BP Executive: EU Needs Practical Carbon Policies

By STEPHEN FIDLER
BRUSSELS—The European Union should stop wringing its hands after the disappointment of the Copenhagen climate talks and embark on practical policies that will begin to reduce carbon use, a senior BP PLC executive said Friday.
In what was billed by the company as an important speech in Brussels, BP's chief executive of refining and marketing, Iain Conn, said that rather than focusing on the long-term objective of halving carbon usage by 2050—an effort he called "polishing the diamond"—the EU should take early material steps toward increasing energy efficiency and cutting carbon usage.
In an interview beforehand, he said Europeans "should stop wringing our hands" over what many on the continent saw as a disappointing outcome from the Copenhagen talks in December. "We know so much about practical things we can do today but we are not doing them. All this talk about polishing the 2050 diamond is getting in the way of what we need to do today."
These practical policies would include emphasizing the importance of natural gas in electricity generation, boosting nuclear-power generation and reconsidering policies in the EU, which is encouraging the use of diesel in passenger cars.
When its greater thermal efficiency and the lower capital costs of new power plants are taken into account, natural gas is about four times as efficient as coal, and plenty of natural gas is available in the world because of new technologies that allow it to be extracted from shale, Mr. Conn said. Because of this, he said, the U.S. has overtaken Russia as the world's largest natural-gas producer. Capital costs associated with building gas-fired power stations were also lower than coal.
In the interview, he said European governments would have a "make or buy" decision about nuclear power. Even if countries such as Germany decided not to produce electricity from nuclear-power stations, they would be buying it from countries that had them, such as France, the U.K. and the Czech Republic.
The European bias for diesel in personal transportation should be reconsidered, he said. Major gains can come from advanced gasoline-engine technology, he added. Combing this with hybrid technology, starting with the recovery of braking energy, there was the potential for nearly halving carbon-dioxide emissions per kilometer. "Importantly, this can be delivered at a much lower incremental cost than a full battery electric vehicle," he said.
"In the shorter term it seems clear from our work that by far the most effective pathway to lower carbon transport is through making existing vehicle engines more efficient," he said.
The focus on diesel for cars in Europe also makes it harder to increase the proportion of biofuels in the mix. Unlike gasoline, which can be mixed with ethanol—which Mr. Conn said could be relatively easily produced without hurting food supplies—diesel would require blending with "environmentally more problematic vegetable oils."
In the interview, he said Europe exports about a million barrels a day of gasoline to the U.S. and imports the same amount of diesel, mostly from Russia. Gearing up European refineries to produce more of the high-quality diesel required by engine manufacturers would, he said, be very expensive.
Mr. Conn said that proposals for a border carbon tax, which would impose tariffs on imports from countries with a lower cost of carbon than Europe, "a considerable mistake" that would lead to negative results such as trade retaliation. Among the proponents of such a move is the French president, Nicolas Sarkozy.
Mr. Conn also said the U.S. and EU should closely align energy policies—without signing treaties—to keep the price of carbon broadly in line, in part to avoid trade and other frictions arising from big differences in the price of carbon. This would also provide an important example to the rest of the world, he said.
Write to Stephen Fidler at stephen.fidler@wsj.com