BP PLC

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Revision as of 09:59, 24 July 2007

MI Summary

BP illustrates many of its environmental policies and is involved in a number of related projects. 2006 saw BP launch it’s Environmental Requirements for new projects (ERNP), with the aim of ensuring all new projects are designed, built and operated to consistent, high environmental standards.

BP demonstrate their commitment to reducing greenhouse gas emissions, eliminating the use of specific ozone depleting substances and using alternative means of energy e.g. solar, wind, hydrogen power and gas power.

BP use a life cycle approach to managing waste and a similar integrated approach to water management. This has proved a successful method with total fresh water withdrawal from all sources decreasing by 13% from 2005 – 2006.

BP PLC and the Environment

One of BP’s group values is to seek to drive down the environmental impact of its operations by reducing waste, emissions and discharges and by using energy efficiently.

2006 saw the culmination of two years’ work to clarify and strengthen the processes and requirements that we apply to our new projects. These are brought together in a new group practice called environmental requirements for new projects (ERNP), launched in 2006. Implementation of ERNP aims to ensure that we design, build and operate all our new projects to consistent and high environmental standards.

(1)

Environmental Requirements for new Projects

Our new environmental requirements for new projects (ERNP) originated in work commissioned by the group chief executive in 2004 after we were challenged by investors over our processes for assessing and working in environmentally sensitive areas.

In 2005, we expanded the scope of this work to embrace all BP's new projects, beyond just sensitive areas, as we developed a far more integrated approach to environmental management and performance.

In 2006, this approach was approved as a group practice, part of the new OMS, defining the environmental impact management processes and requirements to which BP will operate. We intend that all new projects in BP will use the practice by the end of 2007.

The practice was developed primarily for major projects, where the potential for environmental impact is often the greatest. However, it also applies to smaller projects that may have the potential for similar levels of impact in environmentally sensitive areas.

There are two key elements:

• A set of nine environmental impact management processes that are undertaken at different times in the life of a project.
• A series of 12 environmental performance requirements that cover the different aspects of environmental performance, ranging from energy efficiency to local community impacts

The ERNP has undergone extensive consultation within BP and externally. A key stakeholder in this process was F&C Asset Management, an institutional shareholder, which provided the original environmental challenge to BP in 2004.

“The process that BP launched to produce its environmental requirements for new projects was unusual in three ways. First, the company admitted that its procedures needed revision. Secondly, it undertook extensive consultation with parties who were at times very critical. Thirdly, it has produced a tangible result and not simply hot air.

The new requirements bring much greater clarity about how BP intends to plan projects and operate in or near ecologically-sensitive areas. They are not perfect, but they are the best I have seen from the sector. The guidelines should give reassurance to investors that BP understands the emerging risks associated with biodiversity and ecosystem management.

However, the challenge will be in implementation. In the light of recent performance, BP needs to convince its critics that in a company of such size, it is able to turn good headquarters policies into effective operational practice”.

(2)

Environmental Performance

2006 Environmental Performance Highlights

Energy Efficiency & GHG Emissions

BP is committed to delivering continuous commercial business improvement and greenhouse gas reductions through energy efficiency.

Many of 2006’s efficiency gains resulted from continued implementation of the seven-year $450 million energy efficiency programme that began in 2004 and enables businesses to carry out sustainable energy-reducing activities, cutting costs as well as GHG emissions. Since 2001, we have been tracking the underlying growth in BP emissions from our business growth and comparing it to the emission reductions achieved across our operations. After five years, we estimate that some 11 million tonnes (Mte) of growth has been offset by around six million tonnes of sustainable reductions. We now estimate that since BP began focussing on its internal GHG emissions performance in 1998, nearly $2 billion of net present value has been created from reduced procurement or increase production. We also judge our overall energy efficiency performance in various business sectors through normalized GHG per unit of production performance against a 2001 baseline.

Our total 2006 operational GHG emissions of 64.4 Mte of CO2 equivalent 1 on a direct equity basis were some 2.4 Mte lower than 2005 when they were 66.8 Mte (excluding Innovene’s 2 2005 contribution). The growth of our business generated an extra 1.3 Mte of emissions, but this was offset by continuing efficiency projects that delivered 1.2 Mte of reductions. The combined effect of acquisitions and divestments, temporary operational variations and reporting protocol changes accounted for a 2.5 Mte decrease.

In the exploration and production segment and the refining business, our performance in 2006 was 24.2teCO2e/mboe and 915teCO2e/kbduEDC3 respectively, This reflects increasing GHG intensity within our mature upstream assets and lower availability of our refining assets when compared with 2005. Our petrochemicals businesses maintained their 2005 performance levels with further efficiency gains in aromatics and acetyls, offset by increased production from our energy intensive olefins and derivatives assets in Asia. (4)

Emissions affecting Air Quality

Our goal in managing these emissions is to understand the impacts they may have on local and regional ambient air quality. BP seeks to avoid, prevent and reduce air emissions in order to mitigate the potential for effects on human health and harm to the environment.

In 2006, our total emissions to air (aggregating all monitored pollutants but excluding carbon dioxide) was 764kte, which was 4% lower than the 2005 emissions (797kte when adjusted for the Innovene divestment and the disagreggation of non-operated facilities. The 2006 emissions total is about 44% lower than the 1,355kte reported in 1999.

Ozone-depleting substances We are planning to eliminate the use of specific ozone depleting substances (ODS) before it is required by international and national obligations. Emissions of ODS to comply with the Montreal Protocol on Substances That Deplete the Ozone Layer, an international agreement designed to protect the stratospheric ozone layer. We plan to end our use of ODS before it is required by international and national obligations. Emissions of ODS have occurred as a result of using certain types of fire-suppression equipment, as losses from refrigeration equipment, or as unintended by-products of our manufacturing of the chemical purified terephthalic acid.

This is the third year that we have reported on ozone depleting substances (ODS) and other halocarbon emissions from our worldwide operations. During 2006, we emitted 645 tonnes of ODS on a CFC-11 equivalent basis. This is a 61% increase from our 2005 emissions, mainly as a result of events in which the fire and explosion prevention systems were activated due to actual or false alarms. We also emitted 13.3 tonnes of hydrofluorocarbons which was a slight increase from 12.4 tonnes emitted in 2005 (when adjusted for the innovene divestment of 1.3 tonnes). (5)

Waste & Water Management

Our activities generate a variety of solid and liquid wastes, including oily sludges, waste chemicals, spent catalysts and construction debris. Our goal is to manage waste in a manner that will not pose harmful risks to the workforce, local communities or the environment. We try to avoid or eliminate waste, using a life-cycle approach for managing waste from project design through to decommissioning.

In 2006, the reported amount of hazardous waste disposed was 270kte, which was an increase of 49% when compared with 2005 (182kte when adjusted for the Innovene divestment), primarily due to clean-up activities at Buncefield terminal after an explosion in an adjoining tank farm. The amount of hazardous waste disposed in 2006 was 150% higher than that in 1999 (108kte). The reported amount of general solid waste disposed during 2006 was 400kte, an increase of 69% when compared with 2005 (238kte when adjusted for the Innovene divestment), also primarily due to clean-up activities at Buncefield, and was 57% higher than in 2001 (254kte), the first year that general solid waste data was collected.

Water management We use fresh water from many sources for cooling, steam generation and industrial processing. Our goal is to use water more efficiently, reducing the impact on local communities and the environment. We take an integrated approach to water management, where other environmental effects are considered and emphasis is placed on preventing pollution and minimizing impacts at source.

In 2006 our total fresh water withdrawal from all sources was nearly 342 million m3. This is a decrease of 13% from 2005 (392 when adjusted for the Innovene divestment). Our fresh water use is mainly of concern at the local level. In 2006, 42 sites reported a decrease in their withdrawals of fresh water, while 29 sites reported an increase. We have been reporting our fresh water withdrawal since 2003. Our 2006 figures represent a decrease of 34% at group level compared to our 2003 withdrawal.

Drilling/discharges Our goal is to eliminate the disposal of drill cuttings and fluids to pits and landfills. In offshore projects, we seek to eliminate the discharge of aqueous and non-aqueous based fluids and discharges of all other chemicals used in the drilling, completion and workover of a well, once a recirculation system has been established. We also prohibit the use offshore of diesel-based drilling fluids.

In 2006, our group reported discharges to water increased from the 2005 level to 71kte. Discharges to water can vary greatly depending on our drilling activity as we explore for new energy resources worldwide. The impact of our discharges is mainly upon the local receiving waters. We compare our annual discharges to water to those in 1999 – the first year of our consolidated operations. Our 2006 group reported discharges are nearly 54% higher than those in 1999. (6)

BP & Climate Change

Today, we take precautionary action to limit greenhouse gas (GHG) emissions and work to combat climate change in several ways. Our position on the issue is well defined.

• We support precautionary action on climate change although we recognize that aspects of the science are still the subject of expert debate and not fully proven
• We believe that climate change is a long-term issue, which needs to be tackled over the next fifty years or more. We support urgent but informed action to stabilize greenhouse gas (GHG) concentrations by achieving sustainable long-term emission reductions at the lowest possible cost
• There are many potential contributors to this goal. We support an inclusive approach that acknowledges the existence of many different starting points, perspectives, priorities and solutions
• We believe that governments and businesses must work together to create policy ‘spaces’ in which economic progress, security of energy provision and emissions reductions can be achieved simultaneously. Such spaces can be defined by appropriate policy and regulation, while activity within them will be driven by market mechanisms
• We believe that the policy and regulatory interventions must support the development and implementation of appropriate technological solutions and also enable the amendment of market mechanisms as new knowledge around climate change emerges
• In our view, all energy sectors can help to address GHG emissions. With fossil fuels currently the source of 80% of the world’s primary energy and likely to remain vital to global energy supply for at least 20 to 30 years, innovation to reduce carbon emissions from fossil fuels can make a major contribution to stabilization. Consequently, energy companies like ours have an important role to play in contributing to policy and education, enabling market mechanisms, developing and deploying new technological and commercial solutions based on both fossil fuel and new energy sources at large scale

We will focus our efforts on:

• Influencing policy, regulation and innovation. We can do this by working to develop inclusive, informed dialogue, supporting the creation of a ‘level playing field’ for low-carbon energy, encouraging market mechanisms and promoting technological innovation and transparency
• Continuing our business activities in energy efficiency, fuels switching, hydrogen power, solar energy, wind, biomass and natural sinks.

(7)

BP & Low Carbon Power

We believe that the growing consensus to take action on climate change gives us an opportunity to take the lead in developing, promoting and marketing alternative energy solutions.

In 2005, we launched BP Alternative Energy, a business that provides low-carbon energy solutions for power generation. Today, BP Alternative Energy is a profitable business with a large project portfolio in place and more than 150 new people recruited in 2006.

In 2006, BP Alternative Energy made progress in four low-carbon technologies: solar, wind, hydrogen power and gas power.

Building low-carbon power capacity worldwide We believe that businesses and policy-makers must take four critical factors into account in order to build low-carbon power capacity faster. First, businesses and governments must work together to invest in the development and deployment of low-carbon fossil fuel technology; second, mechanisms that set a price for CO2 should be established; third, investment is required to construct an effective electricity distribution infrastructure; finally, efforts are needed to raise consumer awareness of low-carbon energy alternatives. (8)

BP & Low Carbon Transport

One consequence of the growth in global population and prosperity is an increase in demand for mobility. Meeting this demand and managing its consequences presents a major challenge to BP and the world The resources needed to support mobility, such as land, raw materials and energy products are generally finite. The emissions produced by transport contribute to climate change and may also adversely affect human health. In addition, dealing with waste generated from transportation is a significant issue, while lack of mobility sharpens the divide between rich and poor.

World Business Council for Sustainable Development In its Mobility 2030 report, the World Business Council for Sustainable Development (WBCSD) set out seven goals: reduce GHGs; improve local air quality; improve road safety; reduce noise; manage congestion; narrow the mobility divide; and improve mobility for all. We helped to develop Mobility 2030 and are involved in its promotion.

Mobility for Development The WBCSD Mobility 2030 report acknowledged, but did not address in detail the issue of mobility in the developing world. We are now supporting a new WBCSD project, Mobility for Development, which aims to raise awareness of mobility as a driver of economic development, examine ways to close the mobility divide and promote debate leading to mobility solutions in developing countries. The results of this project are scheduled for publication in 2008.

Urban mobility We are supporting a project at Tsinghua University in China to investigate the challenges for mobility presented by the rapid growth of cities, especially in Asia. The first phase, completed in March 2006, demonstrated the need for an integrated approach across many disciplines. The second phase involves development of this thesis and associated policy recommendations as well as practical approaches to implementation.

In Istanbul, we are supporting EMBARQ, the World Resources Institute Centre for Sustainable Transport. EMBARQ's aim is to build partnerships between government, business and civil society to develop sustainable solutions to urban mobility issues. Our involvement will help us learn more about how a city tackles transport issues and the role we can play in support.

TargetneutralTM Targetneutral was launched in the UK in August 2006. The scheme aims to educate motorists and to encourage them to reduce their CO2 impact. As a final step, they can neutralize their remaining emissions by subscribing to a non-profit making partnership that funds environmental carbon reduction projects. We funded the scheme and are covering ongoing costs, but will not profit from contributions. Targetneutral was developed in consultation with Forum for the Future and other leading NGOs and is advised and monitored by an independent Advisory and Assurance Panel chaired by Jonathon Porritt, founder director of Forum for the Future. He said: "Forum for the Future is very supportive of what BP is doing through targetneutral. The scheme should help raise awareness of the links between driving and climate change." (9)

Sources

• 1. BP PLC and the Environment
• 2. Environmental Requirements for new Projects
• 3. Environmental Performance
• 4. Energy Efficiency & GHG Emissions
• 5. Emissions Affecting Aair Quality
• 6. Waste & Water Management
• 7. BP & Climate Change
• 8. BP & Low Carbon Power
• 9. BP & Low Carbon Transport