MIAMI — In April 2019, BP brought a group of its branded marketers from the United States to Norway, where more than 6 in 10 new vehicles sold—or 64%—are electric vehicles (EVs), according to IHS Markit. For comparison’s sake, EVs’ share of the U.S. market is not even 2%.
One of the marketers on the trip was Charles Howard Jr., vice president of Chase Oil Co. Inc., Florence, S.C., and chairman of the BP Amoco Marketers Association (BPAMA). As the third generation of leadership for the fuel marketer, which has been delivering gasoline and diesel for more than 70 years, Howard was admittedly anxious about the buzz around EVs.
“Before I went, it was a little bit of fear of the unknown,” he told CSP Fuels during an interview at BPAMA’s 2020 convention in March in Miami. “What that trip did for me was give me some clarity on that so that I could see through the fog and the noise, and just kind of see the landscape a little bit, have a better understanding where we’re heading.”
Norway, where generous government subsidies have helped boost EV ownership and encouraged global fuel brands such as Circle K to swap gasoline pumps for EV charging stations, is much further ahead on the electrification curve than the United States.
“For it to really move the needle here, it’s an intersection of convenience and time and charge capability,” said Howard. He cited the predominance today of fast-charging stations, which deliver about an 80% charge in 30 minutes. “When you get that experience down to five to 10 minutes so that it mimics the fuel pump, that's when I think you'll see it impact more in this country,” he said. “But until that happens, I don't think you'll see it.”
'A Very Bold Destination'
Despite the current low level of demand for EV charging in the United States, BP’s branded marketers need to get ready for change. That’s because of BP’s own pledge to reach net-zero carbon emissions by 2050, announced by its new CEO, Bernard Looney, in March. As part of that net-zero pledge, BP aims to cut the carbon intensity of its energy products by 50% by 2050 or sooner.
“It’s a very bold destination,” said Richard Harding, senior vice president of marketing and sales for BP at the BPAMA convention. The details of how BP plans to reach that goal are still in the works; the company plans to announce more information at a capital markets day in September. But for BP’s branded partners in the United States, Harding said the journey will consist of small steps as opposed to large disruptive leaps.
“In our view, the U.S. market will still be the biggest gasoline demand market globally … and so project out to 2050, it'll still be highly material,” Harding said. “So you know, liquid fuels are not going away anytime soon."
The opportunity in the United States is providing fuels more efficiently.
“The more we can make products which fit new engine technology, the greater efficiency they then have that lower the carbon intensity,” said Harding. “And that’s … one of the things that we'll work on, to step through this. And the other is obviously electrification.”
In 2018, BP became a strategic investor in FreeWire Technologies Inc., a San Leandro, Calif.-based tech company best known for its mobile EV charging units. At the BPAMA convention, FreeWire displayed a battery-integrated EV fast-charging station set to go into pilot at five of BP’s ampm locations in California, with the first installation expected in second-quarter 2020. The unit’s battery bank allows the FreeWire station to be installed in locations that lack the electrical infrastructure to support fast charging. Because its draw on the grid is relatively modest, the FreeWire unit’s operating costs are said to be more predictable.
“The pace of electrification in a country the size of the U.S. will vary significantly, but we're already seeing real opportunities to start stepping into electrification on the West Coast and on the East Coast and particularly at state level, where there are policies being put in place, which incentivize the adoption of electrification,” Harding said. The FreeWire pilots will help BP “step into this space and start understanding how the consumer responds.”
BP owns the largest EV charging network in the United Kingdom with its BP Chargemaster business, which has about 7,000 charging stations, Harding said. China and Germany are the other two largest EV charging markets for BP. It plans to apply what it has learned there to the U.S. efforts.
“The challenge with the U.S. is there’s no one U.S. … There's just huge diversity here,” Harding said. “What we need to do is understand the diversity of the consumer you have across the U.S. and make sure that we're being thoughtful about tailoring products and services to those consumers at the right place at the right time through our marketers or indeed directly through investments.”
Carbon Cutting
Jack Allard, head of BPAMA, gives BP credit for setting a net-zero goal and trying to get in front of the EV charging trend, even though it may not transform its U.S. downstream for decades.
“Electrification is coming no matter what, and it’s how you choose to deal with it,” Allard told CSP Fuels. “What [BP’s] saying is, we know that this carbonless society's moving forward.”
“The ship's left the dock, and rather than wait for it to come and manage us, we'd like to get in front of it and try to help manage it,” Howard said of the net-zero pledge. “From a marketer's perspective, how that affects me right now, I don't know. … The devil's in the details, and we won't hear details for some time down the road. But I think it's a progressive way to look at an issue that's worldwide and it's not just fuels.”
Considering the size of the U.S., BP expects electrification of transportation here will “really take some time,” said Harding, although by 2050 it expects the share of EVs “will be very significant.” In its 2019 Energy Outlook, BP expects a large shift toward EVs to begin in the early 2020s and has forecast about 350 million EVs on the road worldwide by 2040.
But EV charging is only one way BP plans to remove carbon from its fuel portfolio.
“We provide energy for mobility, whatever the form of energy needs to be,” Harding said. “It will be electrification. We’re looking at hydrogen, liquefied natural gas and other forms of energy for mobility.” Also included are biofuels such as biodiesel and ethanol, although BP does not currently authorize or endorse the sale of E15, the 15% ethanol blend, from its branded dispensers. However, it is monitoring the demand for E15 and the success of its marketers who sell it separate from their BP branded offer.
“Liquid hydrocarbons will still be the predominant energy for mobility in the U.S. for the foreseeable future, and therefore it’s our job to provide the best products and innovate around those products to our marketers,” Harding said. “But in parallel, help them look at transitional opportunities as time progresses. And the combination of those two things also will help us move toward the targets or the destination that Bernard [Looney] has defined.”
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