From the EIC: Q&A Dominic Emery
One is around carbon management, which includes CCS and carbon trading. Another one is bio-products, which includes taking bio-mass and turning it into energy and energy products. A good example of that is turning waste to bio-jet fuel, which is what Fulcrum, a company we invested in, is currently developing. The first Fulcrum plant recently broke ground in the US. The next area is low carbon power and storage, where, for example, we are trialling Tesla batteries to help manage intermittency at some of our US wind farms. We’re also targeting advanced mobility technology, with a focus on electrification, autonomy and new mobility models. We recently invested in an advanced battery company called StoreDot. The fifth area is digital transformation. This is aimed at longer-term digital opportunities such as blockchain and cognitive computing, the most advanced form of artificial intelligence. We recently made an investment in a company called Beyond Limits, which works in this area. In addition, we are examining quantum computing – the next generation of computing beyond binary. New innovators can engage with BP through our Venturing team. We get in excess of 1,000 opportunities coming across the desks of the ventures team every year. Some are screened out rather quickly and others we take forward and invest in. We’re very open to new ideas, particularly in the five areas described above. What role does BP see for carbon capture, usage and storage (CCUS) in the future? CCUS has definitely had something of a rebirth in the last couple of years. We’ve seen a greater enthusiasm for it by several host governments. The US has introduced a new tax code, 45Q, which encourages CCUS both for the permanent storage of CO2 as well as the use of CO2 in enhanced oil recovery. We are seeing the same appetite in the UK, and also the Netherlands with the Port of Rotterdam project, which is designed to take CO2 from industrial facilities around Rotterdam and bury it in former gas fields in the Southern North Sea. We see CCUS as mission critical to the energy transition and to the Paris Agreement. I think without CCUS it’s going to be near impossible to achieve those ambitions. BP has invested in a company called Solidia, which takes CO2 and actually uses it as part of the curing process for concrete. By doing so it reduces CO2 emissions by between 30% to 70% and reduces the use of the water by 80%, so it’s really quite an impressive technology. Applying some of these ‘U’ technologies is going to be important, but the big deal will actually be large scale CCS. We need to bury not just a few million tonnes, but hundreds of millions of tonnes of CO2 every year. I think CCUS in the future must be scaled and scaled rapidly. It’s had a very stop-start approach so far, but I think more governments support it and the wider industry is starting to realise it’s mission critical.
8 energyfocus | www.the-eic.com
What is needed from the government, the oil and gas industry and its supply chain to create the confidence to invest in and grow low-carbon businesses at scale? At a very macro scale, we think the introduction of an economy-wide carbon price is the key, because it will incentivise the most cost-effective opportunities, which is the right thing to do. What the UK has done is set a floor price for emissions, take the European emissions trading scheme’s prevailing price on the day and add that to the floor price. That’s been really helpful and has encouraged the replacement of coal with gas in the system. A recent Nature science paper has shown that emissions in the UK power sector have come down by 47% in five years through renewable generation and, most significantly, coal-to-gas switching. As a result, the UK’s ability to reduce CO2 has been impressive. The next step is to ensure global development of carbon pricing. Whether it’s a trading scheme or a carbon tax, either will create confidence, which will translate into action and investment. We also need to be creating innovative business models to enable CCS. For example, the transportation and storage of CO2 could be treated as a common good. Creating an infrastructure or rate-based approach to that will be very important and we are seeing signs that governments is interested in doing that. Governments also need to continue to provide transitional incentives for new technologies for a period of time. The important word is transitional because they shouldn’t be there forever. The transitional incentives provided for solar, wind and even offshore wind are starting to be withdrawn because these technologies have come down the cost curve so quickly. Having those incentives make a lot of sense. Add to that a carbon price and you have two appropriate regimes, which allow lower carbon technologies to penetrate. Is a completely decarbonised oil industry possible? If so, how? It’s extremely challenging. The EU has done some fascinating work looking at a fully electrified European energy system versus an energy system that combines electrification with decarbonised gas. Interestingly, if you do the electrification and decarbonised gas scenario it’s about ¤1tn cheaper than full electrification. The oil and gas industry, supported by CCUS and decarbonised gas, can actually start to make significant in-roads in providing new technologies to achieve that goal. I think complete decarbonisation is massively challenging, but there are some big opportunities for developing the industry of the future. *To find out more about BP’s plans to reduce the methane content of its gas operations and to read the full unabridged version of this interview please visit: https://energyfocus.the-eic.com
About BP Starting in 1908 with the discovery of oil in Persia, BP’s story has always been about transitions – from coal to oil, from oil to gas, from onshore to deepwater, and now onwards towards a new mix of energy sources as the world moves into a lower-carbon future.
Advancing low carbon
2.9
million tonnes
of CO2 equivalent avoided through renewables business in 2017
BIOFUELS
Ethanol production avoided emissions equal to 260,000 fewer European cars on the road in a year
BIOPOWER 70% of biopower generated at biofuels sites goes to the local electricity grid
SOLAR
US$200m investment over three years in Europe’s largest solar development company
WIND
The net generating capacity from BP’s portfolio is enough to power almost 400,000 homes