Energy and the Environment, 10 years on
Speaker: Lord Browne
Speech date: 26 April 2007
Venue: Stanford University, California, USA
Title: BP Group Chief Executive
Speech date: 26 April 2007
Venue: Stanford University, California, USA
Title: BP Group Chief Executive
Ladies and Gentlemen, good afternoon.
I stood here 10 years ago, almost to the day, and first talked about the risk of climate change and global warming. Then, many saw that risk as a remote challenge. So, it is an enormous privilege to come back to Stanford and to speak again on the subject which I believe is the most important issue of our times - the risk of a serious shift in the earth's climate with unknown consequences for human life.
Now, the consensus of informed opinion is that the risk is both greater and closer than was imagined then. Ten years of great scientific work have improved our knowledge of many aspects of the issue.
I'd like to talk today about both the past and the future, what has happened since 1997 and what needs to happen now.
Let me begin with the words I used here ten years ago, six months before the Kyoto conference. I said then:
"There is mounting concern about two stark facts. The concentration of carbon dioxide in the atmosphere is rising. And the temperature of the earth's surface is increasing.
There's a lot of noise in the data. It is hard to isolate cause and effect. But there is now an effective consensus among the world's leading scientists, and serious and well informed people outside the scientific community, that there is a discernible human influence on the climate, and a link between the concentration of carbon dioxide and the increase in temperature. There are still large elements of uncertainty ...but it would be unwise and potentially dangerous to ignore the mounting evidence. The time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate is conclusively proven but when the possibility cannot be discounted. We in BP have reached that point."
I stood here 10 years ago, almost to the day, and first talked about the risk of climate change and global warming. Then, many saw that risk as a remote challenge. So, it is an enormous privilege to come back to Stanford and to speak again on the subject which I believe is the most important issue of our times - the risk of a serious shift in the earth's climate with unknown consequences for human life.
Now, the consensus of informed opinion is that the risk is both greater and closer than was imagined then. Ten years of great scientific work have improved our knowledge of many aspects of the issue.
I'd like to talk today about both the past and the future, what has happened since 1997 and what needs to happen now.
Let me begin with the words I used here ten years ago, six months before the Kyoto conference. I said then:
"There is mounting concern about two stark facts. The concentration of carbon dioxide in the atmosphere is rising. And the temperature of the earth's surface is increasing.
There's a lot of noise in the data. It is hard to isolate cause and effect. But there is now an effective consensus among the world's leading scientists, and serious and well informed people outside the scientific community, that there is a discernible human influence on the climate, and a link between the concentration of carbon dioxide and the increase in temperature. There are still large elements of uncertainty ...but it would be unwise and potentially dangerous to ignore the mounting evidence. The time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate is conclusively proven but when the possibility cannot be discounted. We in BP have reached that point."
For us, and for oil industry as a whole, those comments represented a fundamental change of direction. We came out of denial. Companies, including oil companies, consist of people who are educated, intelligent and who have lives not just within the companies but also as citizens and parents. Many of them, certainly in our case, are scientists and engineers, including some of the best applied scientists and engineers in the world. Those are the people who told us we were wrong to be in denial. They read the evidence and they asked why as a company we were trying to ignore that evidence.
They saw the first faltering attempts to find an international agreement to deal with climate change by reducing emissions and they asked why we, as one of the largest companies in the energy business weren't involved?
I think it is a sign of a very healthy company when people can challenge the orthodoxy.
Some, of course, wanted to believe that there wasn't a problem and we had an intensive internal debate before the 1997 speech was made. That is also healthy.
And the speech itself, and the change of policy which it represented, opened up a similar debate across the industry. The instant reaction was, in the enduring words of one industry veteran, that we had "left the church". The more thoughtful reaction led to a process of reconsideration and over time, a realisation that the industry had to engage with the problem and to be part of the solution. Many other companies had been moving in that direction over a long period of time. But some stood and continue to stand outside that consensus. That is their privilege in a free society. But the old church is now a pretty small place.
Accepting the challenge was, of course, only the first step, the beginning of a new process of change.
They saw the first faltering attempts to find an international agreement to deal with climate change by reducing emissions and they asked why we, as one of the largest companies in the energy business weren't involved?
I think it is a sign of a very healthy company when people can challenge the orthodoxy.
Some, of course, wanted to believe that there wasn't a problem and we had an intensive internal debate before the 1997 speech was made. That is also healthy.
And the speech itself, and the change of policy which it represented, opened up a similar debate across the industry. The instant reaction was, in the enduring words of one industry veteran, that we had "left the church". The more thoughtful reaction led to a process of reconsideration and over time, a realisation that the industry had to engage with the problem and to be part of the solution. Many other companies had been moving in that direction over a long period of time. But some stood and continue to stand outside that consensus. That is their privilege in a free society. But the old church is now a pretty small place.
Accepting the challenge was, of course, only the first step, the beginning of a new process of change.
We in BP went on to set ourselves a target: to reduce our emissions of greenhouse gases by 10 per cent below the 1990 level by 2010. We set that target because we recognised that we wouldn't have a legitimate position in the debate unless we were doing something material and demonstrating just how much could be done at a reasonable cost. We had to set an example.
We achieved our target nine years ahead of schedule and because so much of the reduction came from eliminating leaks and waste we managed to create some $ 650 million of value in the process. We established an internal trading system to ensure that the reductions were achieved in the most effective way. That worked well and has given us great knowledge of how emissions trading can be applied.
In 1997, I committed BP to take five steps. The first was to reduce our operational greenhouse gas emissions, and on this I've already reported. We went on to set a new target of at least stabilising emissions, in spite of the fact that our company would continue to grow its output of hydrocarbons. We are doing this by offsetting our emissions growth through the introduction of lower emission products and services.
We achieved our target nine years ahead of schedule and because so much of the reduction came from eliminating leaks and waste we managed to create some $ 650 million of value in the process. We established an internal trading system to ensure that the reductions were achieved in the most effective way. That worked well and has given us great knowledge of how emissions trading can be applied.
In 1997, I committed BP to take five steps. The first was to reduce our operational greenhouse gas emissions, and on this I've already reported. We went on to set a new target of at least stabilising emissions, in spite of the fact that our company would continue to grow its output of hydrocarbons. We are doing this by offsetting our emissions growth through the introduction of lower emission products and services.
Secondly, we said we would fund continuing research and development. This we have done and let me give three examples. First in China, we are conducting research with the Chinese Academy of Science and Tsinghua University into more efficient systems and technologies for conversion of coal into gas for power and clean fuels. This will, in the short term, provide opportunities to use coal in a much more efficient manner with respect to lower overall carbon emissions. Second, we have invested in the engineering of new systems to take fossil fuels, convert them into hydrogen and carbon dioxide, store the carbon dioxide in geological structures, and use the hydrogen for power generation. Third, we have committed $ 500 million for a research programme into the new generation of biofuels at the Energy Biosciences Institute at, and I apologise for mentioning them on this campus, the University of California at Berkeley in a partnership with the Lawrence Berkeley National Laboratory and the University of Illinois at Urbana-Champaign. Biofuels today, most notably in the US, use food crops and there is much debate over their full cycle carbon content; it may be little different from conventional gasoline. We want to produce fuels from non food crops and ones which have a far lower full cycle carbon content than conventional fuels. We believe this can be done by, for example, using the sugars derived from breaking down cellulosic materials.
Thirdly, we said we would take initiatives for joint development. We have not availed ourselves of the Clean Development Mechanism or the credits attached to it. Rather, we have worked in our joint ventures to encourage activity which was not mandated by regulation at that time. For example, we have taken steps to re-inject naturally occurring carbon dioxide produced with methane in In Salah in Algeria. This project is one of the largest carbon capture and storage systems in the world. We have reduced the burning of natural gas which has no market - so called flaring - across our operations.
Fourthly, we said that we would work to develop alternative fuels and energies for the future. We are growing our solar business, increasing capacity from just over 20 megawatts in 1997 to 200 megawatts in 2006 to over 700 megawatts in the next few years. We have grown our wind power business from scratch and we expect to have half of a gigawatt of energy installed by year end, then adding 1 gigawatt of new capacity each year. In the US, our portfolio includes the opportunity to develop almost 100 projects with a potential total generating capacity of some 15 gigawatts. Overall, we plan to invest at least $ 1 billion per annum in alternative energy sources such as these.
We have redoubled our efforts to produce natural gas, a preferred lower carbon fuel for the generation of electricity and we are now one of the largest non-state producers of natural gas. In the US, we are the largest producer of natural gas and the largest supplier of gas from LNG.
We have developed new higher efficiency and lower carbon output fuels such as BP Ultimate and we are now the largest blender of ethanol into conventional ground transportation fuels giving us valuable experience for the future.
Fifthly, we said we would contribute to the public policy debate in the search for wider global solutions. This we have done by establishing such centres as the Clean Energy Centre at Tsinghua University. In addition, we have dedicated much effort to other public policy forums and Government initiatives in Europe, America and the rest of the world. We are pleased to be a part of Stanford's Programme on Energy and Sustainable Development, and we appreciate the work of David Victor and Tom Heller.
We have redoubled our efforts to produce natural gas, a preferred lower carbon fuel for the generation of electricity and we are now one of the largest non-state producers of natural gas. In the US, we are the largest producer of natural gas and the largest supplier of gas from LNG.
We have developed new higher efficiency and lower carbon output fuels such as BP Ultimate and we are now the largest blender of ethanol into conventional ground transportation fuels giving us valuable experience for the future.
Fifthly, we said we would contribute to the public policy debate in the search for wider global solutions. This we have done by establishing such centres as the Clean Energy Centre at Tsinghua University. In addition, we have dedicated much effort to other public policy forums and Government initiatives in Europe, America and the rest of the world. We are pleased to be a part of Stanford's Programme on Energy and Sustainable Development, and we appreciate the work of David Victor and Tom Heller.
It is clear from this that not only has BP moved on a very great deal but also it is continuing to move. And we have done so against a radically changed background, much of which we saw, at least in part, back in 1997.
Remarkably, we have had ten years of strong economic growth in this country and around the world. I say remarkably because as Fareed Zakaria noted in Newsweek a couple of months ago no one on September 12th 2001 would have predicted that the next five years would be a period of sustained economic growth around the world with that growth running at a level above anything experienced during the 20th century.
That growth has raised living standards here and around the world. Hundreds of millions of people in China and India have been lifted out of poverty. The Chinese economy alone has grown by more than 9 per cent per year since 1997.
But equally there has been a strong growth in greenhouse gas emissions. The world uses 30 per cent more electric power than it did in 1997 and around 50 per cent of that new power has been fuelled by coal. There are some 100 million more cars on the world's roads - almost all still fuelled by oil.
Of course, climate change isn't an issue which stands in isolation. Concern about global warming is part of a wider debate about the security and sustainability of our whole pattern of energy use.
High and volatile prices, instability and conflict in producing countries such as Nigeria and Venezuela, war in the Middle East and the increasing dependence of the world market on a shrinking number of suppliers, many of whom are closed to international investment - those are the reasons why energy security has become such a prominent issue on the agenda of public policy.
Remarkably, we have had ten years of strong economic growth in this country and around the world. I say remarkably because as Fareed Zakaria noted in Newsweek a couple of months ago no one on September 12th 2001 would have predicted that the next five years would be a period of sustained economic growth around the world with that growth running at a level above anything experienced during the 20th century.
That growth has raised living standards here and around the world. Hundreds of millions of people in China and India have been lifted out of poverty. The Chinese economy alone has grown by more than 9 per cent per year since 1997.
But equally there has been a strong growth in greenhouse gas emissions. The world uses 30 per cent more electric power than it did in 1997 and around 50 per cent of that new power has been fuelled by coal. There are some 100 million more cars on the world's roads - almost all still fuelled by oil.
Of course, climate change isn't an issue which stands in isolation. Concern about global warming is part of a wider debate about the security and sustainability of our whole pattern of energy use.
High and volatile prices, instability and conflict in producing countries such as Nigeria and Venezuela, war in the Middle East and the increasing dependence of the world market on a shrinking number of suppliers, many of whom are closed to international investment - those are the reasons why energy security has become such a prominent issue on the agenda of public policy.
It is clear that the mix of inputs to create useful energy will continue to change. We do not believe that this change will result from shortage - for example there are ample reserves of natural gas, oil and coal. Hydrocarbons such as these will continue to be used for the foreseeable future. But we believe the mix of energies will be supplemented by new sources, such as biofuels and alternative energies and be changed by new technologies. The International Energy Agency has, for example, concluded that biofuels could represent over 7 per cent of demand for ground transportation fuels by 2030. We think that this could easily be at least doubled. There is likely to be renewed emphasis on local sources of energy, reducing the reliance on imported fuels. Coal, in the USA, India and China, is abundant and coal use is growing. The question will be how it will be used in a way which reduces its carbon output.
There has also been a significant advance in understanding of the costs of action or of inaction in respect of climate change.
The report by Sir Nicholas Stern which was published last year while still the subject of debate, was a very important step in the development of that understanding.
He made clear that action taken in good time, which means from now on, would be both manageable in terms of its impact on world output and cheaper than the cost of either action taken much later, when the challenge is more immediate, or the cost of inaction in the face of the mounting consequences of climate change.
I believe that this conclusion is becoming accepted. It is one of the two fundamental changes which have occurred in the public debate over the last ten years.
The first was the acceptance that there is a risk, and that the risk required precautionary action.
There has also been a significant advance in understanding of the costs of action or of inaction in respect of climate change.
The report by Sir Nicholas Stern which was published last year while still the subject of debate, was a very important step in the development of that understanding.
He made clear that action taken in good time, which means from now on, would be both manageable in terms of its impact on world output and cheaper than the cost of either action taken much later, when the challenge is more immediate, or the cost of inaction in the face of the mounting consequences of climate change.
I believe that this conclusion is becoming accepted. It is one of the two fundamental changes which have occurred in the public debate over the last ten years.
The first was the acceptance that there is a risk, and that the risk required precautionary action.
The second and equally important is the acceptance of the view that the costs of taking action are manageable. Ten years ago it was commonplace to say that we couldn't afford the costs of dealing with the challenge. Efforts to reduce greenhouse gas emissions would end up destroying the American economy. I think that has been effectively disproved.
Those two changes have begun to affect the business community.
If you look through any newspaper or business magazine you will find innumerable companies describing what they are doing on environmental issues in general and climate change in particular.
And if you look at the news media, you will find that news reports on the subject of climate change have increased dramatically, from 200 reports in 1997 to over 35,000 today.
This is not just an issue of branding or public relations, though it is fascinating and indeed very encouraging that so many companies feel they should be advertising in this way. But it is important to understand that this reflects the reality of customer choice.
Companies large and small are re-examining what they do and how they do it and re designing their activity to reduce their environmental impact and their emissions.
They are changing the ways in which they and their customers use energy. That is true here in the US, in Europe, in China and in Japan.
So one could argue that there is much to celebrate from the last ten years.
Our knowledge of the climate issues has advanced.
The level of serious scientific confidence in the link between emissions resulting from human activity, the concentration of greenhouse gases in the atmosphere and the increase in temperature is now much higher than it was.
Those two changes have begun to affect the business community.
If you look through any newspaper or business magazine you will find innumerable companies describing what they are doing on environmental issues in general and climate change in particular.
And if you look at the news media, you will find that news reports on the subject of climate change have increased dramatically, from 200 reports in 1997 to over 35,000 today.
This is not just an issue of branding or public relations, though it is fascinating and indeed very encouraging that so many companies feel they should be advertising in this way. But it is important to understand that this reflects the reality of customer choice.
Companies large and small are re-examining what they do and how they do it and re designing their activity to reduce their environmental impact and their emissions.
They are changing the ways in which they and their customers use energy. That is true here in the US, in Europe, in China and in Japan.
So one could argue that there is much to celebrate from the last ten years.
Our knowledge of the climate issues has advanced.
The level of serious scientific confidence in the link between emissions resulting from human activity, the concentration of greenhouse gases in the atmosphere and the increase in temperature is now much higher than it was.
It would take a purposefully defiant person to read the latest pieces of analysis and to dismiss the repeated conclusions which are assessed as very likely, indicating a level of confidence in each judgment of more than 90 per cent.
We know that the annual carbon dioxide concentration growth rate was larger during the last ten years, with an average addition of 1.9 parts per million per year. More than it has been at any time since the beginning of continuous direct atmospheric measurements.
We know from the Assessment report published by the IPCC in February that 11 of the last 12 years rank among the 12 warmest years in the record of global surface temperature, that is since 1850.
And we know that sea levels rose by an average of 3.1 millimetres per year over the period from 1993 to 2003.
Our knowledge will no doubt advance further when the next reports from the IPCC are published later this year.
Overall, across the world there is a broad acceptance that the challenge is real, and a growing awareness that precautionary action is necessary and need not destroy economic life.
Public opinion now expects actions that will avert the threat or at least ameliorate it. Political parties and governments are under huge pressure to respond, as are companies.
A respected commentator in the United States recently characterised the issue of climate change as the "the Civil Rights movement" for this generation.
Thus a decade of research of accumulating evidence, a decade of debate. A lot of words have been spoken but only very limited actions have been taken. The words may have made us all more aware of the issues at stake but they haven't changed the reality and the cold fact is that the risks are now greater than they were ten years ago.
We know that the annual carbon dioxide concentration growth rate was larger during the last ten years, with an average addition of 1.9 parts per million per year. More than it has been at any time since the beginning of continuous direct atmospheric measurements.
We know from the Assessment report published by the IPCC in February that 11 of the last 12 years rank among the 12 warmest years in the record of global surface temperature, that is since 1850.
And we know that sea levels rose by an average of 3.1 millimetres per year over the period from 1993 to 2003.
Our knowledge will no doubt advance further when the next reports from the IPCC are published later this year.
Overall, across the world there is a broad acceptance that the challenge is real, and a growing awareness that precautionary action is necessary and need not destroy economic life.
Public opinion now expects actions that will avert the threat or at least ameliorate it. Political parties and governments are under huge pressure to respond, as are companies.
A respected commentator in the United States recently characterised the issue of climate change as the "the Civil Rights movement" for this generation.
Thus a decade of research of accumulating evidence, a decade of debate. A lot of words have been spoken but only very limited actions have been taken. The words may have made us all more aware of the issues at stake but they haven't changed the reality and the cold fact is that the risks are now greater than they were ten years ago.
The whole issue of climate change is rapidly moving from being a long term problem to a real medium term challenge which will affect the lives not just of the next generation but of everyone in this room.
And that in turn means that this is not an issue we can leave until tomorrow in the hope that a magical solution turns up. We have to take action now.
Societies are increasingly telling their governments that action is required. And governments are increasingly reflecting this concern of their citizens.
The truth is only Government can create and police the framework within which progress can be made. I am not a historian but I think it is true to say that at moments of a fundamental shift of values, the leadership role which has enabled society to keep making progress has been the responsibility of Government.
That is not to argue for policies which are prescriptive and which seek to manage the economy and individual lives in micro detail. I don't believe that is the most effective way forward.
The best way in my view is strategic intervention which sets a framework of rules in which market processes can operate.
And that in turn means that this is not an issue we can leave until tomorrow in the hope that a magical solution turns up. We have to take action now.
Societies are increasingly telling their governments that action is required. And governments are increasingly reflecting this concern of their citizens.
The truth is only Government can create and police the framework within which progress can be made. I am not a historian but I think it is true to say that at moments of a fundamental shift of values, the leadership role which has enabled society to keep making progress has been the responsibility of Government.
That is not to argue for policies which are prescriptive and which seek to manage the economy and individual lives in micro detail. I don't believe that is the most effective way forward.
The best way in my view is strategic intervention which sets a framework of rules in which market processes can operate.
Sir Nicholas Stern in his report talks of climate change as the greatest market failure. The paradox perhaps is that the market failure, which is caused by not pricing factors such as greenhouse emissions, will only be solved by the introduction of a market mechanism. Such a mechanism can only be introduced by Governments.
We need a target which stabilises the total concentration of greenhouse gases in the atmosphere at a certain level. There is much debate about that level, and the view of what is acceptable seems to be reducing over the years. A level of 450 to 500 parts per million is the present consensus. We need a trajectory to achieve that, taking us away from the current trend line and we need a rational workable timescale to achieve the necessary reduction.
We need a target which stabilises the total concentration of greenhouse gases in the atmosphere at a certain level. There is much debate about that level, and the view of what is acceptable seems to be reducing over the years. A level of 450 to 500 parts per million is the present consensus. We need a trajectory to achieve that, taking us away from the current trend line and we need a rational workable timescale to achieve the necessary reduction.
Of course we could do this country by country, continent by continent and that's the way we have started.
But it is clear from every strand of analysis which I have ever seen that the most effective solution is to work on the largest possible scale, to target reductions and the resources required to achieve them in the places where the cost of abatement is the lowest and the impact the highest. And this is a global problem since the world's atmosphere cannot be divided up.
I am a great believer in the market process. But that process works best when people develop plans - when they make their own dispositions for the future through investment. That is what a business plan is all about and that is what we need now, a business plan to make the transition to a new lower carbon world.
As the UK Environment Minister David Miliband made clear in a speech a couple of months ago such a transition is a major endeavour. But it isn't unprecedented. The world has been through at least one industrial revolution. Over the last half century we have gone through a process which has changed our patterns of industrial organisation from the local to the global, from the manual to the cerebral. In this country there have been fundamental transformations of society and industrial organisation. Only a century ago California was still a place on the frontier of American life. In 2007 this State is at the heart of global change.
There are many elements to the process of transition. But each element can reinforce the others. Each part of society can stimulate, incentivise and provide choices. Working together the transition is eminently possible.
But it is clear from every strand of analysis which I have ever seen that the most effective solution is to work on the largest possible scale, to target reductions and the resources required to achieve them in the places where the cost of abatement is the lowest and the impact the highest. And this is a global problem since the world's atmosphere cannot be divided up.
I am a great believer in the market process. But that process works best when people develop plans - when they make their own dispositions for the future through investment. That is what a business plan is all about and that is what we need now, a business plan to make the transition to a new lower carbon world.
As the UK Environment Minister David Miliband made clear in a speech a couple of months ago such a transition is a major endeavour. But it isn't unprecedented. The world has been through at least one industrial revolution. Over the last half century we have gone through a process which has changed our patterns of industrial organisation from the local to the global, from the manual to the cerebral. In this country there have been fundamental transformations of society and industrial organisation. Only a century ago California was still a place on the frontier of American life. In 2007 this State is at the heart of global change.
There are many elements to the process of transition. But each element can reinforce the others. Each part of society can stimulate, incentivise and provide choices. Working together the transition is eminently possible.
Governments will need to create structures to provide incentives for the right sort of lower carbon energy to be developed and used. A "level playing" field between technologies, taking into account the cost of carbon, needs to be developed. Emissions trading, taxation, and regulation are all likely to play a role in such a system. Flexibility will be needed but I believe there are good arguments that incentives, such as those afforded by carbon trading, are better for industry than regulation. Regulation will have a role when it comes to the individual consumer since incentives may be impractical to implement on a wide and diffused population.
Governments too will need to continue to use their policy direction to ensure that the right level of research and development takes place, in particular ensuring that risks are made tolerable in demonstration projects.
And they must also work together because this is a global issue, and the costs of meeting the challenge will be higher if we don't act together. Governments need to re-establish the sense of collective endeavour which secured peace and prosperity after the second world war.
They need to create the right legal basis for global action and introduce an "International Climate Agency". This will need recognition of and then a move beyond the limitations of national sovereignty.
Governments too will need to continue to use their policy direction to ensure that the right level of research and development takes place, in particular ensuring that risks are made tolerable in demonstration projects.
And they must also work together because this is a global issue, and the costs of meeting the challenge will be higher if we don't act together. Governments need to re-establish the sense of collective endeavour which secured peace and prosperity after the second world war.
They need to create the right legal basis for global action and introduce an "International Climate Agency". This will need recognition of and then a move beyond the limitations of national sovereignty.
That "Agency" should have the responsibility for:
Government then must set the context, identify priorities - not winners - and establish the most effective way forward. All the players need to know how they are to maximise their contribution.
For industry, one of the largest issues is how electricity is generated. Electric power generation contributes some 40 per cent of carbon dioxide emissions. And 60 per cent of all the generating capacity needed by 2030 has yet to be built. So methods of capturing carbon dioxide from gas, oil or coal fired generation and then storing it in geological structures is an important step. BP is active in this area with two projects proposed - one in Peterhead in Scotland and one at our Carson City refinery in California. These are major projects each costing more than $ 1.5 billion and need clarity on policy and taxation for a company to take the risk to demonstrate something new. That demonstration is of the engineering, at scale, of a technology which has promise to be of vital importance.
- Firstly, establishing a long term stabilisation goal, setting fair and equitable emissions targets on a trajectory which leads to this goal;
- secondly, issuing allowances in line with those targets;
- thirdly, designing new mechanisms which encourage clean, low carbon development in the emerging market economies;
- fourthly, encouraging global technology transfer; and
- finally, the monitoring and verification which will build trust in the new international system.
Government then must set the context, identify priorities - not winners - and establish the most effective way forward. All the players need to know how they are to maximise their contribution.
For industry, one of the largest issues is how electricity is generated. Electric power generation contributes some 40 per cent of carbon dioxide emissions. And 60 per cent of all the generating capacity needed by 2030 has yet to be built. So methods of capturing carbon dioxide from gas, oil or coal fired generation and then storing it in geological structures is an important step. BP is active in this area with two projects proposed - one in Peterhead in Scotland and one at our Carson City refinery in California. These are major projects each costing more than $ 1.5 billion and need clarity on policy and taxation for a company to take the risk to demonstrate something new. That demonstration is of the engineering, at scale, of a technology which has promise to be of vital importance.
Industry armed with the right incentives, must continue to innovate, to find new energy products with less greenhouse gas emissions. We should not close off options but work on specific material items in priority - for example, creating the right biofuels with low full cycle carbon content, or creating the possibility of localised power generation and access to the transmission system.
And then individuals also have a significant part to play.
The individual can make decisions about how much and what sort of energy is consumed. They need to see the consequence of their actions. For example, the real time pricing of electricity and awareness of how much is consumed could reduce the need for peak electric power generation capacity. And they need to be offered other ways of increasing efficiency for example, through the use of redesigned appliances and advanced controls. Some will need direct government intervention in the form of regulation since the choices of many will need direction. Some will need incentives.
And individuals and groups will need to be engaged with experts on the methods of mitigating climate change if unnecessary adverse local reactions are to be avoided.
The art of bringing different strands of society together will be a great challenge.
But it is possible now to see what needs to be done, and that is important because it is one crucial part of the process of reaching a tipping point - a moment when we change direction.
My successor as CEO of BP and the whole of BP team intend to continue to play their part in leading this change in a practical way. And I hope to do the same, in a relevant role, even after I have stepped down as CEO of BP.
There is no cause for fatalism but the real question is one of time.
And then individuals also have a significant part to play.
The individual can make decisions about how much and what sort of energy is consumed. They need to see the consequence of their actions. For example, the real time pricing of electricity and awareness of how much is consumed could reduce the need for peak electric power generation capacity. And they need to be offered other ways of increasing efficiency for example, through the use of redesigned appliances and advanced controls. Some will need direct government intervention in the form of regulation since the choices of many will need direction. Some will need incentives.
And individuals and groups will need to be engaged with experts on the methods of mitigating climate change if unnecessary adverse local reactions are to be avoided.
The art of bringing different strands of society together will be a great challenge.
But it is possible now to see what needs to be done, and that is important because it is one crucial part of the process of reaching a tipping point - a moment when we change direction.
My successor as CEO of BP and the whole of BP team intend to continue to play their part in leading this change in a practical way. And I hope to do the same, in a relevant role, even after I have stepped down as CEO of BP.
There is no cause for fatalism but the real question is one of time.
In 1997, I referred to two views of the momentum of history. Jacques Delors claim that with the Fall of the Wall history was accelerating and Francis Fukuyama's claim that History was ending. What has happened is that history has changed. The old ideological clash of the Left and the Right has to an extent been subsumed in the rivalry of religions and regional beliefs. Tragically violence has not left the stage. But there is something else. The challenge of climate change is contributing to a new sense of community - of a shared fate and a shared future.
In this lies hope.
I was not pessimistic in 1997. Nor am I so now.
Thank you very much.
In this lies hope.
I was not pessimistic in 1997. Nor am I so now.
Thank you very much.
