Addressing global climate change (part 2)

This follows the commitment we've made in relation to other environmental issues. Our overall goal is to do no harm or damage to the natural environment. That's an ambitious goal which we approach systematically.

Nobody can do everything at once. Companies work by prioritising what they do. They take the easiest steps first - picking the low hanging fruit - and then they move on to tackle the more difficult and complex problems. That is the natural business process.

Our method has been to focus on one item at a time, to identify what can be delivered, and to establish monitoring processes and targets as part of our internal management system and to put in place an external confirmation of delivery.

In most cases the approach has meant that we've been able to go well beyond the regulatory requirements.

That's what we've done with emissions to water and to air.

In the North Sea, for instance, we've gone well beyond the legal requirements in reducing oil discharges to the sea.

And now at our crude oil export terminal in Scotland - at Hound Point - which handles 10 % of Europes oil supplies - we're investing $ 100 m to eliminate emissions of volatile organic compounds.

These VOCs would themselves produce carbon dioxide by oxidation in the atmosphere.

No legislation has compelled us to take that step - we're doing it because we believe it is the right thing to do.

Now, as well as continuing our efforts in relation to the other greenhouse gases, it is time to establish a similar process for carbon dioxide.

Our carbon dioxide emissions result from burning hydrocarbon fuels to produce heat and power, from flaring feed and product gases, and directly from the process of separation or transformation.

Now we want to go further.

We have to continue to improve the efficiency with which we use energy.

And in addition we need a better understanding of how our own emissions of carbon can be monitored and controlled, using a variety of measures including sequestration. It is a very simple business lesson that what gets measured gets managed.

It is a learning process - just as it has been with the other emissions we've targeted but the learning is cumulative and I think it will have a substantial impact.

We have already taken some steps in the right direction.

In Norway, for example, we've reduced flaring to less than 20% of 1991 levels, primarily as a result of very simple, low cost measures.

The operation there is now close to the technical minimum flare rate which is dictated by safety considerations.

Our experience in Norway is being transferred elsewhere - starting with fields in the UK sector of the North Sea and that should produce further progressive reductions in emissions.

Our goal is to eliminate flaring except in emergencies.

That is one specific goal within the set of targets which we will establish.

Some are straightforward matters of efficient operation - such as the reduction of flaring and venting.

Others require the use of advanced technology in the form of improved manufacturing and separation processes that produce less waste and demand less energy.

The task is particularly challenging in the refining sector where the production of cleaner products require more extensive processing and a higher energy demand for each unit of output.

That means that to make gasoline cleaner, with lower sulphur levels, takes more energy at the manufacturing stage. That's the trade off.

In each case our aim will be to establish a data base, including benchmark data; to create a monitoring process, and then to develop targets for improvement through operational line management.

Monitoring and controlling emissions is one step.

The second is to increase the level of support we give to the continuing scientific work which is necessary.

As I said a few moments ago, there are still areas of significant uncertainty around the subject of climate change. Those who tell you they know all the answers are fools or knaves.

More research is needed - on the detail of cause and effect; on the consequences of what appears to be happening, and on the effectiveness of the various actions which can be taken.

We will increase our support for that work.

That support will be focused on finding solutions and will be directed to work of high quality which we believe can address the key outstanding questions.

We're also joining the Greenhouse gas programme of the International Energy Agency which is analysing technologies for reducing and offsetting greenhouse gas emissions from fossil fuels.

The third area is the transfer of technology and the process of joint implementation which is the technical term for projects which bring different parties together to limit and reduce, net emission levels of greenhouse gases.

Joint implementation is only in its infancy, but we believe it has great potential to contribute to the resolution of the climate change problem. It can increase the impact of reduction technology by lowering the overall cost of abatement actions.

We need to experiment and to learn… and we'd welcome further partners in the process. The aim of the learning process must be to make joint implementation a viable and legally creditable concept that can be included in international commitments.

We've begun by entering into some specific programmes of reforestation and forest conservation programmes in Turkey and now in Bolivia, and we're in discussion on a number of other technology based joint implementation projects.

The Bolivian example I think shows what can be done.

Its a programme to conserve 1.5 million hectares of forests in the province of Santa Cruz . It is sponsored by the Nature Conservancy and American Electric Power and sanctioned by the US Government.

Technology transfer is part of the joint implementation process but it should go wider and we're prepared to engage in an open dialogue with all the parties who are seeking answers to the climate change problem.

So those are three steps we can take - monitoring and controlling our own emissions, supporting the existing scientific work and encouraging new work, and developing experiments in joint implementation and technology transfer.

Why are we doing all those things? Simply because the oil industry is going to remain the world's predominant supplier of energy for the foreseeable future.

Given that role we have to play a positive and responsible part in identifying solutions to a problem which is potentially very serious.

The fourth step - the development of alternative energy - is related but distinct.

Looking ahead it seems clear that the combination of markets and technology will shift the energy mix.

The worlds population is growing by 100 million every year. By 10,000 just since I started speaking.

Prosperity is spreading. By the end of the century 60% of the world's economic activity will be taking place in the South - in areas which ten years ago we thought of as Third World countries.

Both these factors will shape a growing level of demand for energy.

At the same time technology moves on.

The sort of changes we've seen in computing - with continuing expansion of semiconductor capacity is exceptional but not unique.

I think it is a reasonable assumption that the technology of alternative energy supplies will also continue to move forward.

But let me be clear.That is not instead of oil and gas. It is additional.

We've been looking at alternative energies for a long time, and our conclusion is that one source which is likely to make a significant contribution is solar power.

At the moment solar is not commercially viable for either peak or base load power generation. The best technology produces electricity at something like double the cost of conventional sources for peak demand.

But technology is advancing, and with appropriate public support and investment I'm convinced that we can make solar competitive in supplying peak electricity demand within the next 10 years. That means, taking the whole period from the time we began research work, that 25 to 30 years will have elapsed.

For this industry that is the appropriate timescale on which to work.

We explore for oil and gas in a number of areas where production today wouldn't be commercially viable at the moment.

Thirty years ago we did that in Alaska.