Oil giant BP stuns energy industry with decision to axe 18 major projects: 'Continuing to prioritize businesses that deliver earnings today'

Following low profits for Q3 2024, oil giant BP has divested investments from 18 of its early-stage hydrogen projects, as TechCrunch reported. Despite the gas' versatility and clean-energy potential, hydrogen projects are costly to execute and have been slow to turn profits at this time. 

With downcast company earnings, falling stock prices, and worried shareholders, BP is prioritizing higher-value projects that generate value sooner rather than later. 

What's happening?

According to BP's Q3 2024 Financial Results presentation, BP's profits this past quarter (July to September) netted only $2.3 billion. These earnings were 30% lower than Q3 profits in 2023. BP shares fell over 18% in Q3 2024, according to the company's share price history tool, while Reuters reported its annual debt rose by 9%. 

Shareholders are rightfully concerned, wondering how BP will improve its profits and standing.

Per the financial results presentation, 75% of its hydrogen projects are now ending to cut costs.

BP's strategy shift is expected to save at least $200 million in the renewable and hydrogen segments, Chief Financial Officer Kate Thomson shared. 

"We… are continuing to prioritize businesses that deliver earnings today with returns that compete across our portfolio," BP CEO Murray Auchincloss explained in the same presentation.

Why is hydrogen important?

Hydrogen is a relatively young industry, but its potential to shift the world from dirty energy sources to a cleaner one is largely understated.

When used for energy in a fuel cell, hydrogen produces only water vapor. This specific process does not emit harmful pollution like fossil fuels do when burned, helping to keep the planet's atmosphere clear of heat-trapping gases. 

Methods of producing hydrogen may generate emissions. However, hydrogen projects — including at least some of BP projects — create the technology to keep harmful emissions to a minimum. 

Hydrogen can also support energy infrastructures, including communities powered by solar, by storing excess energy for future use. 

As a versatile energy source, hydrogen's impact reaches across large and essential industries. Ships, cranes, and even garbage trucks have been powered by hydrogen, all thanks to hydrogen research, design, and innovation. 

What's being done about hydrogen projects?

Although BP is retracting its financial backing on important hydrogen projects, the fight for this cleaner energy source continues. Recently, the EU Innovation Fund awarded €4.8 billion to fund nearly 30 hydrogen projects, Hydrogen Europe reported. The U.S. Department of Energy devoted $750 million to funding 52 clean hydrogen projects across 24 states.

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