The transition to a renewable future figured prominently in the BP instruction. Chief executive officer Bernard Looney said: “These difficult decisions rooted in our net-zero ambition, and reaffirmed by the pandemic, we will be better able to compete with the energy transition.” The company added that the pandemic would likely “accelerate the pace of the transition towards a lower-carbon economy and energy system”.
It is clearly recognized that the progress of the greening is unstoppable, only a few weeks after Royal Dutch Shell too bowed to the inevitable decline of the oil industry returns. Shell has revealed a dramatic rebasing of its dividend to shareholders, wiping out three-quarters of the annual expected earnings this year, in its first dividend since the second world war.
The two companies recognize that the peak of the global oil demand is likely to be sooner than expected
Ben van Beurden, Shell chief executive, said at the time that the pandemic could bring the high-water line of the oil market more closely and may mean that the company shows a preference for clean energy projects“, which serve us better in the future”.
Van Beurden has been more cautious than Looney, but they leave the same conclusion. The most ancient of human fears – a pandemic, showed two of the world’s most powerful polluters to be out of time.
The two companies recognize that the peak of the global oil demand is likely to come sooner than expected because of the collapse of the fossil fuel use during the pandemic, with a continuation of the impetus given by governments that focus on a green economic recovery. A research firm, Rystad Energy estimates that more than 280 billion barrels of oil may be left in the ground as the world’s appetite for the fuel peaks in seven years. Others believe that the pic have spent the last year.
Nevertheless, a climate victory is not guaranteed. It will force the government to speed up plans for a green economy, and that will test the voters of the political. Politicians will be wary of public test of resolve for further change when the economies around the world have received their worst beating since the second world war.
Some sectors, such as aviation, seem to be decades away from the technological breakthroughs that allow them to make a significant contribution to the reduction of emissions.
This will put more pressure on oil companies to recognize their destiny and to put more management attention, and money, by embracing renewable energy. BP set the carbon footprint of the target of net zero by 2050. But by putting just $ 500 million of its annual $12bn budget investment in green energy, it has shown that the words have not been matched by deeds – a familiar accusation can be made against the major polluters. This time, however, the existential threats to the planet (both Covid and climate), present a terminal threat to the fossil fuel majors. BP and Shell are clever enough to know it.
The admission by the oil companies and the companies with the most to lose in a battle against the climate crisis, that their industry is on the verge of a period of decline to renew the hope that change is possible.
Time of return on investment for companies using the seniority scheme
The business buzzword of the year should be “seniority”. It was barely used before the month of March, but now everyone knows the shorthand description for chancellor Rishi Sunak Coronavirus Job retention Plan.
This is the most successful part of the government’s pandemic support program for businesses. At a cost of approximately £20.8 billion euros, it was hideously expensive, but it has supported the salary of 9.1 million workers. A large proportion of these jobs would have otherwise been lost (or lost earlier, as unemployment will inevitably increase as the wind regime).
Fortunately, however, a few companies have stated that Covid-19 has been less disastrous than feared for their business, and they will repay their seniority grants. Ikea, Taylor Wimpey, packaging company Bunzl and, on a smaller scale, the Viewer magazine fall into this category.
A few others, such as housebuilders, Berkeley and Bellway, has never taken government cash in the first place. They took the good line, that it would be “naive” to accept seniority of the money when the sector has already benefited from the sales aid.
These examples should cause some soul searching in other meeting rooms. Has the permission of cash really necessary? Is this really a form of insurance that was not, ultimately, necessary? If yes, go back a few quid for the Treasury would be the right thing to do. Even a return of the collective billions would not significantly improve the united KINGDOM, the new debt-to-GDP ratio of 100.9%, but the principle matters.
The question does not apply to many sectors – airlines, which is the most obvious. But there will be a band of companies that should, at the very least, consider reimbursement. They should also know that any company that grants bonuses to its executives to 2020, after taking the taxpayers ‘ money is going to have some serious explaining to do.
Bailey must think big, if the Bank is to make a difference
The Bank of England governor, Andrew Bailey, marks 100 days in the job this week. His supporters say the country needs a calming influence at the heart of its central bank, in the course of this crisis and argue Bailey has played this role with diligence. However, the coronavirus of the pandemic and the depth of the recession that Britain is faced with the demand for more fire-power of the Bank that at the present time on offer.
It would be unfair to describe the response of the Bank as a shy, it has increased its quantitative easing (QE) programme from £200bn in 2009 to € 745bn. But a good part of the extra money injected into the economy, which has been retained by the co
mpanies and have plenty of work. A modern-day of the central bank’s job is to ensure that these funds are put to work.
Bailey was a senior figure at the Bank of the previous decade, when a plan was hatched to stimulate the housing market. Officials made the lenders give cheap loans to first home buyers. Called “funding for lending” – which ran in parallel to Help Buy – the device has been approved by the government social-engineering project that doubled as a quick way to get the housing market up and running.
But today, where are the proposals likely to lead to business investment in the life? The Federal Reserve, the Bank’s AMERICAN counterpart, is to buy debt-distressed, which means that it is to make loans to businesses affected by the pandemic. Across the channel, the European Central Bank has adopted negative interest rates, in effect paying customers to take loans. Japan has designed its loan program to make sure that the interest rates are at the floor for a generation.
Bailey has been talking about doing whatever it takes. At this time, it is just talk. In 2010, further increases in QE have been described by some officials to “go on a piece of string”. It is time the Bank pushed something else.