Ladies and Gentlemen
Good morning.
It is a pleasure and privilege to be here and to contribute to this discussion.
I think we're at a very important moment in the debate on Climate Change.
In the run-up to the G8 summit in July, the Scientific Academies of each of the eight countries, including the Royal Society, came together to publish a statement on climate change. It is a very precise, rational statement which to me marks a new stage in the debate.
The statement says that climate change is a risk we cannot ignore and that precautionary action is necessary, indeed essential.
When academicians from every major country say that, I don't believe any serious person can ignore them.
They are not claiming the science is complete, or denying that there are things we don't know. But they are saying, with all their individual and collective authority, that we have to act.
We can't afford to wait for the science to be completed, and nor can we wait for universal political agreement. Neither are very common occurrences. Science is never complete and universal political agreement is almost an oxymoron.
We have to act now, and the question in this session is, "what can business do?"
The simple answer is that we have to do the only thing we have the capability to do. We have to provide business answers. We have to take the problem, and use our skills and technology, our commercial experience and our knowledge of markets to help to provide the answer.
What does that mean in practice? Well, every business is different and so there is no common solution. I'll talk about BP, but I think the approach we're taking is replicable in many other businesses, large and small.
We started by reducing the emissions from our own operations. We set a target - of reducing emissions by 10 per cent below the 1990 base-line. We established an internal trading system so that we could apply resources in the most effective way - rather than just asking every business unit to achieve the same percentage reduction.
We met the target - ahead of schedule - and we found that rather than costing us money, the process added value - over $ 600 million of value - because most of the reductions were achieved by improving efficiency, changing business practices and eliminating routine flaring.
Now we feel it is time to take another step.
Our actions are built on the presumption that the day will come when carbon is priced. The pricing may not be universal, but I believe it will be quite widespread across the world within the next decade. The European emissions trading system is an excellent initial step. So too are the initiatives being taken by different states in the USA.
I believe we'll see many more such steps, particularly if popular opinion is influenced by the extreme weather conditions we've seen this year - including twelve named storms and four hurricanes in the United States - and by the views of those observers who make a link between the warmer sea temperatures which cause these storms and climate change.
As carbon is priced, we believe there will be a market for technologies which reduce emissions and which displace energy production which would otherwise generate emissions.
We've announced one project which I believe has huge and very exciting international potential. The process of carbon capture and sequestration allows us to separate out carbon from the other elements in different forms of hydrocarbon; to capture and store that carbon and to use the hydrogen which remains to produce carbon-free electricity.
We are now in the process of developing our first project - using gas from the North Sea, and sending the hydrogen to the on-shore power station at Peterhead. That project is at an early stage and will need an appropriate regulatory and fiscal framework. But we are very optimistic about the technology, and as we learn from the North Sea project we hope to develop a series of others - in Europe, in the US and in China.
And, of course, this isn't just a BP initiative. Many companies are working in this area, and we are delighted to be part of the new Carbon Capture and Storage Association which is being established today.
Sequestration and the production of decarbonised fuels is one element in the approach. It will help to change the fuel mix in the sector which is responsible for a greater proportion of emissions than any other - that is the power sector.
We're already working on other technologies - including solar and wind power on our own sites.
And we now believe that the activity as a whole - the supply of the means to generate clean power - can be a commercially viable activity - a distinct business investment. It will be a global business.
That step will represent the latest element in our commitment to move beyond petroleum.
That is a phrase much misunderstood.
For us, beyond petroleum has always meant two things.
First, the development of new ways in which to produce and supply oil and gas - through clean fuels, through greater efficiency and through substitution - particularly of coal for gas in the power sector.
We've been doing that over the last decade and it will continue. The world will need oil and gas for many decades to come.
The second element of beyond petroleum is the development of new fuels which can, over a long period, begin to provide new choices. That has been going through a research and development phase and it will continue. But now is the right moment to invest and to move into a business phase.
Business exists to meet the needs of its customers. That is the fundamental purpose of business enterprises.
In our case that means supplying the energy which people want for heat, light and mobility. But the needs are changing and now people want energy in forms which don't damage the natural environment. That is a legitimate customer choice and businesses which want to thrive over the long term will have to respond.
So this is an important moment in the debate.
The risks are clear. The academies have set them out with a clarity which is beyond contradiction.
Now the time has come for business to respond and to take a lead.
I hope, in doing so, that we can demonstrate just how much is possible. We hope that success will clear the way for some agreement on a wider political framework which would be invaluable in ensuring that progress is made in the most efficient and cost effective way.
But that's an outcome and not a precondition. For the moment the role of business in responding to climate change is to do business.
Thank you very much.