BP Chief Asserts Business Must Take Some Responsibility for
Climate Policy; Company Plans to Measure and Limit its
Greenhouse Gases
We can now see ...what we need to do to respond to the challenge
of climate change. The key word is "we." .... Now, increasingly,
the world has recognized the sense of taking precautionary action
.... [a]ction for Government, and industry and consumers working
together and in parallel.... I think the issue can be managed
without disrupting economic development.... If we fail... the
danger of disruption at some later point becomes a serious risk.
The science of climate change is still provisional. Perhaps all
science is provisional. But it would be unwise and potentially
dangerous to ignore the mounting concern. We need to take precautionary
action now.
Developing the right policies ... will be a complex process ...
not solved by denying or restricting the economic expectations
of the people of Asia, or Africa or Latin America. Nor will it
be resolved by destroying the living standards of the world's
developing economies....
What is at stake is economic activity as a whole, not simply
the transportation section. Of all the carbon emissions which
result from human activity, only 20 percent comes from the transportation
sector.
Politicians represent people, and they must define policy....
But business has a responsibility to help the process of defining
the means by which that policy can be achieved. The problem of
climate change will not be resolved at any single summit meeting....
It will take time .... What matters now is that we begin to take
rational, precautionary steps, not wait for a finished, polished
solution which has unanimous endorsement. Kyoto is an important
meeting, but it is just one more step in a continuing process.
I hope that some measure of agreement will be reached, and that
it will lead to the involvement of the whole world....
Any agreement seems most likely to be around objectives and aspirations
rather than around a detailed program. There may be a target....
but it will just be the beginning of the next process &emdash;
development of
the means to achieve that target. Different governments ... will
work in different ways to achieve their own targets using instruments
which match local circumstances and political realities.
The three policy instruments ... likely to be taken up ... are
taxation, carbon trading and joint implementation; each uses the
market to change behavior.... The key lies in the detailed design
of the instruments and ... the establishment of the right incentives
for action.
Taxation. The test of any proposed tax ... should be its actual
impact on reducing greenhouse gas emissions, ... not simply a
politically convenient means of raising revenue. ... To be effective,
taxation... would have to cover all industry sectors, ... based
on a level playing field between fuels, ... set at a rate which
actually changed behavior, reduc[ing] emissions by changing the
fuel mix or using improved technology.
Trading permits put a value on carbon emissions and establish
a ... market [where they can be] bought and sold at competitive
... prices. The playing field must be level. On a macro-scale,
industries would reduce emission levels according to the supply
of permits in the market. On a micro-scale, companies would be
encouraged to seek new technologies....
Joint implementation [does] the most effective things in the
places where they have the greatest impact, ... improving competitiveness
through technical progress and controlling some of the more immediate
environmental problems such as inner city pollution.
The right incentives would produce a more rapid turnover of capital
stock which could be enormously beneficial because so many emissions
and so much pollution come from the oldest plant. The right incentives
could also encourage ... sequestration and the capture, reinjection
and storage of CO2. Reforestation is also an attractive way of
mitigating ... part of the impact of CO2 emissions.
Climate change is a matter for public policy .... But business
can't be passive in the process. We must be alive to our own responsibilities.
We can't solve the whole problem, but we can make a contribution.....
Four months ago, I set out our objectives in this area:
1) supporting scientific research and contributing to the public
policy debate
2) playing our part in joint implementation initiatives
3) investing in renewable energy, particularly in photovoltaics
&emdash; that is, solar power
4) and controlling our own emissions of CO2.
In terms of public policy, we've developed a set of principles
which we're publishing today.... We've also made some important
steps within the company. The one I emphasized earlier ... at
Stanford ... is our commitment to solar power.... The trends in
photovoltaics are very encouraging &emdash; but there are still
large obstacles: the acceptability to consumer, determin[ing]
whether we can achieve economies of scale in production; the technology
[improvements] to bring down costs.... By 2020 we believe up to
5 percent of world energy could be supplied by renewable energies,
including solar power. Within 50 years it could be as much as
half &emdash; figures also ... given by John Jennings, former
head of Shell Transport and Trading, ... one of the most experienced
people in the energy industry.... Given the current economics,
solar won't replace oil and gas as the prime source of energy
in the lifetime of anyone in this room. Oil and gas will be required
to meet the world's energy needs. That is why we continue to explore
and develop new resources, ensuring they are used with maximum
efficiency ... and minimum of emissions.... We are setting our
own targets to measure and report the volumes of CO2 emitted from
our own operations,... [which will be] independently verified
and published. We are developing our own internal emissions trading
system.
No single company or country can solve the problem of climate
change.... But I hope we can make a difference ... by showing
what is possible through constructive action. There is no immediate
crisis, and so long as we take precautionary action, ... [with]
a common end, but a diversity of means .... there will be no crisis
in the future.
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