Tony Hayward, BP’s chief executive officer since 2007, said in a speech on energy security and climate change at the Peterson Institute for International Economics that it was “somewhat surprising” that coal plants were being built in the United States, given concerns about climate change.
Hayward said Congress instead should be promoting natural gas, which emits as little as half the carbon emissions that coal does. He said the effort in the Senate to write new climate legislation appeared to be more equitable to the natural-gas industry.
BP has significant natural-gas resources, and would likely stand to benefit from climate legislation that encouraged more gas use. Natural gas makes up more than half of BP’s total energy production, according to the company’s website.
Lisa Camooso Miller, a spokeswoman for the American Coalition for Clean Coal Electricity, a group that includes coal producers and users, said Hayward’s comments were “no surprise,” given the importance of natural gas to BP’s business.
She said coal is three times less expensive than natural gas and was an abundant and “increasingly clean” resource that should continue to be the mainstay source of electricity generation.
Coal now accounts for around 50 percent of the power generated in the United States, but emits about one-third of the country’s total carbon dioxide emissions.
Echoing a complaint common in the natural-gas industry, Hayward said the coal industry was “disproportionately favored” in the House climate legislation passed in June. But he said he was encouraged by the direction of climate talks in the Senate.
BP recently dropped out of the United States Climate Action Partnership, a coalition of companies and environmental groups that developed a framework the House climate legislation built upon.
Despite that decision, Hayward says his company continues to support “cap and trade” legislation as a way to lower carbon dioxide emissions and also spur investment in cleaner sources of power.
He indicated he was encouraged by the effort by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) to write bipartisan climate legislation.
Their bill may only apply a firm cap on the electric power sector initially, with large manufacturers having to comply later. Utilities and manufacturers would, however, be part of a market in which allowances are bought and sold as needed to meet reduction targets.
Fewer and fewer allowances would be available each year, forcing companies to cut their carbon emissions.
The three senators are reportedly considering putting the transportation sector, which is responsible for about 40 percent of the emissions in the country, outside that carbon market. Oil refiners would not have to buy allowances. Instead, a fee would be imposed on gasoline linked to the market price of carbon to discourage consumption as a means of reducing tailpipe emissions.
Hayward praised the cap-and-trade approach to forcing emissions cuts rather than the imposition of a carbon tax. He said it would be unlikely that a tax could be set high enough to change people’s behavior.
Later, however, he said that the fee applied to oil companies could be a more “equitable” means of forcing emissions reductions in the transportation sector than the allowance allocation structure in the House climate legislation. He did not endorse that approach.
Oil lobbyists have said the House legislation did not provide their industry with enough free emissions allowances.
To lower emissions, Hayward said, the U.S. should focus on conserving energy, promoting natural gas production, building lighter and more fuel-efficient cars and advancing the production of biofuels with a lower carbon footprint than traditional gasoline.
He said the development of offshore wind and carbon capture and sequestration technologies for coal would be too expensive in the near term to rely upon for cutting emissions.