BP is to cut the amount of oil and gas it produces by 40% by the end of the decade, the energy giant announced on Tuesday as it fleshed out plans to become a “net zero” company by 2050.

Boss Bernard Looney said the business will increase the amount it invests in low-carbon projects tenfold by 2030 to around five billion US dollars a year (£3.8 billion).

The move gained him unusual praise from environmental group Greenpeace, which called it a “necessary and encouraging start”.

Slashing oil and gas production and investing in renewable energy is what Shell and the rest of the oil industry needs to do for the world to stand a chance of meeting our global climate targets

Mel Evans, senior climate campaigner for Greenpeace UK, said: “BP has woken up to the immediate need to cut carbon emissions this decade.

“Slashing oil and gas production and investing in renewable energy is what Shell and the rest of the oil industry needs to do for the world to stand a chance of meeting our global climate targets.”

Mr Looney was put in charge of one of the world’s largest oil companies in February and made it clear from day one that he wanted his term in charge to be defined by the carbon transition.

His plan is to use the oil company’s hydrocarbons – oil and gas – to invest in the transition.

“It’s simply not possible to transform a company that’s 110 years old by simply shutting off the taps in one area and pivoting 100% into the new,” he said.

BP will continue to use cash from its oil business to fuel the transition, he added, “it enables the strategy”.

It is a plan that Mr Looney had not intended to reveal yet, but a decision to slash the company’s dividend in the face of lower oil prices and the Covid-19 crisis forced his hand somewhat.

“We had planned to share this news next month … but particularly as we are making the announcement around the dividend we wanted to give the story all at once so people can put all the decisions in context,” he said on a call with reporters.

“Apologies if this has come as a bit of a surprise to any of you.”

Amid vague-sounding phrases such as moving from being an international oil company to an integrated energy company, and “delivering solutions for customers”, Mr Looney’s plans contain a series of concrete-looking targets which were welcomed by campaigners.

Chief among these are the 40% cut in hydrocarbon production and the five billion dollars a year it will invest in low-carbon projects.

BP has also pledged to not start exploring for oil and gas in any new countries, develop 50 gigawatts of renewable energy generation by 2030, and slash its own emissions by up to 40%.

The plan “does not rely on (carbon) offsets, though we believe the world will need offsets to decarbonise”, Mr Looney said in a call with investors.

Andrew Grant, at think-tank Carbon Tracker, said: “BP has radically changed the game. In the arms race of emissions announcements, most oil and gas peers have conveniently ignored the global need to produce and use less oil and gas – BP’s production cut of 40% by 2030 makes them unquestionably the industry leader.

“We have long argued that an oil company giving greater certainty about cutting production to fit within a Paris-aligned budget would give confidence on both of those fronts – the strong reaction to BP’s announcement from the market shows it agrees.”

It is a big contrast to February when critics condemned BP’s plans to become “net zero” – not to emit more than it absorbs through carbon capture and the like – by 2050 as being too far into the future.

Mr Looney will have allayed some of the worries that he could shunt the hard work to the next chief executive by setting clear targets for 2030, with some of them delivered by 2025.

However, the move is unlikely to pacify environmentalists.

Ms Evans, from Greenpeace, added: “BP must go further, and needs to account for or ditch its share in Russian oil company Rosneft. But this is a necessary and encouraging start.”