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Lucy Nation on bp's decarbonisation plans

Published:
31 May2022

Lucy has worked for bp since 1998 in Australia, the US, UK, Europe and Singapore. In January 2021 Lucy was appointed to the position of Vice President of regions, cities and solutions, Asia Pacific – a new division of bp focused on providing integrated and decarbonized energy solutions to corporations, cities, regions and bp’s own businesses in support of bp’s Net Zero commitments.

Welcome

Good evening, everyone.

 

I’d like to start by acknowledging the Kaurna people as the custodians of the lands and waters of the Adelaide region, on which we meet today. I acknowledge their continued connection to country and leadership in sustainability.

 

It is wonderful to be back in Adelaide, which is where I grew up.

 

I’m Lucy Nation, and I currently lead the decarbonisation of bp’s businesses in Asia Pacific and work with our customers on their decarbonisation. From 1 July will lead bp’s hydrogen business in Australia and Asia Pacific.  Tonight, I want to focus on two key things:

  1. What we think Australia will need to succeed in the energy transition
  2. Why we must get this right quickly – which boils down to two great strategic challenges, climate change and energy security. As we have heard from several delegates today.

 

Before doing so, let’s celebrate what has been a great first day with lots of learning and great discussion – and being able to see people again face-to-face!

 

I’d like to give my thanks to the spectrum of speakers we heard from today– led by the South Australian Premier Peter Malinauskas.

 

I’d also like to give special praise to two pioneers who have led the charge on public policy reform - Minister Alannah MacTiernan from Western Australia and Dr Alan Finkel AC. An honour to have them both here today.

 

And tomorrow’s line up will add to understanding the mega trends shaping the hydrogen industry, its path to maturity and a crucial issue – how the hydrogen industry gains social licence.

 

This Conference is timely. Indeed, just 10 days ago, Australians made it clear that they expect a meaningful pathway to net zero emissions. Australia has far more to gain than it does to lose by embracing and accelerating a low carbon future. And in fact, the planet needs Australia to grasp the green opportunities that are before it.

 

But first, a little more about us and why bp. bp shares that ambition, and we proudly aim to be a triple net zero company by 2050 – or sooner – and to help the word get to net zero. That’s net zero on Scope 1, 2 and most critically scope 3 emissions – we are proud to be the first major energy company to commit to net zero on Scope 3.

 

bp has been operating in Australia for over 100 years and runs several large and very successful businesses here which give us assets and capability that will help us to play an important role in that transformation. We can also leverage our global experiences operating across the production, supply and retail parts of the business to fast track what we are doing in Australia.

 

And we are already making the investments in the projects, technology and partnerships here and abroad that can unlock a low-emissions future with hydrogen playing a crucial role.

 

The role of hydrogen

Those of us gathered here today know that hydrogen is a critically important part of the energy transition.It will provide a low carbon energy for our customers that are difficult to electrify, especially in heavy industry – mining, manufacturing and chemicals production.

 

And how it will help to decarbonize long-distance transportation in marine and heavy-duty transport. We know that.

 

But two events highlight the need to further fast track words into action.

 

The first is the latest assessment from the Intergovernmental Panel on Climate Change that makes clear that we are not on track to limit temperature increase to 1.5°C. That’s what the science calls on us to achieve. It amplifies the need for clean, reliable and affordable energy. We also know delaying decisive action to reduce emissions sustainably could lead to significant economic, environmental and social costs. Or in the words of the Premier this morning, the race is on to fulfill the obligation that we hand the world on in a better state than we inherited it. The speed of the transition will be linked to the economics of the transition. That’s where hydrogen will play a really important global role.

 

And secondly: security of supply….Historically, Russia supplied 14% of the world’s crude and condensate, and is the world’s second-largest producer of natural gas, behind the United States.

 

The devastating conflict in Ukraine and the subsequent sanctions on Russia have destabilised world energy markets.

 

As we have heard, many nations are looking seriously to countries like Australia to help firm up energy supply with an accelerated focus on low carbon solutions. But renewable energy is also the obvious solution, in my opinion, to Australia’s own energy security concerns given our current dependence on imported crude and fuel products.

 

The need for clean, affordable and reliable energy has never been more acute.

 

This is where hydrogen can help, and Australia has an important global role to play to bring economic, clean hydrogen to the global market quickly.

 

bp analysis shows that hydrogen could have up to 15% share in primary energy consumption by 2050. That’s the same as the role natural gas plays in the world today.

 

And it could be double this figure when we factor in additional hydrogen demand to generate electricity and produce products such as ammonia, methanol and synthetic fuels.

 

How we play our hand over the next 12 to 24 months will be critical.

 

How we respond to the IPCC findings and Russian sanctions.

 

How we listen and respond to Australian’s, who have voted in favour of action on climate change.

 

And how we seize the opportunity to make Australia a renewable energy superpower.

 

Australia's role

What excites bp is that Australia has huge potential to contribute to global supply of low-carbon hydrogen as the world decarbonises.

 

We have a stable economy, a skilled workforce and excellent research and development capabilities.

 

And couple all of that with existing world class infrastructure in terminals, ports, and pipelines…But above all it is our natural advantages. Australia is the envy of the world with abundant renewable resources.

 

As Professor McMillan told us, Australia’s has solar radiation of 58 million Peta Joules which is equivalent to 10 times the world’s energy consumption per annum. And with strong wind resource to allow more cost-efficient firming, Australia will have some of the cheapest green electrons on the planet. And a lot of them. Which will allow us to produce some of the most economic green hydrogen. And hence our aspiration should be to become “the Saudi Arabia of Green Energy” in the decades ahead.

 

But in order for that to happen, and in order to address the climate and energy security imperatives, we are going to have to harness all parts of “Team Australia”, as Bettina rightly called it, to get this done as quickly as the world needs.

 

Exactly as Elise stated – there is a lot to be done to live up to our potential.

 

The way I explain it is that we need to build a chair. Each of us are working on one leg of the chair, but without all four legs we will have nothing to sit on. One leg is firmed demand and demand vectors; one is supply, infrastructure and logistics; one is technology and equipment manufactures – both to produce and use new energies; the fourth is financing and then bringing it all together as the base of the chair is government, policy and certification. We need all five parts developed together quickly to get the Australian hydrogen industry to where it needs to be. Having each of us work hard on one part of the chair is not going to get us there. We are going to need all parts of the chair for the chair to work. And all parts of the chair must be made in a way that is congruent with social licence.

 

The need for partnerships and government policy

No one company, nor one government, can build the chair alone. We need to work together – which is why we’re building partnerships across all parts of the supply chain, including working closely with Governments, to get projects off the ground.

 

We need to tie together supply and demand. To act as the bridge between the two to solve the many “chicken and the egg” problems.

 

For example, to develop a hydrogen mobility offering to support the decarbonisation of heavy transport, we need to build consortia’s that bring together transport operators, vehicle manufacturers, low carbon hydrogen supply, government policy and distribution partners.

 

We need to develop bespoke and compelling offers that drive demand from transport operators and, in turn, incentivises vehicle manufacturers to bring their fuel cell electric trucks into Australia.

 

We also need Government support in the early stages to help bridge the total cost of ownership gap until the industry scales sufficiently to be economically competitive.

 

We need more policies to allow for the provision of new infrastructure for hydrogen, or to repurpose existing infrastructure.

 

Where new gas infrastructure or equipment is planned, it should be capable of repurposing – or actually made ready – for hydrogen.

 

bp's net zero and hydrogen priorities

bp is very serious about hydrogen, with plans to reach a 10 per cent share in core markets by the end of this decade.

 

We believe that we can make a significant contribution to “Team Australia” and chair building as the scale of up hydrogen plays to our strengths:

  • We are working on hydrogen supply and decarbonising mobility in many countries around the world and bring the experience of what is working and what is not.
  • ·We own 50% of Lightsource bp, a major solar developer that is progressing multiple Australia developments.
  • We have deep and long-term relationships with our global and local customers and partners who are looking for integrated decarbonisation solutions.
  • We have decades of experience of delivering and operating complex global projects.
  • We have been participating in joint venture projects for decades.
  • We draw on the expertise of our word-class global trading and shipping business, with a presence in 140 countries and deep expertise in price risk management.
  • Our track record of creating successful businesses. Like in offshore wind, where we have grown our pipeline from zero to 5 gigawatts in under two years, supplementing our onshore wind business that is almost 20 years old.
  • And very importantly our skills in logistics, product quality, safety, operating, marketing, and partnering are all useful.

 

We’re already putting these capabilities into action by developing hydrogen mega projects like our planned green and blue hydrogen production facilities in Teesside in the UK. They have the potential to deliver 30% of UK's 2030 target for hydrogen production.

 

These are deeply complex projects which require partnership along the value chain.bp also has a significant focus on opportunities here in Australia.

 

Kwinana transition

For example, our plans for an energy hub at our former Kwinana refinery. Part of this includes our partnership with Macquarie to build a green hydrogen production facility.

 

It involves the installation of electrolysers, hydrogen storage, compression and distribution infrastructure.

 

The hydrogen produced will support domestic and export demand.Recently granted up to A$70m from the Australian Government, Kwinana fits our vision for an integrated energy hub that will produce and distribute renewable fuel and energy for the future. It has an exciting ability to re-purpose and re-use utilities, equipment and infrastructure from the refinery to speed up development.

 

We are already underway with plans for renewable fuels manufacturing at the site, producing sustainable aviation fuel and renewable diesel for the growing market in Western Australia and regionally in addition to green hydrogen. Our plans for Kwinana fit our strategy of being the partner of choice for customers who have their own emission reduction commitments.

 

Geri transformation

bp is also progressing a green hydrogen and ammonia project “GERI” near Geraldton in the Oakajee region of WA.

 

Phase 1 is targeting deployment in 2025 and scaling to 5.5GW electrolysis is planned by 2031.

 

These are just a couple of examples of the work bp is doing, with more to come… 

 

Conclusion

 

But bp is just one piece in the much broader story of Australia’s emerging hydrogen industry. We need renewables developers, the power sector, governments, logistics, research institutions, vehicle manufactures, equipment manufacturers, the hydrogen supply industry, the major potential users of hydrogen, water resources and the huge labour force that will be needed – all pulling in the same direction to construct the same chair. Everyone in the room has a role to play.

 

We need to build on the foundations that many Australian organisations have laid over the last decade or more. We need to work with partners in Germany, Japan, South Korea, Singapore and elsewhere to bring supply and demand together.

 

I am confident that our policy makers are fully intent on playing their role to unlock the full potential of Australia’s burgeoning hydrogen industry and for Australia to become a renewable energy powerhouse!

 

It’s time to make hydrogen happen in Australia.

 

Less talk, more action. It has never been more urgent. Let’s get the chair built. The world is counting on us collectively to get it done.  

 

Thank you.