View from the top : Dominic Emery, BP’s Vice President of Group Strategic Planning

Q. What lessons did BP learn from the Beyond Petroleum campaign launched under Lord Browne’s leadership?

The Beyond Petroleum campaign was rather ahead of its time. It galvanised the organisation into a new way of thinking about energy and was pretty exciting. At the same time, we were bringing together several companies under the new BP Helios branding, and started to grow our investment in renewables, culminating in the creation of Alternative Energy in late 2005.

We learnt a number of lessons from our investment in Alternative Energy. Probably the biggest was that we invested too early, ahead of, and in the anticipation of policy development. However, of the businesses that we invested in, we still have a couple of them left, including our big Brazilian biofuels and US wind businesses. 

The two businesses that we exited several years back were carbon capture and storage (CCS), known as Hydrogen Energy, and solar. On CCS, we were anticipating a carbon price that was much, much higher than it has since turned out to be. We were expecting governments to drive carbon pricing more progressively. In a sense, we created a strategy on an expectation of a policy regime that failed to materialise, so we put CCS on the back burner for a period of time, but it has since revived following the recent US tax rules and UK government clean growth plan support. 

With solar, I think the lesson that we learnt is that manufacturing equipment is not BP’s strength, particularly when it comes to scaling manufacturing up at the speed that China did. We had our manufacturing facilities in the US, Australia and Spain and we simply couldn’t keep up with the pace and cost reductions in China. We have come back into solar through our investment in LightSource BP, but we are now participating not as a panel manufacturer but as a project developer, which gives us more flexibility as we can be selective about our choice of panels and projects. 

Another lesson that we learnt is that setting a financial investment target – we set a target of US$8bn over 10 years – is actually not a smart metric. Spending money is easy. Spending it wisely is a different thing all together, which is why now we have more modest investment plans as we develop our way forward into the energy transition. Instead of saying we’re going to invest so much, we are going to invest wisely across a range of technologies, and then choose to scale, because it’s not yet obvious which is going to be the winning technology, hence the broad-based approach we’re taking. 

Q. BP is aiming for zero-net growth in operational emissions to 2025. How will you go about achieving this?

This is an ambitious target because we are keeping our operational emissions flat on a net basis, yet we are still growing production. We’ve committed to grow our production roughly 5% year-on-year until 2021, because we recognise the dual challenge of growing energy and keeping emissions down. The way we plan to keep emissions down will be primarily through operational and engineering solutions. There are three main focus areas – energy efficiency, flaring and methane management and these can apply across most of our businesses. There’s also a strong focus on how we engineer and build our new facilities, as this is a key opportunity to deliver lower carbon outcomes. All new final investment decisions build in energy efficiency. In operations, many of our operators, maintenance crews and technicians see plenty of low hanging fruit opportunities to make intervention. 

The other important point here is this zero-net growth. If we can’t achieve what we want to achieve through operational and engineering interventions, we will use offsets. These will largely be land carbon-based offsets, which will be an essential part of meeting the Paris Climate goals. We are actually one of the biggest traders of offsets globally, so we understand the market well. 

Q. Limiting methane emissions is integral to BP’s recent Advancing the Energy Transition report. How will BP reduce the methane content of its gas operations? 

Methane is really important. In the short-term, methane is a powerful greenhouse gas, with a global warming factor of about 25x that of CO2. However, methane in the atmosphere decays rapidly, so it has primarily a short-term warming effect. Reducing methane emissions will make quite a difference in the near term. The majority of our methane emissions come from relatively few facilities. The interventions we’re going to make there will be around flaring, where one of the challenges is to achieve complete combustions. Most of the time near-complete combustion is achieved, but where it isn’t you get methane emitted to the atmosphere, so it’s important to improve flaring performance and reduce flaring overall. Particular success in this area has been achieved in our Angola business. 

The other area where methane emissions are being worked on really hard is our Lower 48 business in the US. For example, the Lower 48 team has been doing some amazing things in reducing the number of what are call high bleed valves. We have about 145 left out of the about 10,000 we had a few years ago. 

There are other ways and means to reduce methane emissions and that’s through improved combustion and compressor management and a range of other engineering and operational interventions. 

The other thing we are looking to do is to have a better warning system for methane emissions through emerging imaging technologies. Ultimately, it would be great to observe methane emissions using satellites, so you can make immediate interventions from continuous monitoring. A number of our businesses, particularly the Lower 48, use drones to detect methane. 

We also have forward looking infrared cameras devices that can actually detect methane around ground operations and cameras that can see methane being admitted and then zoom in on it. We’ve got a facility like this in our Whiting refinery and are planning to put these facilities elsewhere. All of this is targeting early detection and quick intervention. 

There are plans for us to progress to a near zero methane emissions future, as part of a wider industry approach as laid out by the Oil and Gas Climate Initiative last year. The target that we laid out of 0.2% of methane fugitives over marketed gas is a metric that we hope will become more widely used across the industry. If you can get down to those low levels across oil and gas, which is roughly running at 1.7%, it will make an immense difference to near-term methane emissions and its impact on warming.

Q. BP has set out its commitment to help incubate and grow low-carbon solutions. How will it do this and how can new innovators engage with BP?

At BP, there’s a desire to create new businesses and that’s why we are planning to spend roughly US$200m a year on incubating new businesses. This isn’t CAPEX spend on big new projects. This is purely a way of investing in start-up businesses, proofs-of-concepts and pilots. We have identified five new business model areas, which we are targeting. 

One is around carbon management, which includes CCS and carbon trading. Another one is bio-products, which includes taking bio-mass and turning it into energy and energy products. A good example of that is turning waste to bio-jet fuel, which is what a company called Fulcrum, which we invested in is currently developing. The first Fulcrum plant recently broke ground in the US.

The next area is low carbon power and storage, where, for example, we are trialling Tesla batteries to help manage intermittency at some of our US wind farms. We’re also targeting advanced mobility technology, with a focus on electrification, autonomy and new mobility models. We recently invested in an advanced battery company called StoreDot.

The fifth area is digital transformation. This is aimed at longer-term digital opportunities – such as blockchain and cognitive computing, the most advanced form of artificial intelligence. We recently made an investment in a company called Beyond Limits in this area. In addition, we are examining quantum computing, the next generation of computing beyond binary. 

New innovators can engage with BP through our Venturing team. We get in excess of 1,000 opportunities coming across the desks of the ventures team every year. Some are screened out rather quickly and others we take forward and invest in. We’re very open to new ideas, particularly in the five areas described above. 

Q. What role does BP see for carbon capture, usage and storage (CCUS) in the future? 

As already discussed, CCS was an area we were disappointed in when we didn’t see the carbon price move in the direction we were anticipating. 

However, CCUS has definitely had something of a rebirth in the last couple of years. We’ve seen a greater enthusiasm for it by several host governments. The US has introduced a new tax code, 45Q, which encourages CCUS both for the permanent storage of CO2 as well as the use of CO2 in enhanced oil recovery. 

We are seeing the same appetite in the UK and also the Netherlands, with the Port of Rotterdam project, which is designed to take CO2 from industrial facilities around Rotterdam and bury it in former gas fields in the Southern North Sea. 

We see CCUS as mission critical to the energy transition and to the Paris Agreement. I think without CCUS it’s going to be near impossible to achieve those ambitions. 

Historically, it’s been CCS, but there’s a new developing industry called carbon capture and use, which takes CO2 and turns into useful products like chemicals or cement. 

There’s a company that BP has invested in called Solidia, which takes CO2 and actually uses it as part of the curing process for concrete. By doing so it reduces CO2 emissions by between 30% to 70% and reduces the use of the water by 80%, so it’s really quite an impressive technology. 

Applying some of these ‘U’ technologies is going to be important, but the big deal will actually be large scale CCS. We need to bury not just a few million tonnes, but hundreds of millions of tonnes of CO2 every year. I think CCUS in the future must be scaled and scaled rapidly. 

It’s had a very stop-start approach so far, but I think more governments support it and the wider industry is starting to realise it’s mission critical. 

Q. What is needed from the government, the oil and gas industry and its supply chain to create the confidence to invest in and grow low-carbon businesses at scale? 

At a very macro scale, we think the introduction of an economy-wide carbon price is the key because it will incentivise the most cost-effective opportunities, which is the right thing to do. 

What the UK has done is to set a floor price for emissions and then taken the European emissions trading scheme’s prevailing price on the day and added that to the floor price. That’s been really helpful and what that has done is encourage gas replacing coal in the system. A recent Nature science paper has shown that emissions reductions in the UK power sector have come down by 47% in five years, through renewable generation and most significantly coal to gas switching.

As a result, the UK’s ability to reduce CO2 has been pretty impressive. The next step is to ensure global development of carbon pricing. 

Whether it’s a trading scheme or a carbon tax, either will create confidence, which will translate into action and investment. We also need to be creating innovative business models to enable CCS. For example, the transportation and storage of CO2 could be treated as a common good. Creating an infrastructure or rate-based approach to that will be very important and we are seeing signs that governments are interested in doing that. 

Governments also need to continue to provide transitional incentives to new technologies for a period of time. The important word is transitional because they shouldn’t be there forever. The transitional incentives provided for solar, wind and even offshore wind are starting to be withdrawn, because these technologies have come down the cost curve so quickly. Having those incentives make a lot of sense. 

Add to that a carbon price and you have two appropriate regimes, which allow lower carbon technologies to penetrate. 

Q. Is a completely decarbonised oil industry possible? If so how?

It’s extremely challenging. There’s some fascinating work the EU has done to look at a fully electrified European Energy system versus an energy system that combines electrification with decarbonised gas. 

Interestingly, if you do the electrification and decarbonised gas scenario it’s about EUR1tn cheaper than full electrification. 

The oil and gas industry, supported by CCUS and decarbonised gas can actually start to make significant in-roads in providing new technologies to achieve that goal. 

I think complete decarbonisation is massively challenging, but there are some very big opportunities for developing the industry of the future.

Q. Do you have any plans like Shell and Statoil to move into investing in large scale renewables?

There are different competitive models in the industry right now. Some are about creating increasingly efficient oil and gas businesses and some are investing in decarbonising their core oil and gas businesses. Others are diversifying their portfolio into renewables.

What’s quite interesting is everyone is taking a different approach and it’s not obvious what the winning approach is. From our perspective, we already have big large-scale renewable investments, including our US wind and our Brazilian biofuels businesses. We have just invested in LightSource BP, building on the fact that LightSource is Europe’s number one solar developer. What we want to do with LightSource is help internationalise its activity beyond Europe. Lightsource has the ambition of having a six-gigawatt solar portfolio, so that’s a pretty big deal. 

And we will continue to look at large scale renewable investments, with a strong push on our five core areas and when we like what we see, we can scale pretty rapidly. 

About Dominic Emery

Dominic is a geology graduate and has worked for BP since 1986. He has held positions in BP’s Exploration and Production Division, in Asia and the Middle East, and also in the UK North Sea. Dominic has led Gas and Power business development in the UK and Northern Europe, as well as running power and utility assets at BP industrial sites. He joined BP Alternative Energy in 2007, ran Emerging Business & Corporate Ventures in 2012 and moved to his current role in 2013.

As vice president of Group Strategic Planning, Dominic helped develop BP’s RIC strategy – Reduce, Improve, Create. This is aimed at reducing BP’s own emissions improving its products to help customers reduce their emissions and creating low-carbon businesses.

About BP

Starting in 1908 with the discovery of oil in Persia, BP’s story has always been about transitions – from coal to oil, from oil to gas, from onshore to deep water, and now onwards towards a new mix of energy sources as the world moves into a lower carbon future.