Oil industry can develop creative solutions to address climate change

He said that this message has already gained resonance in the Middle East and that people and companies in the region and around the world are responding to the challenge, developing new technologies and ways of producing and using energy.

One of the most vivid examples of this is the increasing shift to using cleaner fuels such as natural gas, which in power generation produces 24 per cent less carbon than oil and 41 per cent less than coal.

Sir Charles, who is also a member of the World Business Council on Sustainable Development, said that by setting themselves challenging environmental targets, oil companies can actually save money.

Citing an example from BP, he said that in 1998 the company set itself the target of reducing its own greenhouse gas emissions to 10 per cent below 1990 levels by the year 2010. In the event, BP met the target by the end of 2001, nine years ahead of plan, and produced remarkable savings.

'The further we proceeded, the more we saw that it made good business sense. Within the three years we added $650 million of value for an investment of around $20 million,' said Sir Charles.

BP now plans to hold its greenhouse gas emissions at this level, despite continuing growth in the company.

An important part of BP's initiative was the introduction of an internal emissions trading system, whereby each of the company's 120 business units was given a greenhouse gas emissions allowance. If it exceeded this limit the unit had to either buy additional allowance from another unit or seek lower cost ways of staying within target. The system encouraged participants to find innovative low cost ways to reduce emissions while still growing their business.

The United Kingdom introduced a national emissions trading system in 2002 and a similar system will be introduced throughout the European Union by 2005. BP is taking part in both these schemes.

BP is also exploring possibilities for capturing and storing carbon dioxide (CO2), one of the main greenhouse gases. For example, in Algeria, with Sonatrach the company is developing one of the world's largest CO2 storage projects to store the CO2 that will be separated from large quantities of natural gas produced by the companies for the European market.

'Huge amounts of time, money and effort are going into researching the issues. I think we should be optimistic, but we should not underestimate the scale of the challenge. It is the responsibility of us all, and partnership will be the key in this,' Sir Charles concluded.