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CERAWeek: BP and Amazon officials say reinvention is necessary to reach net-zero goals

01 March 2021 Amena Saiyid

Top officials at Amazon Web Services and BP agree that companies shouldn't shy away from reinventing their business models to meet their net-zero carbon goals.

"Leaders have to have the will to reinvent and change course," Andy Jassy, who is currently chief executive officer (CEO) for Amazon Web Services (AWS), said at a 1 March session on reinventing energy during CERAWeek at IHS Markit.

Also participating in the discussion was BP Group CEO Bernard Looney, who agreed with Jassy that "you can't go against the grain."

When Looney took over as CEO in February 2020 of BP, he set about transforming a company with a history of more than 100 years in international oil and natural gas development and refining to an integrated energy company that aims to increase its renewable share by 20-fold and to diversify and decarbonize its portfolio.

"The reason we have to do it is clear: The world has a finite carbon budget and its running out," Looney said, agreeing with Jassy.

"Society by the way as do our employees want us to change. You can't go against the grain of society, or in the words of Andy, you can't go against gravity," he added.

According to Looney, BP has agreed to provide renewable energy to power Amazon, which in turn is providing cloud-based services to the oil company. By the end of the year, BP expects 60-70% of its data to be stored in the cloud instead of maintained on servers in different cities and countries around the globe.

"BP needs the agility to be competitive when prices, policy, technology, and customer preferences are changing -- and that's what we get with AWS," BP Chief Investment Officer Steve Fortune said of the partnership.

Amazon for its part has also committed to a net-zero carbon goal that includes having 30,000 electric vehicles on the roads by 2030. Jassy said AWS can provide the infrastructure for cloud-based computing and free up resources for companies to pursue renewable initiatives.

IHS Markit Vice Chairman Daniel Yergin, who moderated the discussion between the two CEOs, asked Jassy about Amazon's plans for reducing its carbon footprint. "You use a lot of electricity, and your company uses a lot of fuel to move things around. What is your thinking on climate?" he asked.

"We plan to be 100% renewable by 2030," Jassy responded, but warned that "one company can't alone deliver what people expect the environment to be."

Besides, he said, there isn't enough renewable energy to fuel power demand in developing countries.

Oil not going away

However, John Hess, CEO of Hess Corporation, told CERAWeek that he is unwilling to bid goodbye to oil, altogether though he conceded that a huge challenge lies ahead of the industry.

He said the International Energy Agency in its World Energy Outlook, which was released in a December 2020 outlook, made it clear that global oil companies need to invest $500-600 billion a year to maintain global oil and gas production to keep with demand in the future.

"We don't see peak oil around the corner. We see oil demand growing," said Hess, sharing his view about global demand for oil in a post-pandemic era during a separate CERAWeek discussion on investing in energy future.

Marcel van Poecke, head of Carlyle International Energy Partners' Carlyle International Energy Fund, agreed that the role of oil will not wane in the coming decade as power will be needed to manufacture steel blades for wind turbines and solar panels.

"The push to renewable energy will require oil and gas to be successful," Hess said, agreeing with van Poecke.

Van Poecke said the challenge for oil and gas companies is to lower their carbon footprint while continuing to meet the global demand for energy. In the upstream sector, these companies need to produce lower-carbon-emission barrels, and in the downstream sector they need to transition toward new energy technologies.

The key question is "what will oil companies look like five years from now?" Maynard Holt, CEO of Tudor, Pickering, Holt and Co., asked rhetorically. "I think it's going to surprise how old dogs might learn some new tricks over the next five years?"

Posted 01 March 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit

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