Friday, September 25, 2009

Natural Gas Producer BP Tauting CO2 Reduction

By Matt Daily

NEW YORK (Reuters) - The head of BP Plc's Americas business said on Thursday the United States could sharply reduce its carbon dioxide emissions by expanding its use of natural gas over fuels such as coal.

"Natural gas has the greatest potential to provide the largest carbon reductions at the lowest cost using technology that is available today," Lamar McKay, chairman and president of BP Americas told a Financial Times' energy conference.

BP is one of the world's largest producers of natural gas, with an average output of 8.67 billion cubic feet per day in the first half of 2009.

In June, the U.S. House of Representatives passed a climate bill that would institute a trading regime for carbon credits and require power plants to begin capturing emissions of the gas that is blamed for contributing to climate change.

That bill faces stiff opposition in the U.S. Senate, which is currently considering alternatives to what could be the first U.S. law designed to reduce carbon dioxide.

About half the U.S. electricity supply comes from coal-fired power plants, many of which are decades-old "clunkers", McKay said.

Power plants that burn natural gas emit 60 percent less carbon dioxide than coal per kilowatt hour of electricity produced, and gas could allow the country to shut many of those inefficient plants.

"If we could ramp up natural gas use by one trillion cubic feet per year, we could retire 150 gigawatt hours of the oldest and dirtiest coal-fired plants," he said.

BP has calculated that as much as 30 percent of the carbon dioxide reductions targeted under the Waxman-Markey bill that passed the House could be delivered by expanded natural gas use.

About 20 percent of the electricity in the United States comes from natural gas power plants or roughly equal to the amount generated by nuclear power plants.

But the United States continues to add new coal-fired power generation, McKay said, and 36 new coal plants had received permits, were under construction or near construction as of June. Another 47 have been announced, he added.

BP, which also owns wind farms and a solar manufacturing business, has been working to develop Carbon Capture and Storage (CCS) technology to store carbon underground at projects in California, Algeria and Abu Dhabi.

"With the appropriate regulatory regime and an adequate carbon price, we believe CCS could be commercial by 2020 plus," he said.

(Reporting by Matt Daily, editing by Leslie Gevirtz)

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