BP plc CEO Tony Hayward said Tuesday natural gas needs to become a bigger part of the U.S. energy picture. Congress should find a better way to maintain jobs than by “preserving them in the coal industry,” he told an audience at the Peter G. Peterson Institute for International Economics, a nonpartisan think tank based in Washington, DC.
It’s “somewhat surprising” that coal plants still are being built in the United States given the concerns about carbon dioxide (CO2) emissions and climate change, said the BP chief. Congress instead, he said, should promote natural gas use, which emits up to half the carbon emissions that coal does. Natural gas now makes up more than half of BP’s total energy production worldwide, and it’s the largest gas marketer in North America, according to the latest NGI quarterly marketing survey.
“Looking at the power pathway, we believe it makes sense to use much more natural gas,” Hayward said. “Gas offers the greatest potential to achieve the largest CO2 reductions — at the lowest cost and in the shortest time. And we can do all of this by using technology we have available today. It’s easily the cleanest burning fossil fuel — around 50% cleaner than coal. It’s very efficient, and combined-cycle turbines fueled by natural gas are quick and relatively cheap to build.
“Given these facts, it seems extraordinary that the U.S. is still focused on building coal-fired power plants. In recent years, coal has accounted for around 50% of U.S. electricity generation but 81% of CO2 emissions. Ramping up U.S. natural gas consumption by a readily achievable 1 Tcf/year would allow 150 GW of the oldest and most polluting coal plants to be retired — some of which have been going for nearly 100 years.”
The coal industry was “disproportionately favored” in the climate legislation that was passe by the House last June, but BP is encouraged by the direction of compromise climate talks in the Senate, which are being led by Sens. John Kerry (D-MA), Lindsey Graham (R-SC) and Joe Lieberman (I-CT), the CEO noted. BP still supports a cap-and-trade system for CO2, which Hayward said is the best way to lower emissions and spur investment.
“We see natural gas as a key ingredient of a secure pathway to lower-carbon power together with energy efficiency, coal with CCS [carbon capture and sequestration], and with renewables and nuclear in the mix too.” Hayward also pushed for more nuclear power development.
“The U.S. has not built nuclear power plants for decades, so it needs to progressively replace its existing fleet of stations before it can provide real growth,” he said. The CEO acknowledged that adding more nuclear power would be expensive, but “in my view it is vital, as we gear up to confront the problem of climate change, that we opt for the lowest-cost energy pathways available. Energy efficiency, gas-fired power, lighter cars and advanced biofuels all offer relatively low-cost routes,” but more “headline-grabbing options” may not be the most cost-effective in terms of reducing CO2.
“Our challenge today is how to balance energy security, employment and economic development, with the issue of climate change. I firmly believe we can do it, but not without first acknowledging that the real problem lies above ground rather than beneath it. Getting the policy mix right is the surest way to avoid the traps of complacency and panic.”
In the BP chief’s opinion, three factors underpin energy security: diversity, competition and efficiency.
“First is diversity. We need access to a wide range of different energy sources. Second is competition…to encourage the best ways to explore, produce and distribute that energy.” And “we need to ensure we make the most of each unit of energy produced…These factors aren’t new, but we mustn’t underestimate their significance. Reliable and affordable supplies of energy laid the foundation for the world’s extraordinary economic progress to date, and were very taken for granted through much of the 20th century.
“What’s different in the 21st century is that energy security has become a defining issue. It is one element in a complex matrix with strategic, economic and environmental dimensions. To address it, we must be clear about where we are and where we want to go. We need to set out practical pathways which lead us towards our destination. And we need a clear regulatory framework to enable business to invest with confidence in building a lower-carbon future.”
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