Cleaner track would help security and climate - BP

09 June 2008 16:19  [Source: ICIS news]

KUALA LUMPUR (ICIS news)--The issues of energy security and climate change could be addressed together through diversification of energy supplies into cleaner sources, said BP CEO Tony Hayward on Monday.

Carbon emissions have risen by 35% since 1990 but the carbon intensity, the amount of carbon emitted per unit of energy consumed, has actually been on a downward trend,” he said at the Annual Oil and Gas Conference in Kuala Lumpur, Malaysia.

Hayward outlined options to deal with both energy diversification and carbon emissions such as energy efficiency, renewable sources, biofuels, nuclear power, clean coal technology and carbon capture and storage (CCS).

“BP itself sees these options as a significant business opportunity and is investing more than $1bn annually into these methods of alternative energy, specifically, wind and solar as well as carbon capture and storage,” he said.

The oil and petrochemical major has also committed $500m (€315m) to the US-based Energy Biosciences Institute which develops advanced biofuels that do not compete with food crops.

“However, if we are going to tackle climate change, the industry cannot do it by itself,” Hayward said.

"Governments must ensure the right regulatory and fiscal framework to allow the industry to fully integrate such alternative energy investments into its strategic growth decisions."

BP favours a cap-and-trade system where an environmental regulator establishes a cap that limits emissions from a designated group of polluters to a level lower than their current emissions. Because the emissions cap restricts the amount of pollution allowed, permits that give a company the right to pollute take on financial value.

Companies are free to buy and sell permits in order to continue operating in the most profitable manner available to them.

Hayward added that governments also have a key role of designing transition incentives for new technology such as renewables and CCS that would in turn reward cost reductions over time.

The AOGC is an industry wide forum attended by participants of the oil and gas sector and runs from 8-10 June.

($1 = €0.63)

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By: Bohan Loh
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