It was, in fact, unusual to hear the CEO of a world-class oil company plead for more government regulation of his own industry.
But Tony Hayward, CEO of BP and a member of the MIT Energy Initiative’s external advisory board, told the audience at a MITEI colloquium on Thursday, Oct. 29, that global energy and climate problems won’t be solved without political muscle. “I think it’s clear that it won’t take place without government intervention,” he said.
That notion has been, and is, anathema to most energy companies, but Hayward said regulations are required, such as setting a “carbon price,” to push people into changing behavior.
In addition, Hayward focused on what he called the harsh realities, warning: “We must be completely realistic about what can and can’t be done.”
For example, global demand for energy—primarily fossil fuels—is going up dramatically, and “we will need 50 million more barrels of oil per day by 2030,” much of it to replace declining production from existing fields. Also, the demand for new energy projects such as power plants will be up by 40 percent. So “in 30 years we can still expect 80 percent of our energy to be coming from fossil fuels.”
Potential new energy sources such as solar, wind, and biofuels can and should make a contribution, he said, but cannot make a huge contribution, not more than a few percent of total power. Unless oil is selling for $100-plus per barrel, wind and solar are unlikely to be economically viable, except under ideal conditions in local areas. Hayward has a house in Spain, for example, which uses solar-heated water.
Also, even though nuclear power offers large promise for generating electricity, the lead time for designing, winning approvals, and building nuclear plants is so long it can’t have much impact soon.
Electric cars—including hybrids—do save fuel, but today’s batteries are still inadequate. Nobody wants to stop every 40 miles and wait several hours while batteries are recharging.
Hayward emphasized, however, that his own company, BP, is investing about $1 billion per year in alternative energy projects, including intense research on biofuels.
One reality that is not so harsh, though not widely recognized, Hayward added, is that a major advance was recently achieved in natural gas production, especially here in the United States. New drilling and rock-fracturing technologies have suddenly added vast new gas reserves to America’s gas supply, perhaps more than 100 years’ worth at current usage rates. The natural gas is locked inside tight rock formations called shales, which are now exploitable.
As the abundant new gas comes on-line, substantial reductions in carbon emissions could come from replacing “the oldest and dirtiest coal-fired plants” with new, relatively clean power plants burning natural gas, he said. And these gas-fired plants can be installed quickly.
Under any scenario, however, Hayward emphasized, “the best bet is energy conservation.” Estimates are that “we can cut carbon emissions by one-fifth by the year 2020” simply by using less fuel, reducing the amount of carbon going into the air by 8 billion tons.
To achieve that, however, all fuel-saving and alternative energy sources must be exploited where appropriate.
“The fact is, there is no one miracle solution,” Hayward said.
—Robert Cooke, MITEI correspondent
Posted 5 November 2009