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					Speaker: Vivienne Cox

Speech date: 19 March 2007

Venue: Energy Institute, New Delhi, India

Title: Executive Vice President and CEO of Gas,
       Power & Renewables and Shipping




Thank you and good evening everyone. I'm very grateful to the Energy Institute for hosting this
evening's event And thank you all very much indeed for joining us. I appreciate that there are many
people here tonight who have much experience of the energy industry in India and beyond. I thank
you for joining us and I look forward to hearing your views.

I am delighted to be back in India. It is a great opportunity to learn more about what is happening
here as well as to explain what BP is doing around the world.

In explaining our work, I'll focus on my own business, BP Alternative Energy, which is dedicated to
generating power from the low carbon sources of solar, wind, gas and hydrogen.

Alternative Energy is of course part of the wider BP Group, which has nearly 100,000 people in over
100 countries. We produce oil and gas at a rate of nearly 4 million barrels a day and we are
constantly looking to play our part in creating a sustainable energy industry, which is strong in
energy efficiency and low-carbon products.

Someone asked me recently if the BP Alternative Energy business was a real commercial venture or
simply a public relations exercise.

My answer was to point out that we plan to invest more than $8 billion in Alternative Energy over
the next decade - so it would be an extremely expensive publicity stunt!

The truth is that this is not public relations. It is a significant business. And it exists because there is
a strong business case for low carbon power - one that gets stronger every day. That business case is
about responding to the need for energy:
                that is sufficient to meet people's needs;
                that is local and secure;
                and that is also clean and environmentally-friendly.

Dr. Singh, your Prime Minister, recently set out his aspiration by saying: "If we are able to eliminate
poverty, provide gainful employment to all and do this while protecting the environment, we would
have shown a new path to sustainable development."1
For me, that is exactly the kind of vision to inspire the world of business. We have to find ways to
address each of those needs.

So tonight I want to explain why our business exists, what we are doing, and what we plan to
achieve in the next decade or so.

To do that, I will cover four things

                why we believe the environment is important - alongside providing secure
                 energy for growth;
                why we are looking to move beyond hydrocarbons in the energy we provide;
                why low-carbon power is significant;
                and last but certainly not least, why India is important to BP and why I believe
                 it has much to offer to the developing low carbon economy.

1. Why the environment?

We believe that businesses prosper if they fulfil human needs - and companies such as BP fulfil the
need for energy. Energy is central to growth and development because it provides affordable
solutions for heat, light and mobility. It lights up our homes, helps us cook our meals, provides
power for our factories, and fuels our modes of transport - from two-wheelers to buses and trains.

We believe that the right to energy is a human right. It extends people's lives and improves their
livelihoods - so the foundation of any energy policy has to be that energy is a good thing - and
people should not be denied energy.

But at the same time as providing the benefits of energy, we have to address the challenges that it
brings. These include energy security and the environment.

And I'd like to start with the environment. In this area, Indian civil society and government has
rightly been particularly focused on the issue of improving local air quality. However, globally the
biggest environmental challenge is that of climate change. And while there is near consensus
among scientists that we need to take precautionary action, as a global community we are just
beginning to understand what the potential costs of inaction might be.

For BP, the action on climate has really come in two parts. To begin with, we focused on GHG
emissions from our own operations. Over the four years to 2002 we cut our emissions to 10%
below the level they had been in 1990, in spite of the growth in the business.

However the power and fuels that we sell to customers release far more greenhouse gases than our
operations do. And so, we are now focusing on developing products which enable customers to
reduce their emissions.

In the transport sector, that includes cleaner burning fuels, biofuels and lubricants. And in the
power sector it means providing a set of low-carbon power options for electricity generation
around the world - thus reducing or eliminating the carbon dioxide emissions.
And while we have taken this action, we've also supported research in leading universities and
engaged in the scientific and political debates on climate change.
There are now policies in many countries which directly support low carbon power, whether by
incentives or by creating a market for carbon, as in emissions trading systems.

So the first element of the business case for low carbon power is that it is profitable today where
policy encourages it.
This is why, for example, wind capacity worldwide has risen from around 5,000 MW to nearly
75,000 MW in the last decade2. And it's why solar capacity is estimated to be growing at around
23% a year.3
It now seems that momentum is growing towards setting a long term, global target for carbon
dioxide levels in the atmosphere - possibly in the range of 450-550 parts per million - and that that
will accompanied by long term targets for individual countries.
How exactly that is done - who pays and how - is for politicians to decide. For example, there may
well be increased scope for the most industrialised countries to meet their targets by working with
emerging economies.
I firmly believe that our role as a business is not to sit and wait for new treaties or regulation, but
to take a lead and show what can be done. Our role is a practical one - to create solutions and
provide energy, which is clean and secure.
So with these moves towards new policy, there is a wider developing business case. This was well
put by Goldman Sachs in a recent report when they said: "In our opinion, the companies that have
potential for creating significant value are those that have the most strategic options available to
embrace a low-carbon world".

2. Why beyond hydrocarbons?

However as you well know here, one has to pursue options that are not only sustainable - but
available and affordable.
We live in a world in which the available hydrocarbons are increasingly concentrated in a few
areas. Around three quarters of the proved reserves of oil are in the Middle East, the former Soviet
Union and Africa, while over half of the proved reserves of gas are in Russia, Qatar and Iran.
Many countries - India, China and the US included - are net importers of oil.

So our task as an international energy company is first to help countries maximise the production
of their own hydrocarbons; and second to open up new sources of energy by going beyond
hydrocarbons.
The search for new hydrocarbon resources is increasingly taking the industry into new and more
challenging locations. For example, companies are exploring in the very cold conditions of the
Arctic Circle and in very deepwater in the Gulf of Mexico, off West Africa and indeed off the
shore of India.
We're also looking for resources which are harder to extract and require sophisticated technology
and know-how. For example, one specialism for us is coal bed methane - gas that is located in coal
seams. We have 30 years of experience of producing gas from the San Juan basin in Colorado and
New Mexico. We're now drawing on that expertise as we evaluate possibilities for producing coal
bed methane in West Bengal.
These local hydrocarbons can help to provide more domestic supplies of energy - but they can't
end reliance on imports by themselves. And that is why in the longer term, renewables and
alternatives will become more and more important. The emphasis will be on energy that is both
local and green.
The sun, the wind, the rivers, tides and crops potentially provide a limitless source of energy, more
than enough to fulfil the world's needs. The challenge is to harness natural forces in a way that is
efficient and competitive with conventional hydrocarbons - and affordable in countries like India.

And as well as renewable sources, there are alternative fuels such as hydrogen created from coal
with the carbon being captured and stored.
The challenge is to scale up today's renewable and alternative energy industries and innovate to
bring down costs and increase efficiency.
In solar, for example, we have recently developed a new process for growing silicon, called Mono
Squared, which increases the amount of sunlight turned to energy by up to 8%. At the California
Institute of Technology we're working with nanotechnology experts to investigate making a new
type of cell from tiny silicon nanorods 100 times thinner than a human hair - these are then packed
tightly in an array like bristles in a brush. Then in Berlin, at the Institute for Crystal Growth, we
have researchers experimenting with ways to reduce the amount of silicon needed in each solar
cell.
And in fact, in terms of costs, efforts to innovate and achieve efficiencies are now paying off. Both
solar and wind are now rapidly moving towards parity with other forms of energy.
It's very much a parallel process in the area of transport. Here, biofuels are providing an alternative
source of transport fuel that can be literally 'home-grown'. Biofuels cut carbon emissions because
the crops absorb carbon dioxide when growing. In BP we are already working with biofuels on a
large scale in North America and Europe. Last year we blended over 700 million gallons of ethanol
with gasoline - a 25 percent increase from the previous year.
The race is now on to develop new, more powerful bio-components that can be used in higher
proportions than the 5 or 10% which is typical today. And critically we want to explore using non
edible crops that don't affect food security.
This is why we're involved in a $9 million project here in India with TERI (The Energy and
Resources Institute) to investigate the potential of jatropha as a biodiesel component. This is a
project that is distinctive in its scale and methodology and we are very much looking forward to
seeing what it reveals.
 More widely in BP we are now planning to invest $500 million over 10 years in the world's first
 dedicated biosciences energy research laboratory. This will be called the Energy Biosciences
 Institute and will be hosted by the University of California at Berkeley.

3. Why low-carbon power?

 I now want to focus for a few moments on the power industry worldwide and explain why BP
 has made a specific investment in low-carbon power.
 The power industry is absolutely central to the world's growing demand for energy and to the
 effort to combat climate change. Power is responsible for around 40% of all CO2 emissions - the
 largest share and roughly twice the emissions from transport And yet because many power plants
 are coming to the end of their lives, around two-thirds of the power capacity needed in 2030 is yet
 to be built.
 These are big plants requiring big investments. So the carbon footprint of power can be influenced
 with relatively few key decisions.
 Meanwhile a range of low carbon power technologies exist today. Some can be deployed at scale.
 And the cost to the end user is affordable.
 This provides a window of opportunity to invest in power that is clean - and secure. All that is now
 required is a range of leadership and policy steps.
 And as policy-makers increasingly act to support sustainable power solutions, so the business case
 for them becomes stronger.
 And it's because of that opportunity that we have created BP Alternative Energy and started to
 implement our plans to invest more than $8bn in this business over 10 years.
 Altogether, our aim is for the Alternative Energy business to reduce forecast CO2 emissions by
 more than 24 million tonnes per year by 2015. That's roughly equivalent to twice the annual
 emissions of New Delhi.
 Alternative Energy brings together all BP's low-carbon power businesses under one roof. We have
 a set of technologies that gives us opportunity to invest and to investigate new possibilities

 We have BP Solar - our leading, which we have built over the past thirty years, into a leading
 global business.
 We have also made some significant investments in wind power. In the US, our portfolio includes
 the opportunity to develop almost 100 projects with a potential total generating capacity of some
 15,000 MW.2
 Also in Alternative Energy are our combined cycle gas turbine operations which give us stakes in
 some 12,000MW of natural gas power generation around the world. We believe gas fired power
 plants will be very much a part of the future energy industry because of their lower emissions.

 And the business also includes our plans for projects that generate power from hydrogen - using
hydrocarbon feedstocks but capturing and storing the carbon. These projects have huge potential
because they offer a means to generate clean power from hydrocarbons. In particular they offer a
way to reduce the environmental impact of coal.

 4. Why India?

So having set out that global context, what about our activities and our aspirations here in India?

We recognise the immense diversity of modern India and how that diversity drives quite different
needs. On the one hand, the urgent need to rapidly increase the bulk supply of energy to underpin
what is a well established but fast growing modern economy. And on the other hand, a need to
develop energy and energy infrastructure which extends economic activity in towns and cities or
provides energy for basic services and development in rural areas.
Beyond that I realise that the priorities include ensuring that India has security of supply and
improving air quality. And at the same time there is also the issue of attempting - over time - to
play a part in the global effort to address climate change.
Our own business here is a growing and expanding one. In terms of power, we've been operating
in solar manufacturing and installation here for over 15 years. We have just completed a deal to
give us our first wind power capacity here. With regard to gas, we're exploring for coal bed
methane and looking at possibilities to move downstream. And hydrogen provides an interesting
option for the future.
As was preparing for this visit, it occurred to me that in many ways our situation in BP mirrors that
of India. We have decades of conventional energy experience behind us. But today the challenge is
to develop a strategy which identifies new opportunities, and forms of energy which overcome
what is sometimes seen as a trade-off between economic development, social equity and
environmental stewardship.
I don't want to take the comparison too far. The challenge of building energy policy for all of India
is a huge one, beside which running a multinational business may seem relatively simple. But I do
think that there are areas where we can travel on this journey together, building on areas of shared
interest.

Our aim is to continue to build a local Indian business - in which Indian people work for the
benefit of India - but one which has access to the resources, capabilities and experience that we
have gained over nearly a century of operating around the world.
My sense is that the demand for power here is so great that this provides an opportunity to look at
many options.
Clearly coal is going to be an important part of the picture for many years. And I appreciate there
is a lot of momentum to increase efficiency in coal plants.
There is also a lot of scope to use gas where it's available and affordable. Gas plants can help meet
bulk power needs and the industry has a lot of experience of building and operating them at scale.
Our approach in gas is not simply to invest in production or marketing but all along the value
chain. We are now looking closely with our partners at the potential for low-carbon gas fired
projects, potentially linked to our upstream activities.
India's solar industry remains relatively small - but with great potential. Our solar business here is
Tata BP Solar, the joint venture we formed with Tata nearly two decades ago.
This business is now the market leader with a share of around 30% of the domestic market. It's the
largest solar company in Asia outside Japan. It's been growing profitably at around 20% per year -
reaching a growth rate of 40% last year with sales of over $130 million.
One of the reasons I am here now is that the day after tomorrow we are celebrating the expansion
of our manufacturing facility at Bangalore which produces cells for India and for export markets.
This is a demonstration of commercial confidence in the growing demand of the solar market both
in India and beyond.
This visit is giving me another chance to see Tata BP Solar at work and spend time with the
dynamic team in Bangalore who have built a country wide marketing and service network.
What I find exceptional about the company is how it reaches into all levels of the economic
pyramid, providing solar power across a wide range of sectors.
Solar energy is being used by the commercial sector in India. The Vijaya Bank has installed over
80 solar power systems across their rural branches to ensure they have a stable source of 24 hour
power for critical data processing needs.
Tata BP Solar also have experts in providing solar solutions for rural locations located far from the
electricity grid. They have overseen projects that range from irrigation in Punjab to lighting
systems in Ladakh.3
In the case of the irrigation systems, Tata BP Solar has worked closely with local authorities to
make solar powered systems available to farmers, along with finance packages. Over a period the
payback from the increased agricultural yield outweighs the cost of the solar equipment and that
makes the business viable for all concerned.
In Ladakh and the Himalayan region, Tata BP Solar have installed over 14,000 lighting systems
which have improved the lives of over 100,000 people. The project also provides employment to a
network of technicians.
BP Solar has experience of providing solar systems in many rural locations - from Brazil to the
Philippines as well as India. Here in India the team has developed particular expertise in
understanding how these systems can be sustainable in every sense of the word - sustainable
environmentally - but also economically, both for the customer and the supplier.
I will encourage them to continue to engage with those of you involved in planning and policy so
that this solar business can make the most constructive contribution to the vast effort of bring
sustainable energy to India's cities, towns and vast rural areas.
Wind is also a great opportunity for India because the wind blows strongly in many places and the
government has supported the industry's growth. We have invested in 40MW of capacity at
Suzlon's Dhule wind farm in northern Maharashtra and this project will start to produce electricity
in September this year. I'm delighted that we have made this first investment and we are certainly
looking out for further opportunities to build on this and create a material position in wind.

I spoke earlier about hydrogen power using carbon capture and storage - which is a much more
long-term possibility for India. Today here are challenges involved in locating underground sinks
to store carbon dioxide. It's also challenging to make such projects economically viable and for
governments to create appropriate policy frameworks.
But there are now prototype projects underway. So while this is a longer-term option, I am sure
that the technology is ultimately going to play a key role in providing clean energy and become an
invaluable tool for countries with immense reserves of coal.

Conclusion

So to conclude, I believe we have a great opportunity in our hands. There is a strong business case
for low-carbon power today - and I believe there will be an increasingly strong case in the coming
years.

What gives me great hope is the fact that wherever I go - and this is certainly true here in India - I
find people who share this vision: people in our company, people in other companies and people in
governments and NGOs.
Collaboration is now vital. We want to work with other companies to develop the technologies to
deliver clean power - as we are with Tata. We want to continue to work with policy-makers to
promote low-carbon solutions. And we want to work with customers to show that there is real
demand for new forms of energy for future generations.
We want to play a major role in creating the secure and sustainable energy of tomorrow and I
believe that in many respects, our interests converge with those of India.
So I'm grateful to you for coming along this evening. I look forward to hearing your views now.
And I look forward to working with you in the years to come. Thank you.

         1
           http://pmindia.nic.in/speech/content.asp?id=441
         2
           http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7027554
         3
           http://www.tatabpsolar.com/proj_showcase.html

				
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