Transcript Iema 181007
Climate Change Policy Gordon Harvey The extent of the challenge • Global emissions need to peak no later than 2030 and be lower in 2050 than they are now. • In the developed countries there is increasing alignment that GHG emission reductions of 60 to 80% vs 1990 will be required by 2050. • We recognise that these targets will have profound implications on our business. 2 Climate change context: BP’s point of view • Climate change is happening; there are costs of both mitigation and adaptation. Doing nothing is not an option • Policy needs to be put in place to reduce emissions over time, significantly in the case of developed countries. • A carbon-constrained economy creates business opportunities for BP as well as potentially creating some additional costs. • But • The provision of cheap and reliable energy has been a major factor in the economic and social development of the world • New technologies will increasingly be needed to supply low carbon energy • Fossil fuels will play an important part in energy supply for several decades to come 3 Our global presence Oil Gas Chemicals Refining Market positions An opportunity and a responsibility 4 BP in the North Sea • 15% of UK production • 45 producing fields • 33 platforms in operation • 10 pipeline systems • 3000 BP staff + contractors • >$2bn Capex + Opex per annum • Production over 400mbd • Total resources circa 3.5 billion barrels bn boe 5 The climate change journey 1997 BP publicly acknowledges the need for precautionary action to cut GHG emissions after exiting the Global Climate Coalition. 1999 BP initiates the CO2 capture project with other companies and governments, studying methods of capturing and storing CO2 at power plants. 1998 BP sets target to cut emissions from our operations to 10% below 1990 levels by 2010 2001 BP achieves its 2010 target nine years early, having reduced GHG emissions by energy efficiency projects and cutting flaring of unwanted gas. 2000 BP begins funding the Carbon Mitigation Initiative at Princeton University, exploring solutions to climate change. 2003 Based on work at Princeton, BP sets out a range of technology options to stabilize GHG emissions over 50 years, including increases in solar, wind, gas-fired power and carbon capture and storage. 2005 BP announces plans for the world’s first industrial-scale hydrogen power plant. BP launches BP Alternative Energy 2002 BP announces plans to build a 2004 BP’s solar business moves into wind farm at Nerefco, the profit and announces plans to double Netherlands. production. BP launches CO2 capture and storage project at the In Salah gas field in Algeria. 6 Innovation: Magnus EOR project Magnus Gas Injection Line Schiehallion Gas Export Line Foinaven Live Crude Sullom Voe FLAGS SHETLAND ISLANDS Gas to Market > 400,000 tonnes p.a. reduction in greenhouse gas (CO2) emissions Cost curve Marginal abatement cost in the different scenarios* Abatement required beyond business as usual 2030, Gton Cost of abatement EUR/tCO2e 100 50 550 ppm 450 ppm 400 ppm 16–21 24–29 31–36 Coal Biomass CCS co-firing Avoided Industrial deforestation feedstock Africa Industrial substitution CCS Soil CO2 Solar power 2030 High cost CCS; industry Coal High cost abatement* land use retrofit Industrial Avoided abatement* motor deforestation Wind systems America Smart transit, air, fuel subst., non CO2 Nuclear 0 0 1 2 3 4 5 -50 -100 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Stand-by losses Re/afforestation Fuel efficient vehicles • Africa • America Water heating • OECD Lighting systems Air Conditioning Fuel efficient commercial vehicles Marginal cost: Marginal cost: Marginal cost: 30-35 EUR/tCO2 35-40 EUR/tCO2 50-60 EUR/tCO2 Insulation improvements -150 • Technically possible to solve global warming only Abatement GtCO2e/year in 2030 addressing measures below 40–50 EUR/tCO2e • However, politically very challenging, due to fragmentation of opportunities across sectors and regions * Assuming opportunities are addressed in order of increasing cost 5 Source: Team Analysis 8 Carbon price “funnel” is the key framework for future explicit carbon prices and transitional incentives 9