SUSTAINABILITY

So this takes us onto the third of the three S’s, sustainability. This is sometimes seen as incompatible with security and sufficiency – but that’s not the case and gas is one of the main reasons why. It’s certainly true that the current path of carbon emissions is not in line with keeping the rise in global temperatures to the level recommended by the experts. But, with political will and collective action, that trajectory can be changed. And there are two main ways to do it. The first is to use energy more efficiently and the second is to use lower carbon energy in place of higher carbon energy. Put simply, saving and switching. And critically, switching does not only mean switching from fossil fuels to non-fossil fuels – but from coal to gas.

We know that gas is the cleanest fossil fuel. We all know that gas emits half the carbon of coal when burned to generate power. But what about the world outside? If we were to ask passers-by, I doubt they would know these facts about gas. As an industry, we need to explain more clearly that gas is not so much part of the problem as part of the solution. That is why a group of us have issued a statement to highlight the role gas can play in addressing climate change.

However, to be clear, we are not arguing for any special favours for gas in the area of policy. What we are recommending is simply a price on carbon, however it is emitted. This will then enable many solutions to play a part. It will encourage more energy efficiency – smarter vehicles or advanced industrial equipment. It will enable renewables to be more competitive. It will improve the economics of carbon capture and storage. And in many circumstances, it will lead to the substitution of gas for coal – and with it significant reductions in emissions.

Because of the relative scale of coal versus renewables in today’s power industry, if we were to switch just 1 per cent of total power generation from coal-fired power plants to gas-fired ones, that  would cut emissions as much as increasing renewable energy by 11 per cent.

Gas is lighter in carbon than coal, but not carbon-free, and that’s why it is also important to minimise emissions from the gas supply chain as well. That includes tackling flaring and so-called fugitive emissions.  And I just wanted to note for the record that BP has now added its name to the World Bank’s initiative to end routine flaring.

So progress is being made but, in general, we recognize that the challenge of achieving these objectives is a great one.  At the same time as striving for a more sustainable system, there will be the tremendous imperative to reduce poverty and provide reliable energy to the world’s poorest populations. We are seeking to shift the global energy system at the same time as meeting the needs of a world whose population is set to grow by around 20 per cent in the next 20 years and whose GDP is expected to more than double over that same period of time.

BP IS HELPING TO SHAPE THE AGE OF GAS

So gas can help to meet demand, provide energy security and pave the way to a lower carbon economy. That’s what we can achieve as an industry. But let me close with a brief word on how we in BP aim to play a part in this.

Our contribution comes about in two main ways, through our upstream operations, and through our trading arm. Today gas accounts for around half of BP’s Upstream production and this is expected to grow over the next decade. We specialise in operating giant fields, deploying new technologies and working with partners to create gas value chains. But as well as our upstream operations, we also have a trading operation that facilitates trade in gas on a much wider scale.

To give you an example, we produce around 1 per cent to 2 per cent of the natural gas that comes out of the ground in the US – that’s around 1.5 billion cubic feet a day. But we market some 24 billion cubic feet a day, which is roughly the equivalent of the combined daily demand of Europe’s four biggest gas markets – Germany, Italy, Turkey and the UK – and that makes BP the leading natural gas merchant in America.  Worldwide, we are part of a trading sector that is facilitating the globalization of the market, directing gas to where it is most needed and making it more available and affordable. Trading has become a specialism for BP – but it is grounded in operational experience. Many of the people on our trading floors have spent time in frontline operations.

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