“Our industry can and must be part of the solution,” Dudley said. “We’ve proven we can adapt and change over the years, and we’ve overcome many big challenges along the way.”
Dudley said the 2018 edition of BP’s Energy Outlook, which considers the forces shaping the global energy transition out to 2040, projects a growing and more diverse energy mix and forecasts that renewables are growing faster than any fuel in history.
“That makes them a really exciting opportunity, particularly where you can partner wind, solar and gas together to counter intermittency issues,” he said.
Dudley said BP, which has viable businesses in wind, biofuels and solar, can make alternative energy work.
“But to really make a difference on this important issue, we need to do more than that - so we’re infusing a lower carbon mindset in everything we do, right across the whole of BP,” he said. “We have a really simple, but not simplistic, framework to describe this approach: We call it R – I – C, or RIC.”
Dudley said the “R” is for reducing emissions in BP operations, which means producing oil and gas more efficiently and clamping down on methane emissions.
He cited BP’s Khazzan gas plant in Oman, where a state-of-the-art processing facility minimizes the potential for leakage from processing gas at each well site.
“The ‘I’ in ‘RIC’ is for improving our products in ways that help all of our customers lower their carbon footprint,” Dudley said. “That means producing more natural gas as an alternative to coal in the power sector, producing more renewable fuels, and developing more advanced fuels and lubricants that help engines run more efficiently.”
Finally, Dudley said the “C” in “RIC” stands for creating lower-carbon businesses and expanding existing ones while making smart investments in promising technologies.
“We’re backing up our actions with about half a billion dollars of investment every year, and we’re prepared to spend much more as we find and develop real opportunities that are scale-able.”
Dudley concluded his remarks by saying all sectors of the economy need to help bring down emissions.
“We need a big drive on energy efficiency in all kinds of areas — that’s where the greatest reductions are going to come from,” he said. “And to support this, we need a price on carbon, which is something that only national governments can do. Put a price on carbon, and you incentivize lower-carbon activities of all kinds.”
Following his presentation, Dudley sat down for a conversation with IHS Markit vice chairman Daniel Yergin.
Yergin asked Dudley whether he felt the energy transition was primarily about a reduction in global emissions, as opposed to a shift in the fuel mix.
“I think broadly people do believe that the Paris goal is a race to power the world through renewables,” Dudley said. “But it is actually a race to reduce emissions and that cuts across all kinds of fuels and human behavior.”
Dudley then repeated his earlier remarks about the need for carbon pricing. “We do need a mechanism for putting a price on something that we need to reduce. For example, the U.K. has put a price on carbon and has brought emissions levels down through electric power systems,” he said. “At some point in the future, a price on carbon has got to be part of this answer.”