When it comes to climate change, I have always been a believer: not in hand-wringing debate, not in unrealistic solutions like the elimination of hydrocarbons, but in the power of action.
In 1997, as chief executive of BP PLC, I was the first leader of a major oil company to acknowledge that climate change was a problem, and that the industry had a responsibility to acknowledge and address it.
The head of the American Petroleum Institute claimed that I had “left the church.”
Twenty-one years later, I returned to the church in a different way, along with a group of distinguished business leaders.
Last month, Pope Francis hosted the chief executives of many of the biggest oil and gas companies, investors overseeing nearly US$10 trillion of capital and many of the energy sector’s leading thinkers and policymakers. We convened to discuss ways of reducing emissions of carbon dioxide and methane.
It was the first time in my 50-year career in the energy industry that such a gathering has taken place. The discussion was marked by humility and pragmatic optimism.
Not everybody shares this bright outlook. Two investment managers have argued in the Financial Times that the end of the “age of oil” is in sight. They urged oil and gas companies to commit to winding themselves down when the time is right, and return money to investors, who are more qualified to decide what to do next.
As things stand, they are wrong. In areas such as aviation, maritime and heavy commercial shipping, there are no viable substitutes for oil. Natural gas has a long life ahead as it replaces coal in the power sector and provides a reliable complement to the intermittency of renewables.
Based on current trends, IHS Markit expects total demand for oil and gas to rise by 30 percent between now and 2040.
Consumption of renewable energy is expected to triple, but from a lower base: By 2040, it will account for just 6 percent of the energy mix, about the same as nuclear power today.
It is also premature to discount the ability of today’s oil and gas companies to adapt. When I took over as CEO of BP in 1995, the industry invested almost nothing in renewable energy. Today, the “supermajors” allocate more than US$4 billion every year to low or zero-carbon energy.
These giants have the resources to make large capital commitments and, in many cases, skills that can be adapted and redeployed to deliver energy solutions at the immense scale that is needed. If leaders can redirect their organizations toward a new lower-carbon purpose and if they can successfully engage their staff, there is every reason to believe that they can be active participants in, or even drivers of, the energy transition.
The oil and gas industry has come a long way, but even today it accounts for a tiny share of low-carbon investment.
To accelerate the transition and reduce the risk of damaging climate change, the International Energy Agency has estimated that the rate of investment in the energy sector would have to double, with 85 percent of all investment allotted to renewable energy and energy efficiency.
To transform the pace and scale of investment, I have long advocated for a global price on carbon, most likely in the form of a consumption tax. This levy would need to be high enough to encourage the shift toward lower carbon energy sources on the supply side, and to drive adoption and improvement of efficiency measures on the demand side.
So far, no pricing proposal has been able to achieve those goals. Implementation of a carbon tax without exemptions and with measures to penalize countries that do not comply would require courage and determination to face down vested interests.
Most of the technologies to build the low-carbon energy systems of the future already exist.
There are designs — if not yet public confidence — to turn proven nuclear-fission technology into a safer and cheaper power source by making small, modular reactors. Every year, the efficiency of solar and wind generators improves, and the costs fall.
Energy storage technologies are increasingly viable for widespread application in transport systems and power grids. We also have extensive experience developing systems for carbon capture, storage and use. Many of the world’s experts in these technologies are employed by oil and gas companies.
Not all of these technologies work at scale or are economically viable, but they need refinement, rather than reinvention. There is a law of engineering that as a new technology is adopted and deployed, its price falls, predictably, and sometimes precipitously. Something of the kind is at work in the energy sector.
Solar generation, for example, has become cheaper by a factor of 250 over the past four decades and it is now the cheapest source of electricity in parts of the US, Italy, Spain and Australia. The same will soon be true in much of China and India.
If other technologies follow the same trajectory, then demand for hydrocarbons could plateau, and even decline, sooner than expected — but today’s oil and gas companies need not be victims of the energy transition; they can be a critical part of it.
This great shift must not come at the expense of the world’s poorest.
The provision of abundant energy has reduced the number of people living in absolute poverty by a factor of seven during my lifetime. Nevertheless, more than 1 billion people still do not have reliable access to electricity, while more than 2 billion still cook using low-quality fuels, such as biomass or animal waste, which are a danger to health.
Future energy systems must provide more to more people, while extracting a lower economic, humanitarian and environmental cost.
The meeting at the Vatican last month reaffirmed my conviction that we now have the tools to solve this pressing and complex global puzzle. The decisions we make about energy in the years ahead are among the most profoundly consequential we will face.
To cite Pope Francis: “Civilization requires energy, but energy use must not destroy civilization.”
Exxon Mobil Corp, Royal Dutch Shell PLC and Total SA invest about US$1 billion each. BP invests US$500 million. Figures for Chevron and Conoco are not available, but they are assumed to bring the total to more than US$4 billion.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
The military is conducting its annual Han Kuang exercises in phases. The minister of national defense recently said that this year’s scenarios would simulate defending the nation against possible actions the Chinese People’s Liberation Army (PLA) might take in an invasion of Taiwan, making the threat of a speculated Chinese invasion in 2027 a heated agenda item again. That year, also referred to as the “Davidson window,” is named after then-US Indo-Pacific Command Admiral Philip Davidson, who in 2021 warned that Chinese President Xi Jinping (習近平) had instructed the PLA to be ready to invade Taiwan by 2027. Xi in 2017