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BP Publish 2017 Energy Outlook

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Yesterday, BP published its most recent Energy Outlook, in which it highlights the ‘most likely’ path for the global energy landscape.

In the wake of Royal Dutch Shell’s November 2016 announcement that oil demand could peak in five years, investors will scrutinise BP’s views on oil in particular. A November 2016 report assessed the climate risk disclosure and lobbying by the leading oil majors and found in general poor disclosure to investors, including by BP, on how the proliferation of renewable energy and electric vehicles (EV) would impact their two largest markets – fuel for vehicles and gas for power.

The analysis summarized in the table at the end found that companies are making vague disclosures whilst simultaneously aggressively lobbying to prevent policy favouring renewables and EVs. The following information provides an account on BP’s existing predictions for EVs and renewables and its climate change lobbying activities, prior to its Energy Outlook release.

Download this information in PDF format here.

“Following the Paris Agreement, investors want to know how oil and gas companies can survive, and even thrive, in the transition to a low carbon economy. This requires more detailed disclosure of the impact on asset portfolio resilience of low carbon scenarios including disruptive technologies, such as zero emissions vehicles. Investors also expect oil and gas companies to play a supportive role in developing public policy to support the transition.” – Leon Kamhi, Head of Responsibility, Hermes Investment Management

BP’s disclosures on renewables and EV penetration

 Electric and hybrid vehicles: BP suggests oil will fuel 90% of all transport and electricity just 1% in 2035, with electric vehicles (EVs) making up only 10% of the total increase in the global car fleet. It expects automobile driven oil demand to, along with global car ownership, roughly double by 2035, with its optimistic scenarios for electric vehicle growth leading to only a 5% fall in demand for oil of current levels. This is despite the fact that the California regulator wants 100% EVs by 2035 and most automakers have ambitious roll out plans, like Honda which plans for 60% EVs and hybrids as soon as 2030.

 Renewable energy: BP suggests renewables will generate 16% of global electricity and 9% of global energy in 2035. However, in 2016 BP does not appear to have addressed the potential impacts on its business model deriving from the proliferation of renewable energy in its their investor communications. This contrasts with the International Energy Agency (IEA) which states that by 2040 “In a scenario compatible with 2°C, significantly faster growth means that, in the four largest power markets (China, the United States, the European Union and India), variable renewables become the largest source of generation”. This appears to represent a significant disconnect with BP’s estimations indicating either underestimation of renewables penetration or lack of conviction in a 2C scenario.

BP’s climate change lobbying

BP is notable, along with other European energy majors, for top line support of a “price on carbon” while lobbying against the details of enabling policy like reform of the EU ETS. Evidence also suggests BP has been lobbying against EU renewable energy subsidies in the last few years.

 Emissions Trading: BP has a clear position in favour of carbon pricing as the most efficient means to transition to a low carbon economy, which includes supporting the EU ETS. It has however in a 2015 consultation with EU policy makers opposed the creation of a strong carbon price by advocating against key reforms such as the Market Stability Reserve, whilst continuing to stress carbon leakage concerns in an effort to secure free emission permits for industry.

 GHG emissions Targets: BP CEO Bob Dudley continues to stress economic and technical issues with reducing greenhouse gas emissions reductions in line with an IPCC demanded response to climate change. The company warned against setting an ambitious EU GHG reduction target, in 2014 emphasizing whether competitors’ are making “comparable” efforts. It also in 2015 reportedly lobbied against the EU Industrial Emissions Directive.

 Renewable Energy Policy: BP Chairman Carl-Henric Svanberd in 2015 stated that the company supports continuing renewable energy subsidies. However, BP has opposed European renewable energy targets in various consultations and evidence released in 2015 and 2016 suggests that the company was lobbying against EU renewable subsidies.

BP’s lobbying by its trade associations

BP along with the other oil and gas majors maintains a network of lobbying agents in the form of trade associations, globally. Notable among them are the Western States Petroleum Association which has lobbied against Californian low carbon vehicle standards and the American Petroleum Institute which in the wake Trump’s US victory is pushing hard to dismantle any climate related policy measures at the US federal level.

 Western States Petroleum Association (WSPA): BP is a member of WSPA, which has over a number of years campaigned against Low Carbon Fuel Standards (LCFS) for vehicles, and two bills designed to reduce GHG emissions (AB 32 and SB 32) in California. During BP’s 2016 AGM, its CEO Bob Dudley made comments distancing BP from WSPA lobbying positions.

 National Association of Manufacturers (NAM): BP executive John Minge is on the Executive Committee of NAM. NAM opposed US leadership on climate change and the US Clean Power Plan, including through a successful legal challenge. In late 2016 NAM advocated to President Trump against the need for regulation to directly limit GHG emissions. BP does not disclose its membership of NAM to investors through CDP despite being transparent about other organisations.

 Australian Petroleum Production & Exploration Association (APPEA): An executive of subsidiary of BP is on the board of APPEA. APPEA, which welcomed the removed the Australian carbon tax, also in 2015 opposed the Renewable Energy Target, Energy Efficiency legislation and advocated for significant limits on the scope of the Australian Safeguard Mechanism.

 American Petroleum Association (API): BP has an executive on the API, an organisation that has in 2015 been implicated in funding climate change denial research. In 2015 it also opposed renewable energy legislation and the UN Climate Treaty, suggesting it has been driven by “narrow political ideology”. In 2016 API opposed regulations on methane standards and the Clean Power Plan through a legal challenge.

“The uptake of electric vehicles globally will be hugely important for oil majors like BP where fuel for vehicles accounts for up to 40% of revenue. California wants 100% electric vehicles by 2035 with the automakers articulating strong EV and hybrid roll out plans. In its latest annual report BP suggested oil will still fuel 90% of all transport by 2035, an estimate clearly misaligned with the plans of regulators and automakers like Toyota and Honda. Investors should look for updates on this in the 2017 BP Energy Outlook.” – Dylan Tanner, Executive Director, InfluenceMap

Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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5 Easy Things You Can Do to Make Your Home More Sustainable

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Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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