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BP: Put a price on carbon

A price on carbon is the "missing link" in the world's quest to increase energy efficiency, reduce emissions and develop alternatives to hydrocarbons, accoridng to BP's chief executive

Addressing delegates at a conference in India, Tony Hayward said such a carbon price should apply equally to all carbon, "whether from a smokestack or a tailpipe".

Carbon pricing would make "energy conservation more attractive and alternative energy more cost competitive". It would also allow "informed investment" in technology and fossil fuels, which will continue to dominate the energy landscape for decades, Hayward said.

"Plans for a US cap-and-trade system are before Congress. Australia also has a system under development. We now need moves at the global level to strengthen, extend, and ultimately link these systems."

Hayward extended this plea to other areas or regulation, saying that to ensure cheap, sustainable, secure energy supplies to meet the world's growing demand, the energy industry needs a "clear regulatory framework that enables business to invest with confidence to build such a future". The world will need 45% more energy in 2030 than it consumes today, he said, which will require investment of more than $1 trillion in the next 20 years.

This would bring changes in the energy matrix, he predicted. But he warned listeners to be "realistic" about the contribution that renewable energy will make, saying that all of the world's wind, solar, wave, tidal and geothermal energy will account for around only 5% of total consumption by 2030, compared with 1% now. "So, in other words, we can have a sustainable energy future and significant volumes of fossil fuels. That's important. It's also reassuring because it would be impossible to fulfil the demand without hydrocarbons."

However, 18 months after he predicted a new form of relations between national oil companies and international oil companies (IOCs) that did not require the ownership of reserves by the latter, Hayward called for resource-rich countries to open up their riches to foreign developers. "Today almost 80% of the world's oil resources are off-limits to the technology and expertise that IOCs can provide. I think that needs to change," he said.

The consequences if the energy industry fails to make hydrocarbons more available to development and expand the role of alternative energies, he said, would be "serious".

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