of course. 

Given that BP is planning this push into low carbon energy, here is a closer look at how the company is trying to do more business in the sector. 

How BP is trying to go ‘green’

While BP has emphasized green energy before, it is now planning to spend a lot more money than before in the sector. In terms of expenditures, BP recently disclosed an ambitious ‘10-fold’ increase in its low carbon investment budget, to around $5bn a year within a decade. 

As a result, the oil giant expects to have substantial renewable energy operations by 2030. Specifically, the company targets bioenergy production of over 100,000 b/d, developed renewable generating capacity of 50GW by 2030, up from 2.5 GW in 2019, as well as a substantial hydrogen business. 

BP also plans to adjust to the electric vehicle age. In addition to its traditional gas stations, the oil giant plans to increase the number of electric vehicle charging points to 70,000 by the beginning of next decade, from around 7,500 now. 

As a result of investing more in green energy, BP believes it will reduce its emissions from operations by 30% to 35% by 2030, as well. 

The expected returns of going green

BP management expects to generate a more sustainable return by going green. 

In terms of the specific numbers, management expects to “diversify and improve the resilience” of its cash flow. In conjunction with its existing operations, management expects to have an average compounded annual growth rate of 7% to 9% to 2025 in terms of EBIDA per share. 

I think BP’s green pivot is a great idea. Although transitions can be difficult, I think it’s better to get started earlier rather than later when it comes to adjusting to a long-term trend. By starting earlier, a company could potentially have more opportunities to gain economies of scale and advanced tech. A company would also have more experience which could improve efficiency. 

Given that China has committed to going carbon neutral by 2060, there will be a lot of demand for green energy. As a result, I think there is also potential for outperformance if management executes well. If BP succeeds with its green ‘pivot’, I think the stock could garner a higher valuation in the long term. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Jay Yao has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.