BP DAC Initiatives for 2025: Key Projects, Strategies and Partnerships

BP’s Carbon Capture Pivot: Pragmatism Replaces Ambition

BP is navigating a complex and shifting energy landscape, and its strategy toward carbon capture, utilization, and storage (CCUS) and direct air capture (DAC) technologies reveals a significant strategic realignment. Once a vocal proponent of a broad energy transition, the company’s recent actions demonstrate a pivot towards a more pragmatic, focused approach that tightly integrates decarbonization technologies with its core oil and gas operations. This shift, driven by market realities and investor pressure, provides a clear case study in how major energy players are balancing long-term climate goals with near-term financial performance.

A Strategic Inflection Point in Carbon Capture Adoption

Between 2021 and 2024, BP’s strategy for carbon capture appeared focused on building foundational, large-scale infrastructure in developed markets. The company initiated major partnerships, such as the 2022 plan with Linde for a carbon capture project on the U.S. Gulf Coast and its role in the Northern Endurance Partnership (NEP) in the UK, which secured a final investment decision in late 2024. These projects were aimed at creating multi-user CCS hubs to decarbonize industrial corridors and enable low-carbon hydrogen production, positioning CCS as a versatile tool for a broad energy transition. During this period, DAC was acknowledged as a critical future technology, particularly for producing e-fuels, but it remained on the strategic horizon rather than the subject of direct investment.

A clear inflection point occurred at the beginning of 2025. BP announced a strategic realignment, prioritizing oil and gas investments with an allocation of approximately $10 billion per year through 2027 while cutting planned renewables spending. This shift was underscored by the divestment of its U.S. onshore wind portfolio and its Dutch EV charging business. Consequently, the application of carbon capture has narrowed. Instead of building speculative hubs, the focus is now on integrating CCUS directly with upstream assets, as exemplified by the final go-ahead for the Tangguh UCC project in Indonesia. This project directly links CCUS technology to unlocking additional natural gas resources. The new threat is clear: activist investor pressure, such as from Elliott Management, could curtail even these focused low-carbon projects. The opportunity, however, lies in capital-efficient partnerships, such as the potential DAC joint venture with ADNOC, which allows BP to maintain a foothold in emerging technologies without deviating from its core business focus.

Investment: A Tale of Two Strategies

BP’s investment patterns since 2024 starkly illustrate its strategic pivot. While significant capital was committed to large-scale CCUS projects in late 2024, these decisions were immediately followed by a 2025 announcement that dramatically increased oil and gas spending while slashing the renewables budget. This reveals a clear hierarchy where decarbonization investments are now primarily justified by their ability to support and sustain traditional energy production.

Table: BP’s Recent Investment Decisions in Energy and Carbon Capture

Partnerships: The Primary Vehicle for a Focused Strategy

In its realigned strategy, partnerships have become BP’s primary vehicle for participating in the carbon capture space. This approach allows the company to share significant capital costs, leverage partner expertise, and de-risk its ventures into less mature technologies like DAC. The nature of these partnerships has also evolved, moving from broad infrastructure alliances to highly specific, asset-focused collaborations and strategic divestments that streamline the company’s portfolio.

Table: BP’s Evolving Partnership Landscape in Carbon Management and Energy

A Geographic Shift from Western Hubs to Global Gas Assets

BP’s geographic focus for carbon capture has tracked its overarching strategic shift. In the 2021-2024 period, activity was concentrated in developed nations with strong industrial bases and supportive regulatory frameworks. Key projects were initiated in the UK (Northern Endurance Partnership) and the US Gulf Coast (Linde partnership), with the goal of establishing CCS hubs to serve multiple industrial emitters. This approach positioned BP as a central player in the decarbonization of established economic zones.

Since 2025, the geographic center of gravity for new, large-scale capital commitments has moved. The go-ahead for the Tangguh UCC project places a major focus on Indonesia, directly linking a multi-trillion-cubic-foot gas resource with an integrated CCUS solution. This marks a pivot toward deploying carbon capture to facilitate fossil fuel extraction in resource-rich regions. Similarly, the potential DAC venture with ADNOC would be located in Texas but is driven by a partnership with a Middle Eastern national oil company. At the same time, BP is divesting assets in the US and Europe. This geographic realignment shows that while the US and UK remain important for existing CCS infrastructure, new strategic investments are increasingly located where they can directly support and extend the life of BP’s global oil and gas portfolio.

Technology Maturity: CCUS Scales Commercially While DAC Remains Exploratory

The data reveals a clear divergence in technological maturity within BP’s strategy. Between 2021 and 2024, the primary effort was to move point-source CCUS technology from the planning stage to commercial reality. Final investment decisions for projects like the Northern Endurance Partnership in the UK were key milestones, validating the business case for capturing emissions from industrial clusters. For BP, CCUS was transitioning into a scalable, commercial-ready technology. DAC, in contrast, was recognized in theory but saw no direct project investment, remaining a future possibility.

The period from 2025 onward has solidified this trend. CCUS is now in the execution phase, as confirmed by the greenlighting of the Tangguh UCC project. This is no longer a pilot; it is a large-scale commercial deployment integral to a major gas project. This validates CCUS as a bankable technology for decarbonizing BP’s core operations. DAC, however, remains firmly in an exploratory phase for the company. BP’s own statements express concerns about its cost and scalability, and its only notable move in the space is a potential, non-binding joint venture with ADNOC. This indicates a “watch and partner” approach rather than a commitment to lead. For BP, CCUS is a tool for today, while DAC is a technology for tomorrow, and one it may prefer to enter as a follower rather than a pioneer.

SWOT Analysis: BP’s Carbon Capture Strategy

Table: SWOT Analysis of BP’s CCUS and DAC Strategy

Forward-Looking Insights: A Year of Pragmatic Execution

The data from 2025 signals a clear and unambiguous path for BP’s carbon capture strategy in the year ahead: pragmatism will dominate ambition. We should expect BP’s CCUS activities to be almost exclusively linked to enhancing the economic viability and extending the operational life of its core oil and gas assets. The model established by the Tangguh project—integrating CCUS to unlock fossil fuel resources—is gaining traction and will likely serve as the blueprint for future investments.

Market actors should pay close attention to two key signals. First is the outcome of the potential joint venture with ADNOC for a DAC facility. A firm commitment would mark BP’s formal entry into the DAC space, but as a cautious partner rather than an innovating leader. Second is the progress of the Tangguh project itself. A smooth and on-budget execution would be a powerful validation of its integrated strategy. The most significant wildcard remains the influence of activist investors like Elliott Management. Their pressure could either reinforce the current focus on fossil-fuel-first projects or push for an even more aggressive divestment from anything perceived as low-return, including strategic CCUS initiatives. The narrative of BP as a broad energy transition leader has lost steam, replaced by that of a disciplined oil and gas major using proven decarbonization tools only where they clearly serve the bottom line.

Frequently Asked Questions

Why has BP’s carbon capture strategy changed recently?
BP’s strategy shifted in early 2025 from building broad, multi-user carbon capture hubs to a more pragmatic approach focused on its core business. Driven by market realities and investor pressure for better financial returns, the company now prioritizes using CCUS technology to directly support and extend the life of its major oil and gas assets, as seen with the Tangguh project in Indonesia.

What is the difference between BP’s approach to CCUS and Direct Air Capture (DAC)?
BP treats CCUS as a commercially mature and bankable technology that it is actively deploying at scale to decarbonize its operations. In contrast, it views DAC as an exploratory, future technology. The company has expressed concerns about DAC’s cost and scalability and is only considering a cautious entry through a potential partnership with ADNOC, rather than making direct, large-scale investments.

How have BP’s recent investment decisions reflected this strategic pivot?
The pivot is clearly shown in its capital allocation. In 2025, BP announced it was increasing its oil and gas investments to $10 billion annually while cutting planned renewables spending by over $5 billion a year. This was accompanied by the sale of its U.S. onshore wind portfolio and its Dutch EV charging business, demonstrating a clear prioritization of fossil fuel projects over broader, low-carbon ventures.

What is the biggest threat to BP’s current carbon capture strategy?
According to the analysis, the most significant threat comes from activist investors, specifically mentioning Elliott Management. Their pressure could force BP to further curtail or divest from low-carbon projects, including strategic CCUS initiatives, if they are not directly tied to maximizing near-term returns from the core oil and gas business.

What does the Tangguh UCC project in Indonesia signify for BP’s strategy?
The go-ahead for the Tangguh UCC project is a prime example of BP’s new, focused strategy. It directly links a multi-billion-dollar CCUS investment to unlocking an additional 3 trillion cubic feet of natural gas resources. This signifies that BP’s primary justification for new, large-scale carbon capture investments is their ability to enhance the value and extend the life of its core fossil fuel assets.

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