Lord Browne: The only energy company of the future will be clean

Author:
Ilario D'Amato
9 November 2015

Lord John Browne of Madingley, Executive Chairman of L1 Energy and former CEO of BP

NEW YORK: Commenting on the future of energy in an exclusive Climate TV interview, Lord John Browne of MadingleyExecutive Chairman of L1 Energy and former CEO of BP, declares “electricity is the winner, and clean electricity will be the biggest winner”.

In the video interview, Lord Browne underscores the recent advances in renewable energy around the world, with costs plummeting, efficiency ramping up and customer needs shifting. “I see a continuous change,” he says, “and I also see it in the way people demand the amount of energy.”

NATURAL GAS

Natural gas, which has often been called a ‘bridging fuel’ to renewables, can play a huge role in the  future energy mix, says Lord Browne. This is because “it is lighter in carbon than coal, provided that it is produced correctly – with a limited amount of methane leakage – and used properly.”

He adds: “However, it’s like all energies: the good and the bad come all in one package. It’s there, it’s a substituting, a different form of energy, and I expect it to be there for a very long time. Methane, a natural gas, is one of the most stable hydrocarbon molecules, and there is awful a lot of it in the world.”

FUTURE ENERGY COMPANIES

Given his outlook on how clean electricity will dominate the energy mix of the future, Lord Browne urges energy companies to adapt. But while companies are already focusing on becoming lower carbon, Lord Browne says we still need a technology breakthrough to keep ahead of the curve. However, he states “here and now, I think [the solution] is a better application of renewable energy and a better application of natural gas.”

At the same time, renewable energy adoption must be geographically strategic, warns Lord Browne. “Much as you’d not go and explore for oil when you knew there was no oil there, much as you also shouldn’t install solar power when the sun doesn’t shine very often, or more importantly put in windmills where the wind doesn’t blow – because then the engines aren’t used very often and it’s very expensive.

“It is not for everyone, not for everywhere, but it clearly is working. And in my own experience – I’ve been running for the last nine years, the world largest renewable fund – you can clearly see how the economics of electric power generation are changing as a result of renewables.”

Lord Browne is also one of the high-level signatories of the Global Apollo Program, a 10-year project aiming to spur renewables growth with a coordinated approach to financing and technologies. “It has been launched now because this is the moment to get international attention on climate,” says Lord Browne. “We are looking for global coordination of research and development (R&D) dollars to improve renewable energies – notably solar, but it wouldn’t stop there.

“I believe this is an area where R&D will make a very big difference. We have seen in so many areas there hasn’t been enough investment yet, and someone – not just the private sector – has to take some of that risk. It does fit the proper role for the public sector to do so.”

LOW CARBON FINANCING

Energy subsidies in the UK are running at about £12 billion (US$18.1 million) a year, much directed at fossil fuels. “That’s about VAT rebates, and I think that’s really a bad way, an incorrect way of looking at things,” comments Lord Browne.

“There certainly are subsidies for energy all over the world, notably in many oil-consuming nations. There would always be subsidies, but it’s up to politicians to put them in the right places. I feel, in my experience, thatsubsidies are for continuous development, for research and development and for the initial risk-taking, that really set up an industry and make work for the future. Here it’s where the right and proper role of governmentsexists.”

Another much debated topic in climate discussions is the opportunity for a carbon tax, which hold polluters accountable for the damage they cause to the environment. “In the end, the way to reduce carbon is to provide an incentive to reduce it, and carbon pricing is a great way to do it.

“However, a global carbon price is purely theoretical, I think. But regional pricing for carbon – maybe with interrelations within the regions – may be something that in the long run one can achieve. I think we are quite a long way from that, because it does really need a real commitment to reduce carbon, and it needs to be put in the hierarchy of things that government think are important.”

COP21 CLIMATE TALKS

Finally, Lord Browne shares his expectations on the climate talks at the end of this month in Paris, which he would set “as low as possible, so that we can overachieve at this COP rather than underachieve, which we’ve done in several COPs in the past,” he says.

What is going to move energy company CEOs “is what other company CEOs are doing in other sectors,” he continues. “And there are tremendous amounts of activities going on outside the energy and mining sector. Retail, consumer goods, how to power data centers with far less electricity, cooling: there are plenty of things going on.

The peer pressure will move things along, and I think we’ll begin to see some changes. And indeed, to be fair, there have been changes; it’s just that there are not enough changes yet.”

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