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Nov 16, 2021 4 min read

After Cop26, is BP a better bet than this alternative FTSE 100 company?

Can BP flourish in the post Cop26 era? I think this alternative FTSE 100 company might be a better bet.
After Cop26, is BP a better bet than this alternative FTSE 100 company?

"We're a cash machine at these types of prices," said the BP (LON: BP)  boss Bernard Looney. He was referring to the price of Brent crude oil, trading at $82 a barrel.

At the current oil price, BP is generating cash, and although it made a paper loss in the last quarter, the underlying profit was $3.3 billion.

The company ticks three boxes: it is making a lot of money, it pays good dividends, including special dividends, and is investing in renewables.

They call Mr Looney the Instagram CEO — he certainly seems to like taking to the social media platform to trumpet BP's green credentials.

See: Is the BP share price on the road to recovery?

But I have concerns.

BP's challenge

It is not a simple task that lies before BP. The various ESG indices don't seem to like the company or any oil companies, but I wonder if they are being fair.  What do the ESG people expect an oil company to do? And to what extent can you blame oil companies for climate change, and to what extend can you blame industry and consumers for using the black liquid?

In any case, BP was an early pioneer amongst the oil companies in trying to shift emphasis away from the carbon fuel; remember how it used to call itself Beyond Petroleum.

But that takes me to my concern. It is not that I doubt Bernard Looney's heart is the right place; it is that I think he is fighting a tough battle.

The renewable revolution has occurred much faster than most expected. Famously, the International Energy Agency has consistently underestimated the renewables takeup.

The major oil industry players are lagging behind because they failed to grasp the rapidity with which renewables would grow. I think they are still making that mistake.

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