Where they will be when we fully decarbonise by 2050 is hard to know, but some oil giants are starting to talk more positively about needing to take climate change seriously. Steven Mufson writes about BP in an article in the Washington Post. Let us hope this is a positive step and not simply greenwashing.
Oil giant makes business case for taking climate change seriously
The chief economist of one of the world’s biggest oil companies is urging other companies to take climate change seriously — and sooner rather than later.
If not, it might be bad for business.
That’s the warning from BP’s Spencer Dale, who made the rounds in Washington last week explaining the business case for finding a solution for the warming planet.
“All the climate arguments are real, urgent and important,” Dale said in an interview with The Washington Post.
Despite working for one of the world’s biggest producers of fossil fuels, Dale said the longer the world waits to address rising emissions, the more “draconian” the changes in the global economy will have to be.
“How do I run a business, how do I make a business plan if I know that the path I’m on is unstable?” Dale asked.
For a multinational energy firm operating in dozens of countries, that could mean having to scrap assets, Dale said.
The provocative economist spent more than a decade working for the Bank of England before joining the oil giant. At the end of February, Dale led the publication of BP’s annual energy outlook, which is widely anticipated among energy industry followers.
At the center of the report’s most likely scenario for the future is the tension between the pressing need to slash carbon emissions and the growing demand for energy as the global population grows and seeks better livelihoods.
The best way to deal with that, Dale said, is to boost the energy efficiency of buildings and other systems.
Still, in all of BP’s scenarios, oil would still be widely used in 2040. The amount could vary from 80 million barrels a day to 130 million barrels a day — a huge gap. Yet even the low-end scenario would require trillions of dollars of investment just in petroleum over the next 20 years.
Indeed, history shows how hard it has been for societies to move from one form of power production to another, Dale said. Previous energy transitions have taken about four or five decades, he said.
It took almost 45 years, for example, for oil to go from 1 percent of world energy in the late 1800s to 10 percent. It took natural gas more than half a century to catch on.
Renewables will penetrate the global energy system faster than any fuel in history, Dale said, going from 1 percent to 10 percent in just 15 years.
But BP’s analysis suggests that is not fast enough to stem the growth of climate-warming emissions. Even though new renewable energy will satisfy about half of the new energy demand, carbon dioxide emissions are likely to increase by about 10 percent instead of falling sharply as needed to stem climate change.
Overall, global energy demand probably will grow by around a third by 2040, slower than the previous 20 years but still enough to make it difficult to lower greenhouse gas emissions as needed.
Around 80 percent of that increase in demand will come from the developing world, yet a substantial proportion — two-thirds — of the world’s population will still consume low amounts of energy 21 years from now.
BP has said it wants the federal government to take action, having endorsed a $40-a-ton nationwide tax. But that doesn’t mean the company always supports carbon taxes in practice. BP spent more than any other company last year to defeat a carbon-fee ballot initiative in the state of Washington that the company said was “poorly designed.” The proposal ultimately fell short with voters in November.
2 thoughts on “BP changes its tune on climate change”
But BP continues as usual to forecast massive increases in energy consumption worldwide. This is despite having vastly exaggerated future consumption forecasts in the past.
Contrast this with MCKinseys. The world’s best known management consultancy is forecasting no overall increases in energy consumption in twenty years time. But of course they have no commercial incentive to inflate demand.
I don’t trust any of them. I thought it was worth providing this, as much as anything, to get reaction such as yours. These companies really have no plans to change their tune at all, as far as I can see. You mention McKinsey and you are right. But we have to keep close eye on IEA to ensure it takes a rigorous path forward. And, after recent increases in consumption, we have to significantly change that. I was at EIB energy lending consultation recently. While they mentioned they will increase funding for energy efficiency, I told them that they really have to focus on reducing energy demand and then it will it easier for them to meet their other priorities. But in their consultation document, they never mentioned energy demand at all.