Yesterday Tony Hayward announced that he is stepping down and Bob Dudley will be the new CEO from October. It's a perfect moment to reinvent BP and invest in renewables and "Beyond Petroleum", the initiative started by Lord Browne.

Bob Dudley has some background experience in solar and wind, so the appointment could be promising.  

Even though the Gulf of Mexico leak has stopped (more or less), BP's woes have only started. The estimate of costs is about £20bn and the company is already planning to sell assets worth about that amount in the next year to prop up its balance sheet. With record losses, suspended dividends and uncertainty about its future, there's the additional Damocles sword of a huge appetite for litigation in the sourthern states, where many industries have suffered immense losses. BP can face lawsuits for loss of earnings from people from all walks of life, and until legislators draw a line and cap its liabilities, there will be huge uncertainty about the future of the company and the market is unlikely to react positively to that.

It's unfortunate that BP has been the punchbag of American politicians in the eve of the primaries in November, and Tony Hayward the "ass-to-kick" of choice of president Obama.

A company under such pressure is going to find it much more difficult to turn to the more challenging industry of renewable energy, and is more likely to stay firmly focused on oil and gas, its more profitable area of operation. Now it plans to exploit Canada's tar sands, a massively damaging operation from the environmental point of view, as this operation will result in approximately 3 times the amount of GHG per barrel of oil extracted than by conventional means. It should be deterred from pursuing this and other forms of risky exploitation.

BP briefly flirted with Beyond Petroleum with Lord Browne, but it has only invested £2.6bn in renewables since 2005, and Tony Hayward's reign was characterised by a return to oil, so the company has been firmly anchored in its traditional remit more than ever. BP's own forecast of expenditure in renewables is a mere £5bn by 2015, which is less than 25% of what the Gulf of Mexico spill will cost.

The figures are quite discouraging, but there is room for fundamental change. A turn to renewables will be a good PR coup for BP in the United States and it is likely to help it to cap its oil spill liabilities. BP can take the initiative to spend a further £10bn in renewables by 2015 in exchange of a deal with American legislators to massively reduce the oil spill bill and cap its liabilities vis-a-vis civil lawsuits and the like. The environment would benefit, and it would be a good solution for the company and for the US.

Mikel Susperregi

mikel@carbonica.org

The oil leak continues in the Gulf of Mexico and it looks increasingly likely that in cumulative terms it will release the best part of the underground deposit before it can be stopped. 

It is an absurd situation and we should ask ourselves how we got so addicted to oil that we have taken offshore drilling to environments that we cannot really control. A general principle of any business operation should be that if you haven't got the means to deal with every potential contingency then it's beyond your operational horizon. Like children shouldn't play with fire.

And it looks as though drilling at offshore depths of > 1.5 miles should be off-limits for BP - or anyone, as not even the mighty US armed forces will be able to help you if you run into trouble.

In the meantime the blame game is getting nasty and the US administration is determined to get its pound of flesh from BP. Or tonnes of flesh, as they are paving the way to what is practically unlimited liabilities. A boldly populist move for the president, conveniently blaming a company located across the pond, where all evils reside, or so he wants his electorate to believe.

He is speaking to a very unsophisticated audience, i.e. the bulk of the electorate, who certainly don't know that 40% of the shareholders of BP are American, roughly about the same percentage as the
British, and the fact that it is headquartered in St James's Sq in Mayfair is little more than a technicality for a global company who was actually carrying out its gulf operations to supply the American market.

As we are getting technical, the drilling operations were subcontracted to Halliburton (another global, but American based, company), the running of the Deepwater platform was in the hands of American subcontractors, as well as every logistical bit of the rescue operation.

I have no vested interest in BP but I admit feeling some sympathy for the terrible situation they find themselves in, especially because the issue of liabilities will be played out very unfairly and cripple them as a company, just so that Obama can score some electoral points. 

On the question of liabilites it can be argued that since the US president claimed to have taken control of the rescue operation, and BP was said to be acting under the orders and supervision of the US administration to do its utmost to seal the leak, then the liabilities from that moment on are a matter for the administration, or at any rate, to be shared by a number of participants who are all collectively failing to remedy the problem.  

The Environment Protection Agency and other regulators in the US are not without blame either (and therefore a share of the potential liabilities) for permitting that these operations got all planning consent without the right contingency plan. This week's issue of Private Eye contains a funny annecdotal item where they cite that the BP contingency report  for such events in the Gulf (approved by EPA) contained plans on how to protect forms of marine life that are only present in the Artic. They suggest that BP did a cut and paste job from another contingency report for other offshore projects. And the regulators missed it the irregularity of it, or didn't read it at all. 

In this entire episode the thing that surprised me the most -and which was only marginally reported- was that BP used thousands of tonnes of a toxic dispersant called COREXIT during the first month of the spill until the US administration asked it to stop. COREXIT is a massively toxic synthetic compound that is quite simply distilled poison to marine life. It is banned in the EU. In fact it is without doubt more toxic than crude oil itself. After all, crude oil is naturally formed, from fossilised marine bacteriae transformed into fuel by huge pressure within the sedimentary rock. It is  not wonderful to have it sitting around in the ocean, but it is a "natural" chemical after all. I am not saying it is good for marine life, but given time it will disperse. Crude oil is not man-made and it will be re-absorbed naturally in the earth's carbon cycle, without nasty by-products, very much unlike COREXIT.

But the big issue here is that we need to move forward. We must get off oil and the only way to do that is to change the way we live. Oil companies are not the ultimate responsible party for oil production, emissions and ocean spills. The consumer of fossil fuels is - we are. BP and other companies are supplying what is in demand and no one can blame corporates for giving the consumer what he wants and by doing so make money for their shareholders. But by changing the demand, BP and other oil giants will switch to cleaner forms of energy. This is happening to a certain extent. The oil giants are investing more and more in renewable energy projects. At the moment their green projects are little more than token efforts but visionary concepts such as the electric car can change all that, particularly when it is taken to the level of the global mass market.

Mikel Susperregi

mikel@carbonica.org

BASE is back with a one-day meeting at ExCeL in London, providing showcasing and networking opportunities for businesses to target the low-carbon market.

 The London low-carbon market is estimated to experience £3.7bn investment growth up to 2025. If your organisation has products and services that can facilitate the growth of this market, then BASELondon offers you an unrivalled opportunity to meet and do business with key decision-makers tasked with turning London’s low carbon ambition into a reality. 

The first ever BASELondon takes place on 27th May 2010 at the new Capital Suite at ExCeL. It is the place to find the strategy, policy and opportunities arising from a rapidly developing and ambitious public sector sustainability strategy to ensure London is one of the leading sustainable cities in the world.

Boris Johnson is opening BASELondon, welcoming 500 decision-makers from London’s public and private sectors. The conference will focus on London’s global leadership role in developing a low-carbon economic model, international best practice and developing 'green collar' job creation. The breakout sessions examine in detail the delivery of London’s low-carbon transformation covering the practicalities involved in de-centralised energy, improving the sustainability of London’s commercial and residential buildings, transport, energy efficiency, waste, air quality and food security. 

Sponsorship and exhibition places are limited to ensure a high quality networking experience for all involved and start from as little as £2000.

For more information, please contact Briony Mansell-Lewis on 020 3170 6040, email
briony.mansell-lewis@basecommunications.co.uk or complete our enquiry form.

Once again, the annual rendez-vous with the UK's green and ethical lifestyle show is at Olympia Two in London this weekend. To get FREE tickets follow this link and type the discount code TRADE2010.

VIP Tickets including the networking evening are £30.

The activists/comedians of the renowed NGO have blown Nestle's attempts to green the brand by launching a campaign against the sourcing of palm oil from tropical rainforests.

Several months ago Nestle announced the Fairtrade Kit Kat, so it must have felt like a kick in the gut to now be blamed for the killing of orangutans and the depletion of rainforests.

Here is the Greenpeace video:

Don't forget the carbon neutral race to Istambul with www.racethegreenmachines.com starts on July 24, from Battersea Park, London.

Please contact alex@carbonica.org  if you are thinking of putting together a team and are looking for sponsorship.

The office of the Mayor launched this week the strategy for climate change adaptation. It is an online consultation initiative - you can give your ideas and have your say: www.london.gov.uk/climatechange

To watch the launch video clip click below

Earlier this month the government announced a £100bn plan to boost wind power to an unprecedented scale. The Crown Estate confirmed the latest round of
leasing of UK waters for offshore farms, which will add 25 GW of electricity generation (to the existing 8GW); this will be enough to power every household in the UK.

Additional plans for offshore wind farms in Scotland could bring the total capacity to about 40GW.

This is all very impressive. Construction is planned to begin 2013-2015. I was at parliamentary seminar on energy policy earlier this week where the shadow
minister for Energy Charles Hendry rightly commented on these plans en passant "we have a shortage of ships, skills, engineers, manufacturing capacity, and absolutely
no money, but other than that everything is going fine". It's a typical "Yes Minister" moment, and probably spot on, but there're reasons to be optimistic.

There is a huge challenge in delivering the necessary volume to build these offshore farms and the cost involved, especially at a time when Britain is
risking a rating downgrade and needs to keep a lid on printing money, but I have no doubt that we will rise to the challenge. It also beside the point
that in all likelihood all this technology will be sourced from abroad.

The concerns about the unreliability of windpower are unjustified. If there's wind for a net 50% of the time during the year, and we need to resort to burning coal and gas for the
remainder to make up for the shortfall, that is a 50% cut in emissions already. There is no objective need to expect that any one renewable source will produce electricity
at a continuous level 24/7. The key is to diversify the energy mix and securing that the main elements of the mix delivering the lion's share of the demand are low carbon.

The same applies at a micro-generation or household level. Solar panels can be a great investment because the excess production can be sold to the National
Grid. The limited number of hours of daylight means that a household needs to buy back from the grid part of the time. However the net balance
is that an average set up with an initial outlay of £30000  can bring dividends of about 5-7% p.a. by selling the electricity, which is more than one would get from
putting the money in a savings account, plus there's the added advantage that the household becomes a carbon negative contributor to reducing emissions.

This is far from a trivial point. Micro-generation and energy efficiency can play a crucial role in decreasing demand that would otherwise spiral out of control.  

Mikel Susperregi

55,000 people have signed up to the list of beneficial owners of the airplot purchased to stop the third runway at Heathrow. Join the list to add your support - it's free. Click on the image for details.

Best wishes to all for the new year - here's to a low-carbon new decade,

The Carbonica Team 

Copenhagen ended without an agreement but a lot of progress has been made, so we shouldn't be too discouraged.

For the first time ever, specific proposals have been discussed to fund REDD (reducing emissions from deforestation and degradation) and there's widespread support from many countries to put a price on the preservation and rehabilitation of the rainforests, and to allocate funds to do so.

The "accord" presented (a five-page draft document presented by the UNFCC without specific signatories and certainly not ratified) contains a statement of funding REDD with up to $30 billion during the period prior to the expiry of Kyoto (i.e. 2010-2012) and setting up a "Copenhagen Green Climate Fund" that will put together up to $100 billion per year by 2020 to "address" the needs of developing countries.

This so-called accord is remarkably unspecific, but the explicit inclusion of REDD in all this is very good news.

The devil is in the detail and all of it is missing. It's not clear where this money is going to come from and how it's going to be spent, when and if put together, and in particular the REDD scheme needs a detailed protocol of verification and disclosure so that it achieves the right objective. We are not there yet.

This accord was put together in haste pressumably in the early hours of Friday morning and tweaked by world leaders during the day, and by all accounts it's a very sloppy document, containing meaningless statements such as the intention of keeping global warming under 2C (I am afraid we don't have such supernatural powers or control over the laws of physics). The Appendix contains a table of emission reduction targets for 2020 and it is tellingly blank. A statement of intentions that emission reductions would be worked out sooner rather than later during 2010 would have reassured the markets.

The first predictable reaction to this uncertainty has been a nose-dive in the price of carbon. The long term damage is that carbon markets are left to their own without any clear sense of direction.

Copenhagen has shown that the UN can always be counted on to mount a circus, and a very slow moving one. Perhaps this demonstrates that  serious climate change agreement can only happen outside of this framework.  After all, world leaders haven't taken this meeting seriously, only showing up in the last minute and trying to dash off a poorly structured document just to save face.

Actually one can say that we don't need the nearly 200 countries that took part in Copenhagen to agree on a consistent and strong climate change treaty. We just need to put together the top 10 emitters around a table and agree on specific emission cuts and the logistics -and  costs- of how to achieve them. The agreement will be global, but to be blunt, we don't particularly need to know the opinion of countries whose emissions are negligible - the emissions game has relatively few players. And more to the point, we certainly do not need the oil/gas rich countries to sit around the table determined to derail the talks, as has happened in Copenhagen.

The challenge in all this is to get the US to extricate itself from the financial interests of the oil industry. It is difficult. We already know that we will never persuade the likes of Saudi Arabia or Russia to support global decarbonisation and turn the taps off. Decarbonisation will only happen by addressing energy policy consistently and creating capacity for low-carbon energy, effectively reducing demand for fossil fuels as much as possible (the supply side is not something we can aspire to change).

Mikel Susperregi

Perhaps one of the most significant statements that has come out of Copenhagen this week is that the US is not prepared to commit public funds to pay for the “technology transfer” to decarbonise China.  

It’s not exactly surprising that a debt laden nation does not want to give billions of dollars (and go deeper into the red) to a country with significant foreign reserves and a trade surplus that makes it better equipped than any to decarbonise itself. The US believes other developed countries are worthier recipients of the technology transfer fund (now estimated at around $100bn per annum), and all of them put together do match in order of magnitude (around 6 billion tonnes of CO2)  the environmental impact of China’s emissions (and future potential emissions). 

This is not what the Chinese wanted to hear though, and it could give them the pretext to walk or blame the US for the failure of the talks. However the US position makes perfect sense. After all China is already the single largest recipient of carbon trading funds within the CDM, and as carbon trading forecast to boom exponentially in the coming years, China will continue to receive billions of dollars every year for carbon credits originated there. In conclusion, it can expect to receive the lion’s share of private money from carbon trading even if it will not get any of the US taxpayer’s dollars.  

It is important that in addition to the technology transfer, we allocate aid to rainforest countries to protect their assets. Retaining and expanding the Earth’s capacity to absorb carbon is as important --if not more-- than cutting emissions. 

London’s ambitions to become a low-carbon leader 

London is already a world leader in finance, and carbon finance in particular. The office of the Mayor of London now has ambitions to make London the greenest city in the world. 

Yesterday I attended a workshop of business leaders at City Hall to discuss the prospects of decarbonising London’s transport and businesses, and it was very interesting to see that the discussions on transport were dominated by the electric car, which got most of the discussion time, rather than public transport. The consensus was that the use of electric cars should be incentivised more strongly.  

At the moment the borough of Westminster is the leading example of central London boroughs in allowing free parking to EVs in all pay-and-display bays. Westminster’s example should be adopted by all local authorities, also introducing a larger number of recharging points. 

Electric cars will prepare London to be decarbonised in a radical way. The important challenge then will be that the increased demand in electricity should be sourced from renewables and low-carbon sources, such as nuclear energy. 

Businesses also depend on clean energy to decarbonise their operations, so fundamentally the decarbonisation of London relies pivotally on a consistent low-carbon energy generation strategy.   

Scientists at the Met Office are responding to the unprecedented attack on the science of climate change by putting together a statement in support of the overwhelming scientific evidence demonstrating global warming, that will be signed by many in the science community in the UK. I think the list of signatories will be long.  

The timing of the attacks is significant, and the sceptics, emboldened by a handful of hacked emails are being very orchestrated. The question is who is behind all this. The Times and the Telegraph are running stories today suggesting that the FSB might be the culprit behind the attacks. (Well, thankfully no climate scientist has tasted polonium - yet). Apparently the hacking originated from the Siberian town of Tomsk, also known for originating other notorious cyber attacks, such as on Estonia and Georgia. And the data was hosted by a company called Tomline, allegedly with a shadowy track record. 

In Russia there’re many IT companies operating as hackers-for-hire working for international cyber terrorism, so ultimately anybody could be behind the attack. It is clear though that it has taken some effort. 13 years of data and thousands of emails have been processed, read and selected snippets fed to the world’s media just in the nick of time for the Copenhagen talks.  

The access and echo that the stories have received in some of the world’s most influential media is also significant. Today Forbes.com runs a battery of stories fuelling the sceptic discourse, and bloggers in the Telegraph and Republican media and networks are running similar stories. Obviously no one is suggesting that these media are bankrolled by a conspiracy of sceptics, but there are many corporate interests to keep the fossil fuel tap open, rather than closed, and quite simply the largest and most successful companies in the world have made their fortunes out of oil, gas and coal. It is not inconceivable that some of these interests are backing the access to the media that the sceptic discourse is enjoying.  

In order cases, such as the Spectator in the UK, it’s pure ignorance.  

The surprising thing of all this is that we’ve had a relatively easy ride so far. It’d be naïve to think that countries like Saudi Arabia, Russia and corporate interests in the United States will stand by while the climate change movement succeeds in securing an international agreement that will undermine their key financial interests. Saudi Arabia and Russia make no secrets of their intention to derail Copenhagen but maybe this is simply a taste of things to come, and the heat is bound to go up and gloves to come off as we move forward. 

After all American oil companies succeeded in putting a stop on the electric car industry for many years, and they are certainly not above dirty tricks. I think now things are different – they know that the scientific evidence is overwhelming and even they need a planet to live on, so there is a limit to the resistance that the oil and gas industry will put up, but they won’t go without a fight. 

It’s good to keep the focus on the right place and away from these distractions.  Nicholas Stern from the LSE writes today on the FT an excellent article emphasising that business should be the driving force to take our economies to decarbonisation (and to fund it also in developing countries). This is key, because our governments will certainly not be able to afford it.