BP: Oil unlikely to be fully exploited due to climate concerns
The world's oil resources are unlikely to ever be fully exploited, BP has admitted, due to international concern about climate change.
The statement, by the group’s chief economist, is the clearest acknowledgement yet by a major fossil fuel company that some coal, oil and gas will have to remain in the ground if dangerous global warming is to be avoided.
“Oil is not likely to be exhausted,” said Spencer Dale in a speech in London. Dale, who chief economist at the Bank of England until 2014, said: “What has changed in recent years is the growing recognition [of] concerns about carbon emissions and climate change.”
Scientists have warned that most existing fossil fuel reserves must stay in the ground to avoid catastrophic global warming and Dale accepted this explicitly.
“Existing reserves of fossil fuels – i.e. oil, gas and coal – if used in their entirety would generate somewhere in excess of 2.8trn tonnes of CO2, well in excess of the 1trn tonnes or so the scientific community consider is consistent with limiting the rise in global mean temperatures to no more than 2C,” he said.
“And this takes no account of the new discoveries which are being made all the time or of the vast resources of fossil fuels not yet booked as reserves.”
Dale said the rise of shale oil in the US, along with climate change concerns, meant a “new economics of oil” was needed. “Importantly, it suggests that there is no longer a strong reason to expect the relative price of oil to increase over time,” he said. The low oil price over the last year has led to billions of dollars of investment being cancelled.
The concept of ‘unburnable’ fossil fuels is closely linked to the idea of stranded fossil fuel assets – that reserves owned by companies will become worthless if the world’s nations act to tackle climate change. Analysis of these issues was pioneered by the Carbon Tracker Initiative (CTI), which warned in 2014 that$1trn was being gambled on high-cost oil projects that might never see a return.
“As BP now recognises, there is a substantial risk in the system of ‘peak [oil] demand’,” said Anthony Hobley CEO of CTI. “This arises from a perfect storm of factors including ever cheaper clean energy, ever more efficient use of energy, rising fossil fuel costs and climate policy. These are key factors the industry has repeatedly underestimated.””
Institutions including the World Bank, the G20 and city analysts have stated their concerned about stranded fossil fuel assets. Bank of England governor Mark Carney warned recently that the losses were “potentially huge”.
This article first appeared the Guardian
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