BP’s latest annual report states: “We operate at the frontiers of the energy industry, in an environment where attitude to risk is key… and intend to help shape and lead the energy industry of tomorrow.”
Environmental risks will grow if energy companies expand deep-water drilling and extraction of unconventional sources such as tar sands as planned. There is a risk that the oil spill could make tar sands extraction appear to have more easily controllable environmental damages, or make significant yet less photogenic impacts such as heavy metal contamination, water use and greenhouse gas (GHG) emissions appear trivial.
At a debate on tar sands at the European Parliament on 5 May, Simon Mui from the US Natural Defense Council said that the spill was a vivid reminder that the environmental risks and costs of petroleum production cannot be ignored. He highlighted the stark choice between investing in facilities which create carbon lock-in for decades or ensuring fuel providers contribute to reducing transport emissions.
Pictured in Brussels (from left): Liesel van Ast, Anastassia Filimonova, oil & gas analyst
The EU’s role in developing low-carbon fuels is currently being put to the test. The 2009 Fuel Quality Directive, which is similar to California’s Low Carbon Fuel Standard, requires fuel suppliers to reduce GHG emissions from transport energy by 6% by 2020. A sticking point is the use of just one baseline default GHG value for petrol and one for diesel. Several Members of the European Parliament have called for more accurate values for fossil fuel GHGs to reflect wide variations in the carbon intensity of extraction and processing. This would help incentivise cuts in production emissions and create opportunities for companies with lower-carbon operations and supply chains.
Policymakers may be unwilling or unable to establish more robust GHG values for fossil fuels from different sources in time for the December deadline. They appear to be fretting about the possible “administrative burden” that the industry is lobbying against, while raking in huge profits and cranking out greenhouse gas emissions through poor practices such as flaring.
Meanwhile, many shareholders might wish they had backed a special resolution on BP’s joint-venture tar sands project with Husky Energy in April. The UNEP FI said last year that “responsible investment, active ownership and the promotion of sustainable business practices should be a routine part of all investment arrangements.” Yet some 90% of shareholders voted against the resolution calling for BP to report on assumptions about “future carbon prices, oil price volatility, demand for oil and anticipated regulation of greenhouse gas emissions and regional and reputational risks” from local impacts, in the Business Review section of the Company’s Annual Report.
BP’s 2009 Business Review states that the development of Canadian oil sands in BP’s portfolio “Is to be sanctioned with board oversight using established processes and undertaken in a manner which fulfils BP’s commitment to sustainability.”
“Error” was the message on BP’s website when I tried to look at its sustainability pages.