BP Says Carbon Charge Needed to Make Renewables Cost Competitive
November 02 2015 - 8:20AM
Dow Jones News
LONDON—The cost of producing energy from renewable sources such
as solar and wind will fall sharply over the next 35 years, BP PLC
said Monday, but without a system in place that levies a charge for
carbon emitted into the atmosphere, natural gas and coal will
remain the cheapest source of supply to 2050.
In a report analyzing the impact of technology on energy
production and consumption in coming decades, the oil giant said
that a carbon price of $40 a ton would make gas a more economical
power source then coal—a more carbon-intensive fuel—but a higher
carbon price will be needed to make wind and solar more
competitive.
"Without a price on carbon, fossil fuels are fiercely
competitive," said David Eyton, BP's technology chief. The oil
giant's long-term forecasts project that coal will remain the
dominant fuel in power generation by 2035, but will lose market
share to natural gas and renewables. In transport, liquid fuels are
expected to continue to dominate in coming decades.
The report comes ahead of a global summit in Paris intended to
seal a deal that would ensure man-made global warming is limited to
two degrees Celsius above preindustrial levels.
BP is one of a number of giant oil companies that have been
vocal in pushing for a price on carbon as a means to lower
climate-warming pollution in the run up to the gathering, arguing
that continued investment in fossil fuels is necessary to meet the
world's growing energy needs, but that a tax or cap on carbon
emissions would help favor cleaner-burning gas over coal.
A 1% switch from coal-fired to gas-fired power plants "would cut
emissions as much as increasing renewable energy by 11%," BP Chief
Executive Bob Dudley told a conference in Paris in June. BP and
other large oil companies are producing an increasing volume of
natural gas, with BP expecting it to comprise 60% of its production
by the end of the decade.
The coal industry has defended its role in the energy mix,
highlighting that advanced technologies can sharply reduce carbon
emissions and that coal remains a critical fuel, particularly in
fast industrializing emerging markets.
Ultimately, BP expects competition between energy resources in
power generation to increase over the coming decades and a carbon
price of between $40 and $80 a ton could make a significant
difference to which energy sources are most competitive. To tackle
global warming though, the company believes more stringent measures
will be needed.
"All the analysis I've seen suggests that you need to have a
price on carbon considerably higher than the sorts of prices that
we've used here to stabilize at 2 degrees centigrade," BP's Mr.
Eyton said.
Write to Sarah Kent at sarah.kent@wsj.com
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(END) Dow Jones Newswires
November 02, 2015 09:05 ET (14:05 GMT)
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