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. | 
