TURNING THEORY INTO
PRACTICE
GRAHAM HUNT
(Chairman BP Amoco China; Chief Executive Shanghai Project)
Introduction
· Thank you for inviting BP, and myself, to address this
important conference.
· As you may know, BP is a major foreign investor in China,
and China is at the heart of BP’s growth strategy.
· We’ve spent $3.5 billion on a variety of projects in China
since 1979. Some 3,000 people work for us, directly or indirectly,
in this country today, and more than 20 of our Business Units
operate in China.
· My area of responsibility is for our chemicals activities in
China, including SECCO, the $2.7 billion worldscale joint venture
petrochemicals complex we’re developing with Sinopec and the
Shanghai Petrochemical Company at Caojing, outside Shanghai.
· At the core of this complex will be a manufacturing facility
designed to produce 900,000 tonnes of ethylene a year – the
largest such plant in China.
· Elsewhere in China BP Chemicals is involved in the licensing
of a wide variety of products – including polyethylene,
polypropylene, acetic acid and purified terephthalic acid - all
over the country.
· We’re also building a state-of-the-art PTA plant in Zhuhai,
Guangdong province - scheduled to be completed by 2003 - and
expanding the capacity of our acetic acid joint venture with
Sinopec’s Sichuan Vinylon Works near Chongqing.
· All this is necessary background to explain why BP has a
strong and enduring interest in clean production in China.
· Everywhere we operate in the world we strive to be
responsible corporate citizens. We believe it is in our interests,
as much as yours, to work to the highest standards in China.
The Context
· Our interest in cleaner production goes far wider than this.
It stems from recognition of some key global realities.
· The first is that social progress rests on economic progress
which, in turn, depends on energy.
· Second, global energy demand continues to grow at more than
2% a year.
· Third, oil and gas currently supply 65% of the world’s
energy needs. Over the next two decades at least, that figure will
increase.
· Today the world uses more than 75 mb/d of oil and 220 bcf/d
of gas. By the end of this decade (on conservative assumptions
about economic growth) the world will be using more than 90 mb/d
and 280 bcf/d. And those figures will still be rising. BP supplies
+/- 4%
· And fourth, the resources to meet this rising demand do
exist. By our estimate the world has found and produced around 800
billion barrels of oil and natural gas liquids. The remaining
reserves are around 950 billion barrels. However, BP believes that
there are another 500 bn barrels of additional supplies which can
come from new discoveries and improvements in the recovery rates
of existing fields.
· So the underlying issue we face today is not one of volume
but of cost – not monetary cost, but the price society is
prepared to pay in terms of social needs and environmental impact
for the increased energy it must have if progress is to be
sustained.
· We are not absolutely short of resources, capital or
technology to surmount this challenge. And we have surmounted
similar challenges in the past. But we are short today of the
capacity to put resources, capital and technology together in ways
which are sustainable.
The role of business
· For business sustainability is basically about enlightened
self-interest. Business needs sustainable societies to protect its
own sustainability..
· So business is not in opposition to sustainability and
cleaner production. In fact it has a central role to play in
achieving sustainability – and to do so in a way that meets the
needs of today’s world without depriving future generations of
their means to do the same.
· Moreover, business has always been and remains an important
agent of change. Companies embody an inherent belief in progress
and positive change. They are part of society. They reflect human
concerns and potential.
· Hence the emphasis we place on staying in touch, staying
engaged, taking part in public policy discussions like this one,
working with civil society, seeking common ground with critics and
behaving constructively.
The Objective · So what is our key objective?
· Basically, as an energy company, we believe the future
requirement is clear – to provide energy and products without
negative environmental impact and to do so in such a way that
there is no trade off between growth and protection of the
environment.
· In a phrase, cleaner greener production – much cleaner
production.
Developing a strategy
· Above all, commercial logic underpins our approach to
cleaner production.
· As we see it, responsible business is good business. It
enhances reputation. It stimulates creativity and innovation. It
helps to shape outcomes. It has the support of employees and
customers. It opens up new markets. It lessens risk.
· At BP we view the trend towards sustainability and clean
production as a massive opportunity which will involve great
changes in behaviour and major technological challenges. The
search for clean production, we find, is a powerful stimulus to
innovation and creativity.
· Nothing will be achieved overnight. You should think of
progress in 25 and 50-year chunks.
· There will be many ways forward. But any approach ought to
be integrated, global and balanced in terms of social, economic
and environmental solutions.
Our policies
· So how is BP turning words and opportunity into real
achievement? For business the first step forward always is to
define an approach and set measurable targets.
· At BP our policies on HSE performance form part of the
company’s overall business policy commitments. They are the rock
on which all else is based.
· Our environmental goal as spelled out in these policies is
very clear: ‘No damage to the environment.’
· More specifically we’re committed to “drive down the
environmental and health impact of our operations by reducing
waste, emissions and discharges, and using energy efficiently.”
· BP is also pledged to comply fully with all legal
requirements wherever it operates, to operate to global standards,
to ensure that all our employees and contractors are committed to
our HSE standards and targets, and to report openly on our
environmental performance and to have that performance verified
independently.
· Everyone in BP is held accountable for implementing these
policies. Senior BP executives must account for environmental
performance in their areas of responsibility through their
individual performance contracts.
Our targets
· So how is BP getting from A to B?
· Basically we’ve established a number of clear targets
which define our environmental performance.
· First, we’re committed to reducing the group’s
greenhouse gas emissions from our own operations by 10% from a
1990 base line by 2010.
· Second, we’re committed to reducing discharges to water,
most of which occur at our chemicals operations.
· Third, we’re committed to reducing all our hydrocarbon
emissions to air.
· And fourth, we’re committed to reducing the number of oil
spills reaching land or water.
Our actions include:
· There are other environmental targets, but those are the
main ones. So how are we doing?
· By end 2000 we’d delivered greenhouse gas emissions
reductions of about 5% globally from our 1990 baseline. We expect
to deliver another 5% by 2004.
· We’re achieving these reductions through scores of
initiatives, mostly at local level. Examples include: reducing
flaring, tightening control of emissions at refineries, limiting
our own energy use, investing in new technology.
· Over the last three years we’ve reduced the amount of oil
in the water we discharge by 40%.
· We’ve introduced the world’s first global greenhouse gas
emissions trading system in all 154 of our businesses. So far 4.4
million tonnes of carbon dioxide have been traded between our
sites since January, 2000.
· We’ve developed a new choice of cleaner fuels – gasoline
and diesel without lead, sulphur or benzene. The programme was
launched in 1999. By the end of 2000 we’d reached 59 cities
worldwide. Our target is 90 cities by the end of this year.
· We’re investing in renewable energy technologies - $200
million in photovoltaics over the last five years. Today BP is one
of the world’s largest producers and users of solar power. And
we’re leading efforts to develop hydrogen as the ultimate clean
fuel for vehicles.
· We’ve shifted our energy mix towards cleaner fuels. In
1996 natural gas represented 15% of British Petroleum’s
business. Now, as BP, it’s 40% and rising.
· We’ve introduced environmental and social impact
assessments on all new projects. All new BP ventures now have a
full range of actions built into performance contracts to ensure
the minimization of any adverse consequences.
· We’re adjusting to a tougher regulatory climate in many
societies. In the US, for example, we reached agreement with the
Environmental Protection Agency in 2000 to reduce more than 40,000
tonnes of emissions a year from our refineries there and to invest
$500 million on improved controls.
· Lest you think we are perfect, or complacent, in 2000 we
paid out nearly $20 million in fines or penalties in more than 50
cases involving pollution around the world. We still have much to
do.
The critical role of technology
· Technology is at the heart of most of these developments,
substituting one process for another and moving the boundaries of
the possible.
· In the 21st century, to an unprecedented extent, technology
has the ability to repeat and repeat this process – most of all,
by spreading knowledge, boosting productivity and creating new
marketplaces and new demands.
· That said, you cannot rely on today’s technology to cope
with tomorrow’s challenges. It’s only by taking up current
challenges, and learning from them, that you can meet them. And
you only do that by encouraging technological development.
· In 2000 at BP technology aided cleaner production and
sustainability in many ways. For example, it enabled us to reduce
emissions at our chemicals/PTA plants, to reduce the cost of gas
pipelines (and so make it easier to transport gas), and to improve
flow rates at our wells.
· This will continue. We find that advances in technology are
constantly redefining the boundaries of the possible in every
aspect of our business.
Taking our strategy forward
· In 2001, for example, we expect to increase by 50% the
number of cities in which BP’s cleaner fuels are on sale.
· In 2001 we expect the turnover of BP Solar to grow by around
25% in line with our commitment to achieve global sales of $1
billion a year by 2007.
· In 2001 we’ve already achieved commercial success
worldwide (in China, Egypt, Trinidad, Algeria, Indonesia, Spain
& Australia) that allows us to speed up the development and
supply of natural gas resources – so promoting cleaner fuels and
lower emissions.
· Within the next two years we’ll begin supplying hydrogen
from our refinery at Kwinana in Australia and, we hope, unveil our
first hydrogen retail station.
What we’re doing in China
· In China, there are of course huge environmental challenges.
· We accept that much remains to be done. For example, mainly
because of China’s dependence on coal, the country is the second
largest emitter of carbon dioxide in the world after the US.
· But there is also huge potential for improvement. At present
China consumes about 20 bcm gas which represents only 2% of the
country’s energy mix. It’s the government’s ambition to
boost this to 7-8% by 2010.
· Our main contribution to clean production in China is likely
to come as a supplier of cleaner fuels including natural gas and
liquefied petroleum gas.
· In this context we’re already involved in a number of
large projects including construction of China’s first liquefied
natural gas terminal in Guangdong, expansion of our East China LPG
capacity, and production from the Yacheng 13-1 field – China’s
largest offshore natural gas field.
· BP is also a lead partner in one of the consortia bidding to
build the West-East natural gas pipeline to the Shanghai area.
· And we’re conducting an appraisal programme to determine
if three coal bed methane deposits in central China contain
commercially viable gas deposits.
· We’re also working with PetroChina on a study of the
feasibility of importing natural gas from East Siberia to China
and Korea.
· Beyond this, BP operates to global standards at all our
facilities throughout China.
· That covers operating requirements, business ethics, health
and safety, environmental protection, labour and personnel
practices.
· In terms of technology, it means using state-of-the-art
equipment.
· And in terms of social involvement it means – among many
other things - sponsoring a nationwide programme to promote
environmental awareness among teachers and schoolchildren, and
supporting a variety of conservation projects in China
Conclusions
· The greatest demonstration of the benefits we and other
foreign investors hope to bring China is the impact we make
through operating successful businesses – the investments we
make, the jobs we create, the people we develop, the standards we
work to, the energy mix we encourage, the taxes we pay, and our
ethical behaviour.
· In our experience all over the world, the goal of Cleaner
Production - whatever your business - stimulates opportunity,
creativity, innovation and environmental responsibility.
· We all stand to benefit from each other’s progress.
· We can’t expect to be congratulated. As soon as one
objective is achieved, our experience is that another one appears
– for example, even to the extent of what constitutes a “clean
fuel.”
· Perhaps there are only two certainties. Technology will
offer solutions to the challenges we face. And there will be
surprises. There always are.
· Thank you very much. |
