BP plans to divest from two carbon capture and storage projects in England's north-east, signaling the company's continued pullback from climate-focused investments after schemes failed to gain shareholder approval.
The oil major seeks to reduce its stake in Net Zero Teesside (NZT), a project designed to create the UK's first gas power plant equipped with carbon capture technology to remove operational emissions. BP also plans to sell shares in a second flagship carbon project in the region, though details remain limited.
The divestment reflects mounting pressure from BP shareholders skeptical of the company's green transition strategy. Carbon capture and storage technology remains commercially unproven at scale, with high capital costs and uncertain long-term performance. The NZT project attracted particular controversy over the effectiveness of its capture systems and the project's overall viability within BP's portfolio.
This move continues a pattern of BP retreating from renewable energy and carbon reduction commitments made in recent years. The company previously scaled back investments in wind and solar projects, refocusing on fossil fuel operations. BP's pivot reflects broader challenges facing oil majors attempting to balance decarbonization pledges with shareholder expectations for returns and continued hydrocarbon production.
The UK government had supported development of carbon capture infrastructure as part of its net-zero strategy, viewing the technology as essential for hard-to-abate industries. However, repeated project delays and cost overruns have strained political backing. BP's exit from these ventures signals weakening confidence in carbon capture's near-term commercial viability.
The divestment raises questions about the future of carbon capture projects dependent on major oil company investment. Government support for the technology may need to increase substantially to fill the funding gap left by private sector withdrawal. Without major operators like BP committed to these projects, the UK's carbon capture ambitions face significant headwinds.