APPEC: Energy transition accelerates amid pandemic related hurdles - BP

The COVID-19 pandemic has had a dramatic impact on energy markets and while there have been many challenges, it has also meant that the momentum towards a net zero world has increased, Carol Howle, executive vice president of BP's trading and shipping arm, said.

In 2020, global energy demand was estimated to have fallen by about 4.5%, which is the largest decline since 1945, driven by a collapse in oil demand, Howle said during a session at the 37th Asia Pacific Petroleum Conference, or APPEC 2021, organized by S&P Global Platts over Sept. 27-29.

The drop in oil consumption accounted for around three quarters of that, although coal and natural gas demand experienced substantial declines too. But despite that, renewable energy, driven by wind and solar, continued to grow significantly, she added.

"In 2020, wind and solar capacity, increased by 238 GW, which is 50% larger than any previous expansion and with that share of wind and solar generation, we also saw a bigger increase in the global power mix, " Howle said.

"So, for us at BP, the response of renewable energy to the events of last year is encouraging as we work towards achieving net zero emissions by 2050, or sooner."

In addition, carbon emissions from energy use fell by about 6.3% in 2020, Howle said.

The challenge, however, is to achieve sustained, comparable year-on-year reduction in emissions, she said.

In 2020, BP announced its new strategy, paving the way for its transition from an oil company to an integrated energy company, with its strategy built primarily around three pillars -- resilient and focused hydrocarbons, convenience and mobility, and low carbon energy.

"So, hydrocarbons are still core to our strategy for decades to come, but we are going to be focusing our hydrocarbon business on oil and gas that is cheaper to produce, resilient to the rising cost of carbon and in line with our guidance to reducing production by around 40% by 2030," Howle said.

BP sells fuels at convenience retail with over 10 million customer touch points, but it wants to double that over the next decade.

"We're going to expand into new markets such as India, we're going to redefine our convenience offer and we're going to build the best EV charging business with well over 10,000 charging points in some of the busiest EV markets in the world, such as UK, Germany and China," Howle said.

BP aims to grow its renewable low carbon electricity and energy business substantially by the end of this decade and is making good progress, Howle said.

"We've grown our low carbon energy pipeline from 4 GW in 2019 to 21 GW today and we're also growing our pipeline in solar," she said, adding that BP is also investing in offshore and onshore wind projects.

Bringing others on the journey

"To get to net zero, we need BP to get to net zero and we also need to help the world to get to net zero," Howle said. "So, one of the things we're doing is more actively advocating for ambitious climate change policies to support net zero and that includes carbon pricing."

But there is also a need to engage with governments, regulators and legislators in the development of proposed policies across the business.

"We've publicly supported the European Commission's proposal for the economic recovery plan, which links recovery funds to climate plan as well as supporting European Commission's 2030 climate target and the overall target to achieve climate neutrality in the EU by 2050," Howle said.

In Asia, BP is working with the Indonesian government and has completed the feasibility study to develop the first large carbon capture utilization and storage project in Tangguh LNG, Howe said. Tangguh LNG is a unitized development of six gas fields located in the Wiriagar, Berau and Muturi Production Sharing Contracts in Bintuni Bay, Papua Barat.

As for shipping, BP recently signed the Call to Action for Shipping Decarbonization, an initiative backed by industry leaders and the task force of the Getting to Zero Coalition, to enable full decarbonization of international shipping by 2050. In conjunction with the UN General Assembly and ahead of COP 26, the signatories are also calling on governments to cooperate with the industry on policies and investments required to reach critical tipping points in decarbonizing global supply chains and the global economy.

"We need to support policy work, but we also need to actively collaborate across a number of areas and in trading and shipping, we're doing just that," Howle said.

BP recently inked an agreement with Japanese shipping company NYK Line to collaborate on future fuels and transportation solutions to help industrial sectors, including shipping, decarbonize.

A strategic partnership with the Mærsk Mc-Kinney Moller Center for Zero Carbon Shipping is also in place for the development of new alternative fuels and zero carbon solutions for the shipping industry.

BP is also increasingly trailing biofuel blends on its vessels and establishing biofuel supplies to marine customers in key ports.

"If we work together, we can fast track development, de-risk investments and provide signals to the market that may help speed up the decarbonization of the shipping industry, for example," Howle said.

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