The new government’s decision to divest from North Sea oil and set up a state-owned renewable energy company is the “last thing” it should be doing, the former chief executive of BP has said.
Bob Dudley, who ran the British petrochemical giant BP for ten years, told City AM that energy secretary Ed Miliband was “ignoring” the reality of modern energy demands by foisting aggressive taxes on the UK’s oil and gas sector in order to fund the taxpayer-funded Great British ‘GB’ Energy.
Speaking shortly before the annual COP environmental summit, which takes place this week, he said: “If you’re worried about security and supply, the last thing [the government] should be doing is trying to drive the North Sea out of business. You need all forms of energy, and you need access to all forms of energy. I think [Miliband] is ignoring that.”
During the run-up to the election, the Labour Party committed to making Britain a “clean energy superpower” as one of its ‘five pledges for government’. Establishing GB Energy is a core tenet of those plans, which, it argues, will help bring bills down as well as aiding the UK’s transition away from fossil fuels.
But Dudley, who took over at BP in the immediate aftermath of the 2010 Deepwater Horizon oil spill, felt the approach of the new administration was misguided, arguing instead for a less interventionist approach.
“I’m not a supporter of nationalised energy companies anywhere,” he said. “I think creating [a company] just for renewables… has to be economic, in my view. Otherwise, you’re really just taxing your citizens, and I’m not a supporter of that approach.”
The comments from the energy heavyweight regarding the UK’s plans to establish GB Energy come despite him having held a position on the board of Rosneft – Russia’s state-owned energy company – for nine years until 2022. BP acquired a 20 per cent holding in Rosneft in 2013, giving the firm two seats on its board that were held by Dudley and his successor at BP, Bernard Looney.
The firm sold stake in February 2022 after Russia’s invasion of Ukraine in a move that also saw Dudley and Looney relinquish their roles as Rosneft board members.
Backing for Auchincloss
The former oil major boss added: “You can build huge renewable projects of solar, for example, and wind, [but they] take up lots of precious land in the south of England for actually not very high density of energy production.”
The government chose to lift the de facto moratorium on new onshore wind farms to widespread support shortly after it was elected in July. Chancellor Rachel Reeves branded as “absurd” the planning laws that had effectively made the construction of new onshore wind farms illegal, as she to removed them and pledged to double the UK’s onshore wind capacity by 2030.
Dudley, however, warned that any transition towards renewables could not come at the expense of a focus on other energy sources, namely liquefied natural gas (LNG) and the small nuclear reactors being produced by the likes of Rolls-Royce, telling City AM: “Everyone wants to be powered by renewables and you can’t do it. Only eight per cent of electricity in the United States is generated by renewable energy. So it’s going to take lots and lots of other things, but primarily natural gas.”
He added that the growing demand being placed on energy grids by artificial intelligence will make the wholesale adoption of renewables even harder.
Dudley’s comments come as his former firm is said to be reassessing its own approach transition.
BP set itself the most ambitious renewable targets of any energy major when Dudley’s successor, Bernard Looney, committed the firm to cutting its fossil fuel output by 40 per cent while rapidly growing its renewable division.
But under the stewardship of new boss Murray Auchincloss, BP looks set to abandon those pledges, in a move likely to enrage environmental campaigners and BP’s more ESG-focussed shareholders.
Dudley confirmed that the move would have would have his support. He said that “the world changed” when Russia invaded Ukraine, adding: “I’m a big believer in having aspirations, but that actually they have to be doable. And when you realise they’re not possible – and actually that’s what’s happened – you don’t go down a path of something that will not happen.
“You adjust, and I think it’s gone through that period of adjusting.”
A spokeswoman for the Department for Energy Security and Net Zero said: “Great British Energy is part of our mission to replace our dependency on volatile fossil fuel markets with clean, homegrown power controlled in Britain…
“Our priority is a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations, which drives towards our clean energy future.”