Oil Company Favors Carbon Tax - No Surprise

Subtitle:  Never Interrupt Your Opponent When He's Making A Mistake

In an earlier article posted on SLB, (see link) I stated that oil companies are indeed in favor of a carbon tax, that is, a tax on carbon dioxide emissions, not because they believe the man-made global warming hype, but because they stand to profit by selling more natural gas.  Natural gas emits far less carbon dioxide when burned in comparison to coal,

BP Energy Outlook 2019,
Fair Use exception to US copyright law

especially in electric power generating plants.   It is pure self-interest that drives oil companies to favor a carbon tax, and if the world has gone crazy in the belief that man-made global warming is real, and dangerous, and ceasing emissions of carbon dioxide is needed, then oil companies seize this as an opportunity.  One wonders just how many coal companies also favor a carbon tax. 

Very recently, yesterday in fact, BP, a major oil company went on record and on camera with a review of energy demand for the near future, out to about year 2040.  A major part of their vision, if you will, was having governments collect a carbon tax.  BP stands to benefit, by selling more natural gas.  BP Energy Outlook 2019 is at this link. 

Some of the major points that BP made in the video are:

1. Favors a carbon tax to replace coal with natural gas
2. Favors subsidies for carbon capture-sequestration, CCS
3. Favors massive energy efficiency investments
4. Favors biofuels for aviation
5. Favors battery-powered transportation, for all but aviation.  This increases electric power generation and sales of natural gas.  

6. Oil will be reduced to non-transportation uses such as petrochemical feed, etc.  (note that these are the more profitable business segments)

The video may be viewed on Twitter at this link.  The interview begins at around 6 minutes 10 seconds into the recording.  

Carbon tax:  BP stated that burning natural gas yields about one-half the carbon dioxide when compared to burning coal in a power plant.  That is rather generous, since the actual comparison is approximately one-third.   My number is based on the gas-powered plant using combined cycle technology, CCGT, with 60 percent efficiency while a coal-fired plant has only 30 percent efficiency.  If the fuels had an equal number of carbon and hydrogen atoms, that would give the one-half figure by BP.  But, coal has more carbon and less hydrogen than natural gas, so the actual comparison is less than one-half, and approximately one-third.   However, natural gas consumption is increasing while coal is decreasing in some areas, without a carbon tax.  UK, for example, has almost zero coal-fired power at this time.  The US has increased natural gas and decreased coal consumption for power generation as pollution laws changed so that coal plants now must invest in pollution abatement equipment.  The plants shut down rather than invest.  Meanwhile, natural gas power plants are booming.  

It is also instructive that Peabody, the major coal company, does not favor a carbon tax.  Instead, Peabody advocates for subsidies for carbon capture technologies, see below.   Also, Peabody's statement on climate change and ways to address it are at this link.

Subsidies for CCS:  BP stated the long-term subsidies for wind and solar power were very effective in making those technologies economic, and wants a similar treatment for CCS technologies.  They refer to it as CCUS, for carbon capture, use, and sequestration.  Presumably, the "use" includes CO2 mineralization such as conversion to sodium bicarbonate for food sales.   At present, there is already a great deal of research into the capture technology, as that is the capital and energy-intensive part.   BP wants more. 

Energy Efficiency Investments:  It is unclear exactly what BP means by this; however we have already seen energy reduction by mandated efficiency for automobiles, the CAFE standards.  Many years ago, the US chemical and refining industries had a mandated energy efficiency improvement that was quite successful.   The problem with energy efficiency in many areas is a diminishing return on the investment.   There are some areas, though, where efficiencies can save more energy; the mandated sale of high-efficiency home appliances is one such area.   It may be a good idea to promote off-peak power consumption for chilled water or ice-and-water storage, then use the stored chilled water the next day for building or home cooling.  This could save fuel when more efficient power plants are running at night, and the least-efficient are running during the peak of the day.  

Biofuels for Aviation:  Bio-jet is similar to bio-diesel in that it handles and burns like jet fuel but is made from renewable feedstocks.   Bio-jet exists and a few test flights have been made. 

Battery-powered Transportation (EVs for cars and trucks):  BP favors these because they increase the demand for electric power.  In BP's vision, the additional electric power will be provided by natural gas, a product which they sell. 

Non-fuel uses for petroleum:  BP discussed single-use plastics, as an environmental problem that should be resolved.  Correctly, BP stated that plastic containers serve a useful purpose and their replacement must be carefully considered else it may be worse. Before plastic (another BP?), containers were typically glass or metal.  Plastic weighs less and therefore less fuel is consumed in the transport of such products in plastic containers.  

Conclusion
BP sees oil demand continuing for many years, perhaps two or three decades as fuel uses diminish, and petrochemicals from oil increase.   Not mentioned were asphalt and lubricating oils.   A reduced demand for oil will extend the life of oil fields, while reducing fuels produced from oil actually increases the profit margins for an integrated oil company. 

All of this has the goal of combating man-made climate change, or so BP says, but one really must wonder how much is simply taking advantage of an opportunity by putting self-interest first and nodding one's head.    Selling more natural gas as power plant fuel, and prolonging the life of oil reserves while making much more profit per barrel, are not bad things to a big oil company.   

If governments are making a mistake in stating that man-made global warming is real and a real danger, (and they are) then BP and other oil companies have figured out ways to make a profit.   That's not a bad thing, actually, since the entire business of mining, transporting, burning, and disposing of the ash from coal has serious and real environmental issues. 

Roger E. Sowell, Esq.

Houston, Texas
copyright (c) 2019 by Roger Sowell - all rights reserved

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