Addressing the global challenge of climate change will require the efforts of governments, industry and individuals
According to the Intergovernmental Panel on Climate Change (IPCC), warming of the climate system is happening, and it is in large part the result of an increase in greenhouse gas emissions and their concentrations in the atmosphere. The IPCC believes that warming of the climate is likely to lead to extreme weather events becoming more frequent and unpredictable. Results from models assessed by the IPCC suggest that to stand a reasonable chance of limiting warming to no more than 2°C, global carbon dioxide (CO2) emissions need to peak before 2020 and be cut by between 50-85% by 2050.
BP projects that with known and probable policy and technology developments, global CO2 emissions from fossil fuels may be 26% higher in 2030 than they were in 2011, partly as a consequence of coal use in rapidly growing economies. These are projections of what we think is likely to happen, not what we would like to see.
More aggressive, but still plausible, energy policy and technology deployment could lead to slower growth in CO2 emissions than expected, with greenhouse gas (GHG) emissions from energy use falling after 2020 – but probably not enough to limit warming to no more than 2°C. The International Energy Agency has acknowledged that its 450 scenario1, which would put the world on a lower-carbon trajectory, looks increasingly unlikely.
There are several reasons why achieving substantial and rapid GHG emissions reductions will be challenging. Some potentially important lower-carbon technologies – including electric vehicles and carbon capture and storage – still face significant technology, logistical, infrastructure and cost challenges. Concerns about nuclear power have grown in many countries following the Fukushima disaster in Japan. And worries about the cost of renewable technologies have led some governments to reduce their levels of support. In the meantime, the GHG intensity of oil and gas extraction and production looks likely to increase, with the move towards resources that are harder to access.
The scale of the challenge is such that it can only be met through governments acting to provide a clear stable framework for the private sector to invest and for consumers to choose wisely. Global economic challenges have reduced the focus of some governments on climate policy, at least in the short term. But the commitment by both developed and developing countries at the UN’s most recent climate change conference in Doha to negotiate an agreement by 2015 that requires action from all countries by 2020, suggests that an emphasis on carbon policy may return.
Q: What is BP doing to manage carbon risk?
A: Over the past 15 years we've had the opportunity to try a number of approaches to managing carbon risk, so we have a lot of experience of what works and what doesn't. We're convinced the most effective approach is to assess and then mirror internally the direction we think government policy to limit carbon is likely to go. We do this by analysing the probable shape of future carbon policy, and then implementing a basket of actions, each aimed at a different risk or opportunity. For example, we require our large new projects to apply a carbon price as part of their investment appraisal process. -- Paul Jefferiss, Head of Policy, BP
Our view on the policy priorities
We believe that the most effective way to encourage companies to find, produce and distribute diverse forms of energy sustainably is to foster the use of markets that are open and competitive, and in which carbon has a price.
Our view is that putting a price on carbon – one that applies economy-wide and treats all carbon equally, whether it comes out of an industrial smokestack or a car exhaust – will make energy efficiency and conservation more attractive to businesses and individuals, and help lower-carbon energy sources become more cost competitive within the energy mix. While a global price would be most economically efficient, regional and national approaches are a necessary first step, provided temporary financial relief is given to domestic industrial sectors that are trade exposed.
We also support:
- Energy efficiency policies that emphasize efficiency in production and energy use as reducing the amount of energy used can have a material impact on GHG emissions.
- Lower-carbon technologies transitional support for high-potential energy technologies, such as biofuels and wind energy, to incentivize their development and accelerate their deployment.
- Technology research and innovation policies that prioritize and facilitate research and development to provide low-carbon options for the future.
Sharing BP’s experience of carbon trading programmes with China
China has decided to start carbon trading pilot programmes in seven provinces and cities. We have worked alongside other companies, non-governmental organizations, and Chinese central and provincial authorities to share information and lessons learned from our own experience of carbon trading, including BP’s internal trading scheme and direct participation in the EU Emissions Trading Scheme, as well as national trading schemes.
United Nations Framework Convention on Climate Change
At the United Nations climate change meeting in Doha in December 2012, there were three major developments. The first was the extension of the Kyoto Protocol’s commitment period to 2020. The second was the successful close of the negotiations on the long term cooperative action track, which included a set of issues that were defined at the meeting in Bali in December 2007. The third was initial progress on the one remaining negotiating track, which involves the establishment, by 2015, of a comprehensive new international agreement for implementation by 2020 that will include the emerging economies of China, India, Brazil, South Korea, South Africa and Mexico.
1From World Energy Outlook 2012. ©OECD/International Energy Agency 2012, page 553. The IEA’s 450 policy scenario assumes governments adopt commitments to limit the long-term concentration of greenhouse gases in the atmosphere to 450 parts-per-million of CO2 equivalent.
The information on this page forms part of the information reviewed and reported on by Ernst & Young as part of BP's 2012 sustainability reporting. View the full assurance statement.