Renewable Energy Policy Framework

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Renewable Energy Policy Framework

• Darrel Thorson, Vice President, Thermal
  Development
• BP Alternative Energy

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Why is BP in Alternative Energy?
China built 100 GW of coal fired generation in
2007

• China continues massive coal buildout.
• China installed 95 GW in 2006
• US installed capacity is 1000 GW
• By 2009, China will be the largest emitter of
  CO2 on the planet, surpassing the US (CERA, 2007)

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65 of power plants needed around the world in
2030 are yet to be built
Power Generation by Technology Global Power CO2
Emissions
As a result, CO2 emissions are expected to double
by 2030
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Significant synergies between the climate change
and energy security agenda

• Three key takeaways
• 50 of the climate opportunities support energy
  security.
• Further 45 is neutral when it comes to energy
  security
• Only 5 of climate initiatives do not benefit
  energy security.

Good
Bad
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Power plant carbon intensity by type
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Policies to stimulate investment

• Regulatory
• Transmission
• Fiscal Incentives
• Communication/Educational Initiatives

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Incentives can accelerate maturity
TRANSITIONAL INCENTIVES
Capital
-
Production
-
CARBON PRICING
(CO2 tonnes)
based
based (
MWh
)

trading
Cap
-
and
-
trade
programs,
carbon taxes
production tax credit
Grants, inv tax credits
RD
H2 power with CCS
Solar nano
Solar PV
Demo.
Offshore wind
CST
Deployment
Onshore wind
Gas power
Commercialisation
Tech
Cost
Time
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Regulatory Policy Priorities

• Enduring carbon pricing policies
• Cap and trade in US
• State RPS targets with enforceability
• A federal RPS in the US
• Could result in 300 GW of wind by 2030
• Favorable siting policies for technologies with
  large land needs
• Wind (20 acres / MW dual use)
• CST (5 acres / MW single use)

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Transmission Policy Priorities
National Interest Corridors, State Transmission
Incentives
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Fiscal/Transitional Policy Priorities

• Grants/Tax Credits for Research and Development
  to both the private and public sectors.
• Develop enduring carbon pricing policies
• Cap and trade in US
• Stability and predictability in fiscal incentives
  
• Avoid stop-go syndrome
• Further tailoring of incentives to technologies
• Production-based where scaling up is the priority
  (eg. Wind)
• Performance-based where cost reduction,
  technological advance is priority (eg PV solar,
  Concentrated Solar, Biofuels)
• Early-mover demonstration programmes for hydrogen
  power / CCS

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Communication/Education Initiatives

• Provide incentives to states to include renewable
  energy studies in the educational curriculum at
  every level
• Promote private/public sector participation in
  renewable energy.
• Increase funding to the National Renewal Energy
  Laboratory (NREL).
• Increase public awareness of the benefits of
  renewable energy (and the hidden costs of
  conventional energy).

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Bio-fuels Policy Target ends, not means. Allow
markets to pick winners. Encourage sustainable
practice.

• Encourage new conversion technologies and
  advanced molecules by moving beyond feedstocks
  and vehicle emissions and avoiding fuel-specific
  targets and fixed per-gallon mandates
• Create incentives or obligations based on
  emission reduction or energy content rather than
  volume basis
• Encourage sustainable and responsible production
  routes

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Back-up slides
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WindExperiencing Explosive Growth

• The world saw 32 growth in wind capacity in 2006
  
• US added 2500 MW in 2006 3000 MW in 2007
• US/Canada will triple capacity to 30,000 MW by
  2010

Source (GWEC, 2007)
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Photovoltaic Solar Power

• Currently
• BP is a leading solar manufacturing and marketing
  company
• We have manufacturing capacity of 200 MW with
  facilities in Bangalore, Madrid, Frederick, Xian
  and Sydney
• We have 30 years experience, 20 offices, over
  2000 employees and installations in 160 countries
• Our commitment
• We are increasing our overall global
  manufacturing capacity to 700 MW
• We are investing 97m to increase our casting and
  wafering capacity at our Frederick plant in the
  USA
• Silicon activities
• Signed significant supply contract for 2007
• Extensive investigation in alternative silicon
  sources
• Provides opportunity for significant cost
  reduction over traditional sources
• Scalable and in line with future growth
  requirements
• Continued development of our advanced Mono² and
  commercialization
• Mono² efficiencies with multi cost and processing
  advantages

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Concentrated Solar Thermal Power
Concentrated Solar Thermal (CST) power generation
produces electricity by concentrating the suns
energy to produce steam and drive a
turbine. Context - SW US has 6,800 GW of
potential vs 1,000 GW in entire US Policy
Positive climate in the US but need more
sustained incentives. Infrastructure Need
transmission!
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Gas-fired power

• Currently
• We participate in 12GW of gas-fired power plants
  (the size of a mid-sized US utility).
• We have successfully developed five new power
  plants in the past five years in the US, UK,
  Vietnam, South Korea and Spain.
• Our 1075 megawatt K Power CCGT in South Korea is
  the most efficient gas power plant in Korea.
• We broke ground at a 250 MW Texas City Steam
  Turbine project in 2006 that will take our Texas
  City facility to 1000 MW when complete.
• Our commitment
• We will continue to look for high value
  opportunities to monetize our equity gas
  positions and build cogeneration facilities at
  existing BP facilities.

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Next generation biofuels
Oily crops eg jatropha for diesel
Ethanol / butanol / ? for gasoline
woody crops
oil crops

• Next-generation bio-components can provide
  higher energy content and GHG reductions
• Energy content
• Corn yields 240 gallons an acre sugarcane 440
  gallons per acre
• Sunflower yields 75 gallons per acre jatropha
  140-220 gallons per acre palm oil 450 gallons
  per acre
• Opportunities to explore woody crops straw,
  residues etc
• Ligno-cellulosic conversion offers prospect of
  using entire plant up to 1200 gal/acre
• GHG benefits
• Biofuels can offer GHG emissions reductions of
  20 to 90, depending on feedstock and conversion
  process
• Goal should be in upper end of range through high
  energy feedstock, less intensive cultivation
  crops, low carbon conversion processes

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Increasing suite of low carbon options are
available and affordable
Combined Effect of Lower Cost of New Technologies
and CO2 Emissions Price by 2030
Source IEA Technology Perspectives 2006, IEA
World Energy Outlook 2006, BAH analysis Note All
data from lower bound of sources reported
ranges. Coal and gas power price varies due to
fuel prices, predicted range shown on chart. No
coal CCS plants currently in operation earliest
operational plant in 2010. All costs are for
wholesale generation.
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Policies and investments - biofuels
US Renewables Fuels Standards EU biofuels
penetration target of 10 for 2020 BP blended
800m gallons of ethanol in 2006
UK Bioethanol plant with ABF Demonstration
biobutanol plant with DuPont
US BP Energy Biosciences Institute - 500m
over 10 years
Joint venture with D1 Oils to plant jatropha In
Asia, Africa and India
Australia plans to market 400m litres of
biofuels per annum Project to make biofuels from
tallow at Bulwer refinery
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Principles for transitional incentives

• Goal accelerate the deployment of low-carbon
  power technologies
• Policy understood to be transitional
  eventually phased down and replaced with a
  carbon-based measure, however
• policy is governed by long (i.e. 5-10 year)
  regulatory periods
• both the timescales and ramping down mechanism
  are clearly understood upfront
• Policy based around a market mechanism, e.g.
  tradable certificate system to seek out
  lowest-cost solutions and to allow business to
  optimise across a wider playing field
• Policy provides encouragement tailored to each
  technology without picking winners for favored
  treatment