Energy Security and Climate Change
Speaker: Lord Browne
Speech date: 17 November 2006
Venue: Columbia Business School, New York
Title: Group Chief Executive
Speech date: 17 November 2006
Venue: Columbia Business School, New York
Title: Group Chief Executive
Chairman, Ladies and Gentlemen, good morning
It's a great pleasure and privilege to come back to the School and to see so many old friends in this audience.
We in BP have been through a difficult period over the last few months. The most positive element of such times is the friendship and support which you receive and I'd like to say thank you for that to many people in this room, and to many others across this country.
Today I want to talk about the key factors that make businesses successful and communities successful:
Trust, confidence and optimism.
Investment, which is by its nature an act of confidence in the future, depends on trust and optimism.
That's true if the investor is an individual saving for the future or a corporation investing its shareholders' resources to create new products and new jobs.
Trust and confidence in others have taken us from a primitive economy - in which every individual and every family had to simply look after themselves by doing everything on the basis of self sufficiency - to an integrated society in which we rely on others to provide the goods and services we need everyday - food, clean water and, of course, energy.
Through trust we have grown used to living in a complex economy in which through specialisation, human needs are met and human talents are developed.
Energy is at the heart of the world's complex economy. So close to the heart in fact that we take it for granted.
We're accustomed in this country and elsewhere to energy being available at a low cost and in almost unlimited quantities.
It's a great pleasure and privilege to come back to the School and to see so many old friends in this audience.
We in BP have been through a difficult period over the last few months. The most positive element of such times is the friendship and support which you receive and I'd like to say thank you for that to many people in this room, and to many others across this country.
Today I want to talk about the key factors that make businesses successful and communities successful:
Trust, confidence and optimism.
Investment, which is by its nature an act of confidence in the future, depends on trust and optimism.
That's true if the investor is an individual saving for the future or a corporation investing its shareholders' resources to create new products and new jobs.
Trust and confidence in others have taken us from a primitive economy - in which every individual and every family had to simply look after themselves by doing everything on the basis of self sufficiency - to an integrated society in which we rely on others to provide the goods and services we need everyday - food, clean water and, of course, energy.
Through trust we have grown used to living in a complex economy in which through specialisation, human needs are met and human talents are developed.
Energy is at the heart of the world's complex economy. So close to the heart in fact that we take it for granted.
We're accustomed in this country and elsewhere to energy being available at a low cost and in almost unlimited quantities.
So when the security and stability of energy supplies are called into question, when people talk about the world being
dependent on supplies from the Middle East ... and about the risks of global warming, our confidence in the future is
inevitably brought into question, because something we take for granted is threatened.
That is why those of us who are in the energy business have a responsibility to do everything we can to maintain and enhance security and confidence in the sustainability of the energy system on which this country and the whole world depend.
I believe we are at a historic moment.
We've taken energy security for granted and I don't believe that is sustainable.
If we do nothing insecurity will grow. If we want continued security we have to take action. And that action has to start now.
To explain what I mean let me start by looking at the fundamental causes of the current sense of insecurity.
The first is the belief that resources are about to run out. The bookshops and the newspapers are full of commentaries saying oil is about to peak and that an inexorable growth in demand, particular from Asia, is going to create first a shortage, then a panic.
The second cause of insecurity is the concern that the resources which remain to be developed, particularly of oil and gas, are concentrated in areas which are closed to investment and held by countries who could use their market power against us in times of conflict and tension.
Thirdly, there is the growing concern about the impact of growing hydrocarbon consumption on the levels of carbon in the atmosphere and the sustainability of the world's climate.
That is why those of us who are in the energy business have a responsibility to do everything we can to maintain and enhance security and confidence in the sustainability of the energy system on which this country and the whole world depend.
I believe we are at a historic moment.
We've taken energy security for granted and I don't believe that is sustainable.
If we do nothing insecurity will grow. If we want continued security we have to take action. And that action has to start now.
To explain what I mean let me start by looking at the fundamental causes of the current sense of insecurity.
The first is the belief that resources are about to run out. The bookshops and the newspapers are full of commentaries saying oil is about to peak and that an inexorable growth in demand, particular from Asia, is going to create first a shortage, then a panic.
The second cause of insecurity is the concern that the resources which remain to be developed, particularly of oil and gas, are concentrated in areas which are closed to investment and held by countries who could use their market power against us in times of conflict and tension.
Thirdly, there is the growing concern about the impact of growing hydrocarbon consumption on the levels of carbon in the atmosphere and the sustainability of the world's climate.
And fourthly, there is a growing concern about the credibility of the industry which has the task of meeting energy needs.
Can the industry be trusted to play its part and to do what is necessary in the interests of all citizens?
All those factors have played their part in creating the sense of insecurity.
This insecurity is felt not just in the United States.
Similar views are held by Governments and the public in Europe, in China, in India, in Japan and many other places around the world. The situation of every country is different but there is a common sense of insecurity.
The risk is that such insecurity leads to mistaken actions - a rush to uneconomic solutions including attempts to secure supplies whatever the cost.
For some that would mean the pursuit of so called "self sufficiency" regardless of the impact on competitiveness and the environment.
If self sufficiency is unattainable the next resort will be competition between nations for the ownership of resources, and state to state arrangements to secure supplies.
Such bilateral deals, of course, would simply reduce the amount of supplies available for open trade and would increase price volatility.
For some insecurity leads to the conclusion that we have to limit economic growth if we are to avoid the dangers of climate change.
I believe that is dangerous because it would deny to the people of the developing world the hope of improving their living standards.
To do that would run contrary to the basic human aspiration of improvement. It is impractical as a policy and in my view immoral as well.
None of those approaches are credible solutions.
We have to do better and I believe business has a crucial role in providing answers and new choices.
Similar views are held by Governments and the public in Europe, in China, in India, in Japan and many other places around the world. The situation of every country is different but there is a common sense of insecurity.
The risk is that such insecurity leads to mistaken actions - a rush to uneconomic solutions including attempts to secure supplies whatever the cost.
For some that would mean the pursuit of so called "self sufficiency" regardless of the impact on competitiveness and the environment.
If self sufficiency is unattainable the next resort will be competition between nations for the ownership of resources, and state to state arrangements to secure supplies.
Such bilateral deals, of course, would simply reduce the amount of supplies available for open trade and would increase price volatility.
For some insecurity leads to the conclusion that we have to limit economic growth if we are to avoid the dangers of climate change.
I believe that is dangerous because it would deny to the people of the developing world the hope of improving their living standards.
To do that would run contrary to the basic human aspiration of improvement. It is impractical as a policy and in my view immoral as well.
None of those approaches are credible solutions.
We have to do better and I believe business has a crucial role in providing answers and new choices.
That role is in line with the fundamental purpose of business - which is to provide the goods and services people need in
ways and at prices which are sustainable.
So let's take a business like approach to the challenge of energy insecurity.
The business approach starts with facts.
First there is no physical shortage of oil or gas.
Demand is rising. The demand for energy has grown by 23 per cent worldwide over the last ten years. Almost one third of that growth has come from China where thanks to the development of a more open liberal economy tens of millions of people can now buy commercial energy supplies - in most cases for the first time ever.
And demand will continue to rise. The world's population is growing and prosperity is spreading. Demand in fifteen years time could easily be 25 per cent higher than it is today.
But there is no physical shortage of resources to meet that demand.
Oil is not about to run out.
To date some 1 trillion barrels of oil have been produced.
But another 1.3 trillion barrels of proven, identified reserves remain to be produced.
And there are at least another 1 trillion barrels of conventional resources still to be found.
For gas the figures are even larger. 80 per cent of total resources remain to be produced.
In addition there are enormous volumes of heavy oil, which can be processed using known technology.
That development is economic at current prices - and indeed at prices down to $30 per barrel in some areas with attractive fiscal regimes. The process of developing heavy oil is getting underway.
So let's take a business like approach to the challenge of energy insecurity.
The business approach starts with facts.
First there is no physical shortage of oil or gas.
Demand is rising. The demand for energy has grown by 23 per cent worldwide over the last ten years. Almost one third of that growth has come from China where thanks to the development of a more open liberal economy tens of millions of people can now buy commercial energy supplies - in most cases for the first time ever.
And demand will continue to rise. The world's population is growing and prosperity is spreading. Demand in fifteen years time could easily be 25 per cent higher than it is today.
But there is no physical shortage of resources to meet that demand.
Oil is not about to run out.
To date some 1 trillion barrels of oil have been produced.
But another 1.3 trillion barrels of proven, identified reserves remain to be produced.
And there are at least another 1 trillion barrels of conventional resources still to be found.
For gas the figures are even larger. 80 per cent of total resources remain to be produced.
In addition there are enormous volumes of heavy oil, which can be processed using known technology.
That development is economic at current prices - and indeed at prices down to $30 per barrel in some areas with attractive fiscal regimes. The process of developing heavy oil is getting underway.
And technology is constantly moving on. Ten years ago the limit of development in the deep water of the Gulf of Mexico was
3000 feet of water. Now it is 8000 feet of water. And that is unlikely to be the final frontier.
So there is no physical shortage.
But the other threats to energy security which I mentioned are real. They can't be wished away. We can't live in denial.
There is a gap in the supply of secure sustainable energy.
Our challenge is to fill that energy gap and I believe we can.
More than 75 per cent of the world's remaining proved oil reserves are located in just three regions. North and West Africa, Russia, and the Caspian. And the five states around the Persian Gulf. Iran, Iraq, Kuwait, Abu Dhabi and, of course, Saudi Arabia.
56 per cent of the world's remaining proved natural gas reserves are in just three countries - Russia, Iran and Qatar.
In most of those countries the oil and gas industry is state controlled. Investment is restricted, if it is permitted at all. Even countries which rely on the West, and in particular the United States, for their security do not permit US oil and gas companies to invest in development.
So we need to take action now. And that action can logically only really consist of three possible alternatives: work together to make the supply from those countries more secure; exploit new oil and gas resources at home and internationally; and develop alternative energy sources to oil and gas. We need to do all three.
So there is no physical shortage.
But the other threats to energy security which I mentioned are real. They can't be wished away. We can't live in denial.
There is a gap in the supply of secure sustainable energy.
Our challenge is to fill that energy gap and I believe we can.
More than 75 per cent of the world's remaining proved oil reserves are located in just three regions. North and West Africa, Russia, and the Caspian. And the five states around the Persian Gulf. Iran, Iraq, Kuwait, Abu Dhabi and, of course, Saudi Arabia.
56 per cent of the world's remaining proved natural gas reserves are in just three countries - Russia, Iran and Qatar.
In most of those countries the oil and gas industry is state controlled. Investment is restricted, if it is permitted at all. Even countries which rely on the West, and in particular the United States, for their security do not permit US oil and gas companies to invest in development.
So we need to take action now. And that action can logically only really consist of three possible alternatives: work together to make the supply from those countries more secure; exploit new oil and gas resources at home and internationally; and develop alternative energy sources to oil and gas. We need to do all three.
On the first, I shall not attempt here to set out how the oil producing regions I have just talked about can be made
politically more stable. But I would say that it would be wrong to think that businesses have no part to play. By investing
in energy-rich nations, and developing a fully-fledged trading relationship, businesses can help foster a sense of mutual
engagement and benefit, which will lead to greater security.
We have to demonstrate that the presence of international investors makes countries better off, and that cooperation benefits everyone.
The second strand of action - increasing production at home and internationally there is much to do, and much already underway.
To begin at home, I am glad to say that there are extensive supplies of oil and gas still to be developed here in the US.
Natural gas in Alaska and in the Rockies. Reserves in excess of 4 billion barrels of oil and 19 trillion cubic feet of natural gas in new fields in the deep water of the Gulf of Mexico, with additional probable and possible resource potential.
The industry is investing in all those developments. BP alone has plans to invest almost $ 20 billion in those areas over the next three years.
And there are extensive supplies of both oil and gas to be developed around the world in areas such as the Caspian, Trinidad, Indonesia, Angola, Egypt and Russia.
We and others in the industry are investing in those developments and in the infrastructure - the pipelines and terminals necessary to bring the supplies to the customer.
In some cases those developments need approvals and we hope those approvals will soon be forthcoming.
We have to demonstrate that the presence of international investors makes countries better off, and that cooperation benefits everyone.
The second strand of action - increasing production at home and internationally there is much to do, and much already underway.
To begin at home, I am glad to say that there are extensive supplies of oil and gas still to be developed here in the US.
Natural gas in Alaska and in the Rockies. Reserves in excess of 4 billion barrels of oil and 19 trillion cubic feet of natural gas in new fields in the deep water of the Gulf of Mexico, with additional probable and possible resource potential.
The industry is investing in all those developments. BP alone has plans to invest almost $ 20 billion in those areas over the next three years.
And there are extensive supplies of both oil and gas to be developed around the world in areas such as the Caspian, Trinidad, Indonesia, Angola, Egypt and Russia.
We and others in the industry are investing in those developments and in the infrastructure - the pipelines and terminals necessary to bring the supplies to the customer.
In some cases those developments need approvals and we hope those approvals will soon be forthcoming.
In some cases we need the support of Governments to ensure that areas remain open to investment and to ensure that
infrastructure can be built. That sort of support - led by the US Government - was crucial in opening up the Caspian which
is starting to provide important new supplies to the world market. Similar support will be important elsewhere.
The most important thing is to open the areas which hold resources to international investment. That is crucial for energy security over the next decade.
But that is not in any way to suggest that there is going to be a process of privatisation.
I don't believe that is going to happen.
Natural resources are the major asset of national economies in many countries and in one way or another states and state companies are going to continue to be involved in their development.
The challenge for those of us working in the private sector is to work together with national authorities in a way which is mutually advantageous.
Those investment projects will also need the sustained development of a new generation of individuals with the skills required to bring the resources on stream.
Many skills are important - not least the skill of management - but engineering in all its many forms is the key skill - here in America and around the world.
So that second strand - the development of resources at home and internationally - represents a significant step in protecting security.
That's vital, especially in the next few years .... but not sufficient for the medium and longer term.
The most important thing is to open the areas which hold resources to international investment. That is crucial for energy security over the next decade.
But that is not in any way to suggest that there is going to be a process of privatisation.
I don't believe that is going to happen.
Natural resources are the major asset of national economies in many countries and in one way or another states and state companies are going to continue to be involved in their development.
The challenge for those of us working in the private sector is to work together with national authorities in a way which is mutually advantageous.
Those investment projects will also need the sustained development of a new generation of individuals with the skills required to bring the resources on stream.
Many skills are important - not least the skill of management - but engineering in all its many forms is the key skill - here in America and around the world.
So that second strand - the development of resources at home and internationally - represents a significant step in protecting security.
That's vital, especially in the next few years .... but not sufficient for the medium and longer term.
The third element we require for enduring security is to look beyond oil and gas to fuels which can be produced locally and
which do not threaten the sustainability of the world's climate.
We need to find ways of expanding the supply of energy which offer substitutes rather than relying on ever greater volumes of oil.
That is our aspiration and like any aspiration it has to be backed up by the means of achievement.
That's why we in BP are investing in biofuels. We already buy and blend over 500 million gallons of ethanol here in the United States.
Now we preparing to undertake an extensive research programme costing $ 0.5 billion to harness the latest science to develop crops which can supplement the contribution already made to energy supply by ethanol.
If you can find ways of developing crops which do not displace food crops, and new ways of processing those crops which make use of the whole plant, the potential could be enormous - here and in many other places around the world. To get to that point requires a significant programme of new scientific research. It requires industry and the scientific and engineering community to work together. And to transfer the products of that cooperation into real products for the consumer will require a secure, sustainable regulatory framework. Science, engineering, commerce and public policy all have to come together.
We will announce the details of our investment in this research shortly.
We need to find ways of expanding the supply of energy which offer substitutes rather than relying on ever greater volumes of oil.
That is our aspiration and like any aspiration it has to be backed up by the means of achievement.
That's why we in BP are investing in biofuels. We already buy and blend over 500 million gallons of ethanol here in the United States.
Now we preparing to undertake an extensive research programme costing $ 0.5 billion to harness the latest science to develop crops which can supplement the contribution already made to energy supply by ethanol.
If you can find ways of developing crops which do not displace food crops, and new ways of processing those crops which make use of the whole plant, the potential could be enormous - here and in many other places around the world. To get to that point requires a significant programme of new scientific research. It requires industry and the scientific and engineering community to work together. And to transfer the products of that cooperation into real products for the consumer will require a secure, sustainable regulatory framework. Science, engineering, commerce and public policy all have to come together.
We will announce the details of our investment in this research shortly.
The notion of using crops is not as new as some people think. Henry Ford originally designed the original Model T to run on
ethanol.
Our hope is that the next generation of biofuels can make a cost effective, local and environmentally positive contribution to the protection of energy security.
Biofuels are extremely promising but they are not the only possibility which science and engineering are offering.
We're investing in solar, including the development of state of the art science to create the next generation of solar panels. That business is based here in the US - in Frederick, Maryland.
We're investing in wind power, which offers the potential of a new natural source of supply in this country and elsewhere. The first major projects for that business will be here in the US - in Wyoming.
And we're investing in the process of carbon capture and storage. Taking hydrocarbons, separating out the carbon from the hydrogen, reinjecting the carbon and then using the hydrogen to produce carbon free electricity. We will initiate that process with a major investment in California.
Again across the range of alternative energies I've mentioned, the development of human skills, particularly engineering, is essential if ideas and great science are to be translated into practical reality. We will invest in those skills too.
The great advantage of all the alternatives is that they not only provide local supplies which reduce the risks of import dependence.
They also help to meet the other great challenge of energy insecurity - global warming.
That too is a genuine risk - and a risk which increases in scale over time if no action is being taken.
Our hope is that the next generation of biofuels can make a cost effective, local and environmentally positive contribution to the protection of energy security.
Biofuels are extremely promising but they are not the only possibility which science and engineering are offering.
We're investing in solar, including the development of state of the art science to create the next generation of solar panels. That business is based here in the US - in Frederick, Maryland.
We're investing in wind power, which offers the potential of a new natural source of supply in this country and elsewhere. The first major projects for that business will be here in the US - in Wyoming.
And we're investing in the process of carbon capture and storage. Taking hydrocarbons, separating out the carbon from the hydrogen, reinjecting the carbon and then using the hydrogen to produce carbon free electricity. We will initiate that process with a major investment in California.
Again across the range of alternative energies I've mentioned, the development of human skills, particularly engineering, is essential if ideas and great science are to be translated into practical reality. We will invest in those skills too.
The great advantage of all the alternatives is that they not only provide local supplies which reduce the risks of import dependence.
They also help to meet the other great challenge of energy insecurity - global warming.
That too is a genuine risk - and a risk which increases in scale over time if no action is being taken.
The science of climate change is still being developed. That is true of all science. But when the national academies of
all the G8 countries including the National Academy of Sciences here in the United States say that the growing concentration
of carbon in the atmosphere poses a threat to the balance of the world's climate, we have to take the risk seriously.
The concentration of carbon dioxide is now at around 380 parts per million and is growing around 2 parts per million a year. The number is increasing because the world's use of hydrocarbons - oil, gas and coal - is growing steadily year by year.
Current scientific evidence would suggest that in order to avoid damaging changes in earth's climate, we need to start taking precautionary action now.
The potential for action is clear.
The science of the different alternatives I've mentioned is known and proven. The challenge is to apply the science through great engineering and to develop the technologies at a material scale.
Then they can begin to make a real difference in this country and around the world. We in BP have already committed to an investment of $ 8 billion over the next few years and it is already clear that that commitment could increase further.
I've talked about what we in BP are doing - but we are not alone in this effort. Many companies within the industry and beyond are developing alternative forms of energy which are local and green.
The shift to alternatives - to new forms of biofuels and all the other possibilities I have mentioned - requires sound, simple regulation and a pattern of incentives which will endure even if oil prices are volatile.
The concentration of carbon dioxide is now at around 380 parts per million and is growing around 2 parts per million a year. The number is increasing because the world's use of hydrocarbons - oil, gas and coal - is growing steadily year by year.
Current scientific evidence would suggest that in order to avoid damaging changes in earth's climate, we need to start taking precautionary action now.
The potential for action is clear.
The science of the different alternatives I've mentioned is known and proven. The challenge is to apply the science through great engineering and to develop the technologies at a material scale.
Then they can begin to make a real difference in this country and around the world. We in BP have already committed to an investment of $ 8 billion over the next few years and it is already clear that that commitment could increase further.
I've talked about what we in BP are doing - but we are not alone in this effort. Many companies within the industry and beyond are developing alternative forms of energy which are local and green.
The shift to alternatives - to new forms of biofuels and all the other possibilities I have mentioned - requires sound, simple regulation and a pattern of incentives which will endure even if oil prices are volatile.
The oil price is a political price - effectively set by OPEC. We should not allow volatility and periods of lower prices to
create a new sense of false comfort and to cause investments in alternatives to be deferred or abandoned.
The need is for carbon to be priced in a way which changes behaviour and encourages innovation and substitution.
The major report on the economics of climate change by Sir Nicholas Stern which was published three weeks ago demonstrates that the cost of taking action is perfectly manageable.
Over a long time period the impact on economic activity of moving to a low carbon world is limited and almost certainly much less than the cost of doing nothing and suffering the potentially devastating effects of a fundamental and damaging shift in the climate on which human life depends.
Of course the starting point for any such system is a cap - a target level for the concentration of carbon in the atmosphere. That target can then be met not through rigid bureaucratic regulation but through the market - with the price of carbon sending the appropriate signal to stimulate investment.
The Stern Report endorses the view that the world should aim to limit the carbon dioxide equivalent of Greenhouse Gas concentration in the atmosphere within the range 450 to 550 ppm.
I believe that is the right target.
But there is no point in having a target unless we have the mechanisms to reach that target.
At the end of the Second World War those who wanted to build peace and prosperity recognised the need to establish international institutions which could help to deliver those objectives.
The IMF, the World Bank, and the international trade organisation which became the WTO. Their story over the last 60 years is one of tremendous success.
The need is for carbon to be priced in a way which changes behaviour and encourages innovation and substitution.
The major report on the economics of climate change by Sir Nicholas Stern which was published three weeks ago demonstrates that the cost of taking action is perfectly manageable.
Over a long time period the impact on economic activity of moving to a low carbon world is limited and almost certainly much less than the cost of doing nothing and suffering the potentially devastating effects of a fundamental and damaging shift in the climate on which human life depends.
Of course the starting point for any such system is a cap - a target level for the concentration of carbon in the atmosphere. That target can then be met not through rigid bureaucratic regulation but through the market - with the price of carbon sending the appropriate signal to stimulate investment.
The Stern Report endorses the view that the world should aim to limit the carbon dioxide equivalent of Greenhouse Gas concentration in the atmosphere within the range 450 to 550 ppm.
I believe that is the right target.
But there is no point in having a target unless we have the mechanisms to reach that target.
At the end of the Second World War those who wanted to build peace and prosperity recognised the need to establish international institutions which could help to deliver those objectives.
The IMF, the World Bank, and the international trade organisation which became the WTO. Their story over the last 60 years is one of tremendous success.
Markets have been opened up and the growth in world trade - a 30 fold increase, or growth of 7 per cent real growth annually
since 1950 has led the process of economic growth across the world and rising living standards for billions of people.
There is much more to do, of course. We need a new trade round to bring in the emerging market economies. But overall, the post-war initiatives to encourage economic prosperity have been highly successful.
I believe that now we need the same sense of global architecture - to tackle the global threats posed by environmental concerns.
The various steps I have proposed are all attainable - but only if different parts of society work together.
Governments can create institutions and enable them to succeed.
Governments can help to open markets for investment, to develop systems to manage volatility. They can set the incentives for the development of alternatives.
But Government can't provide all the answers. They need business and we have to work together to deliver the objectives.
Business is the only part of society which is organised to respond to the needs and the incentives. Business can bring together the capital, the skills and the understanding of markets to take scientific advances and to apply them through engineering and investment in ways which give people better choices.
The problem - our problem - is that business isn't always trusted to do what is right, in the right way.
To develop and deploy solutions on a global scale needs companies which can operate on that scale.
But large global companies are usually feared rather than loved. Some are hated.
There is much more to do, of course. We need a new trade round to bring in the emerging market economies. But overall, the post-war initiatives to encourage economic prosperity have been highly successful.
I believe that now we need the same sense of global architecture - to tackle the global threats posed by environmental concerns.
The various steps I have proposed are all attainable - but only if different parts of society work together.
Governments can create institutions and enable them to succeed.
Governments can help to open markets for investment, to develop systems to manage volatility. They can set the incentives for the development of alternatives.
But Government can't provide all the answers. They need business and we have to work together to deliver the objectives.
Business is the only part of society which is organised to respond to the needs and the incentives. Business can bring together the capital, the skills and the understanding of markets to take scientific advances and to apply them through engineering and investment in ways which give people better choices.
The problem - our problem - is that business isn't always trusted to do what is right, in the right way.
To develop and deploy solutions on a global scale needs companies which can operate on that scale.
But large global companies are usually feared rather than loved. Some are hated.
Large global companies are seen as concentrations of power which trample on the interests of individuals, families and
sometimes whole nations.
Too often business is seen as distant, unconcerned, arrogant, secretive and dirty.
There is a mountain of polling evidence to support such assertions sustained by the daily news coverage which often presents business as dishonest and manipulative.
And, of course, those impressions are sometimes fed by true stories.
But we should never forget that businesses - large and small - create the jobs, the products and the wealth that make our lives possible. They contribute to the cost of our public services. And businesses meet the needs of citizens, and respond to their changing preferences more quickly and often more fairly than governments can.
And my experience over almost 40 years in business is that the overwhelming majority of companies and of the people who work for them are decent, honest and trustworthy.
As human beings, however, they make mistakes. Often serious mistakes and errors of judgement - which can undermine confidence in business generally, and which in our sector can add to the sense of insecurity because people cease to believe that business can bring the solutions which are necessary.
As I mentioned at the beginning we have had our problems over the last two years and we've suffered a great tragedy with the loss of 15 lives at Texas City.
Too often business is seen as distant, unconcerned, arrogant, secretive and dirty.
There is a mountain of polling evidence to support such assertions sustained by the daily news coverage which often presents business as dishonest and manipulative.
And, of course, those impressions are sometimes fed by true stories.
But we should never forget that businesses - large and small - create the jobs, the products and the wealth that make our lives possible. They contribute to the cost of our public services. And businesses meet the needs of citizens, and respond to their changing preferences more quickly and often more fairly than governments can.
And my experience over almost 40 years in business is that the overwhelming majority of companies and of the people who work for them are decent, honest and trustworthy.
As human beings, however, they make mistakes. Often serious mistakes and errors of judgement - which can undermine confidence in business generally, and which in our sector can add to the sense of insecurity because people cease to believe that business can bring the solutions which are necessary.
As I mentioned at the beginning we have had our problems over the last two years and we've suffered a great tragedy with the loss of 15 lives at Texas City.
We've fallen short of the standards we expect for ourselves and which people in this country and every other country in the
world should be able to expect from one of the world's largest companies.
Our challenge is to learn, and to work together with everyone - Government, the unions, our partners, and the communities in which we operate - to apply the lessons from what has happened - particularly the lessons on process safety and integrity - and to incorporate those lessons into our management system.
That process is now underway and we are absolutely committed to its delivery, and through that delivery to the restoration of the trust and confidence in our business and the industry generally.
That trust is essential if we are to play our full part in the process of restoring energy security.
The industry can't live in denial of the problems and challenges we all face - whether the challenge is climate change or the safety and integrity of our operations.
We have to start from reality, from the facts, and we have to win trust by addressing the issues in the most practical way possible.
There is an emerging energy gap. If we do nothing that gap will widen.
There are real risks - of undue dependence and of serious, damaging changes in the world's climate. The risks are real but they can be avoided.
We need to learn. As companies, as an industry, and as a society we need to learn about the reality of the risks and about the real options for action. I believe we can move beyond the rigid boundaries, beyond the public / private stand off.
I believe we can develop education - to give the skills in engineering and all the other necessary disciplines.
I believe we can create a new international institution which sets a framework for action.
And above all I believe we can work together in new and radically different ways.
Our challenge is to learn, and to work together with everyone - Government, the unions, our partners, and the communities in which we operate - to apply the lessons from what has happened - particularly the lessons on process safety and integrity - and to incorporate those lessons into our management system.
That process is now underway and we are absolutely committed to its delivery, and through that delivery to the restoration of the trust and confidence in our business and the industry generally.
That trust is essential if we are to play our full part in the process of restoring energy security.
The industry can't live in denial of the problems and challenges we all face - whether the challenge is climate change or the safety and integrity of our operations.
We have to start from reality, from the facts, and we have to win trust by addressing the issues in the most practical way possible.
There is an emerging energy gap. If we do nothing that gap will widen.
There are real risks - of undue dependence and of serious, damaging changes in the world's climate. The risks are real but they can be avoided.
We need to learn. As companies, as an industry, and as a society we need to learn about the reality of the risks and about the real options for action. I believe we can move beyond the rigid boundaries, beyond the public / private stand off.
I believe we can develop education - to give the skills in engineering and all the other necessary disciplines.
I believe we can create a new international institution which sets a framework for action.
And above all I believe we can work together in new and radically different ways.
Companies, governments, the academic world and consumers. Each contributing to a common objective, and each relying on the
others to make their own distinctive contribution. Achieving security together - through trust and cooperation. Setting the
aspiration and then developing the means of delivery in the most practical possible way.
And by doing that, restoring confidence in the future - restoring the belief that the future, for all its challenges and uncertainties, will be better than the past.
The worst thing of all would be to believe that we don't need to change anything and to allow the current situation to deteriorate because we can't bear to give up the ways of the past.
Let me finish with a quotation from Abraham Lincoln.
Speaking at the end of 1862 he said, "the dogmas of the quiet past are inadequate to the stormy present. We must think anew and act anew. We must dis-enthral ourselves."
Thank you very much for your attention. And thank you again for your support.
And by doing that, restoring confidence in the future - restoring the belief that the future, for all its challenges and uncertainties, will be better than the past.
The worst thing of all would be to believe that we don't need to change anything and to allow the current situation to deteriorate because we can't bear to give up the ways of the past.
Let me finish with a quotation from Abraham Lincoln.
Speaking at the end of 1862 he said, "the dogmas of the quiet past are inadequate to the stormy present. We must think anew and act anew. We must dis-enthral ourselves."
Thank you very much for your attention. And thank you again for your support.
Related links
Reducing carbon dixoide emissions through alternative energy solutions
