Outreach & Policy

Editor's Note: The figures referred to are not currently available.

Opening Address, Sir Mark Moody-Stuart, President, The Geological Society

Today, we are going to have to have a discussion on points of agreement, on points of disagreement and on where we might be going. That will take about 20 minutes. After that, it is up to all of you and we envisage that you will make statements and not necessarily ask questions. If you have a question, then ask it but also make statements on things that you think we need more of, on things that we need less of, on points of agreement and of disagreement and on points that have been overlooked. The two leading speakers will not respond at that point; we will just collect up the statements and when we have had enough points we will go back to Frank and Greg and they will respond and summarise. With that, let the proceedings commence.

BP and Climate Change, Mr Greg Coleman, Vice President, Health, Safety and Environment, BP

Thank you Sir Mark and thank you ladies and gentlemen. It is a pleasure to be here. I am sorry that I have not participated for the last day and a half but I did manage to hear the last two speakers and, as usual, it is a fairly compelling story. I am especially honoured to be in the company of such a down to earth audience. The last time I was involved with geologists in a fulsome sense, I was stripping out crops 27 years ago and I gave that up as a lost cause and decided to go and do something simpler. I graduated in geological engineering in Canada many years ago and I have been watching since then and have not been a practising geologist at any time in those years.

I will talk a bit about BP and I will say a bit more about the agenda. I want to make it clear that I am not planning to address the issue of the science of climate change and it sounds like you have had a pretty robust discussion about that already. Although I was not planning to talk about it, BP has been sponsoring some work done at a number of the universities around the world, including in the United States, at Princeton, and now in Tsinghua University in Beijing. So we do think that there is important learning in the climate change sciences that still needs to take place. However, it is clear to us that there is a compelling need to do something and I was planning to talk about what BP is actually doing. David Jenkins has already made the point that the world is going to really experiment in the matter of what happens when you warm up the atmosphere. For those of you that have been to Alaska or have read stories of what is happening there, it is clearly warming in Alaska.

Just in terms of the agenda that I was planning to cover, the first thing is to reiterate why we think climate change is an important issue for a company like BP and for our industry. I will talk briefly about what we have done so far and then I will talk about what our plans are going forward. This will include how we are trying to run our business differently, how we are trying to develop lower carbon products, how we see the development of flexible mechanisms that will hopefully help the world to move on, and the kind of partnerships that we think are critical to address this situation.

Business Success and Climate Change

The first point to make it that our experience so far has shown us that climate change and dealing with greenhouse gas emissions does not need to be a threat to our business success. But we do believe that the world is starting to recognise, for example in Johannesburg and other forums, that energy is important for the economic development of the world. The previous talk showed that this was becoming clear, although I think most of the world had forgotten that for the last 15 or 20 years.

We think about what contribution we can make as a company and as an industry in terms of security of supply, whether it is from crude oil, natural gas or any other form of industry. We believe that one of our responsibilities is to ensure that our customers have a reliable supply of energy when they need it, regardless of what they are expecting from us in terms of the price – that tends not to be a consideration. We do believe that there is a direct link – and there is much empirical evidence to support this – between economic growth and social growth. Lastly, we do believe that is it very important that, as a company and as a society, we preserve the natural environment. We think that we have a role in all three of those and I will say a bit about what we are doing in those three areas.

Recent Experiences

I will start with what we have done in terms of recent experience in dealing with greenhouse gases. First, we have come to recognise through discussions in our company that almost all of our employees believe that this is a critical issue. As early as 1996, we took a position internally that we wanted to do something with this and in 1997 our CEO set a target for the company to reduce our greenhouse gas emissions by 10% below our 1990 levels by 2009. In fact, we achieved that level in 2001 (Figure 1). That was a pleasant surprise but it also reconfirmed that by achieving this early delivery of the target, we increased the value of the company by well over $600 million and it is still growing. I will say a bit more about that.

We also have the first set of externally verified greenhouse gas emissions as agreed by our external auditors. There is still a lot to learn in terms of what actually is a greenhouse gas and how one measures and reports it, but we have got externally?verified emissions reported in our annual report and in our Social and Environmental Review, which was released the other day. We have operated the first internal energy emissions trading system in the world and we have passed that learning on to the UK Government. We have also been working with a number of the other exchanges that are starting to develop around the world, including the Chicago Climate Exchange, which is just getting started, and we have passed those lessons on to the Europeans, who are forming their own emissions trading system.

Current Plans

Just to articulate what our new plans are, we met our previous target and now we are in a phase where we think we have captured the low-hanging fruit. Consequently, we are setting on a track of providing the world with solutions to allow us to stabilise the level of carbon dioxide in the atmosphere. We are not in a position to say what that level might be but it cannot continue increasing at the rate it has been for the last 50 years. There needs to be some will on the part of governments and society at large to reach stabilisation, and we believe that is an important decision yet to be made.

Our internal goal is that we will hold our net emission levels at our 2001 levels. We are going to do that through a combination of energy efficiency and a reduction in our actual emission levels. We are also going to take advantage of the market mechanisms that are developing in the world so that we can offset the increase in our internal emissions with lower carbon products, such that the overall carbon balance for the world will be reduced. John Browne announced this new set of targets during a speech at Stanford about a year ago today.

Approaching Greenhouse Gases

This slide (Figure 2) gives a framework of how we think about the options that we can approach in dealing with our greenhouse gases. First, on the top left hand side, a continued story of reducing our flaring and venting levels. We are part of a number of global initiatives to reducing flaring and venting levels, but I think it is important to remember that right now there is between 10 billion and 12 billion cubic feet of gas being flared in the world each day. We believe that is an important source of both emissions and, equally importantly, of potential energy for local communities to convert into electricity.

On the top right hand side, we are continuing to look at improving energy efficiency. We have made some early steps and these are largely the source of the improvement in the value of the company that we have realised over the past five years. In 2002, we took another step in terms of reducing our energy consumption. We think that we have added another $100 million or so of value in so doing. Right now, we have an inventory of at least 300 fairly significant projects in just seven of our major operating sites. We think that it will take us five years to fully implement those projects.

As a representation of a company like ours, which probably has 50 to 75 sites of that kind of scale, it shows us the size of the opportunity. Now we are in a situation of rationing our capital and making sure that we are taking advantage of the most attractive opportunities at the appropriate time. The other major area that we are focusing on in energy efficiency is ensuring that, as they are built, new projects have best?in?class energy efficiency or the lowest level of wastage that we can put into these projects, based on the best technology that is available.

The bottom right of this slide shows our favourite subject and one that I know is close to the hearts of all geologists. This is the use of carbon capture and storage. We do not advocate storage in oceans, although many of the people in the science world are talking about storing significant amounts of carbon dioxide in the deep oceans. We do not believe that is something that we, as a company, can make a contribution to and, given the lack of understanding of the whole carbon cycle, we think that it is an area that needs to be studied more before we decide to do anything. I will say a bit more about carbon storage and then I will say something about the last area that we will focus on in a moment: flexible mechanisms.

Just to conclude, in terms of all of the things that we might be doing to reduce our carbon intensity, we are continuing to invest at a significant rate in our renewals business, particularly focusing on solar energy. I think most people know that it is not really cost competitive today unless there is an incentive provided by local governments to actually create the local demand for the product and to allow people the capacity to develop it. We are investing in new technology and we are continuing to rationalise and increase the efficiency of the way we produce our solar energy or solar panels, but we have some way to go before it will become cost competitive with hydrocarbons.

Carbon Capture and Storage

In terms of capture and storage, we are very active in dealing with the greenhouse gases. We do see this as a key way of transitioning to a hydrogen economy. There are two key projects that we are involved in: one is the Carbon Capture Project, which is a collaborative effort, and the other is that we are now actually investing in a full-scale, full-field gas sequestration project in Algeria, our In Salah gas project. The experience so far has been very good. There were two main purposes of the Carbon Capture Project. The first was to demonstrate that we could significantly reduce the cost to capture and store carbon dioxide, and the second was to show that storing the carbon dioxide in geological reservoirs could be both safe and cost effective, and we could monitor and verify that it was staying there.

The project is an investment of $25 million and it involves governments in Europe and the United States, as well as many private companies. The first phase of that project will come to an end at the end of this year. We are also active in carbon storage and have been for a number of years. In West Texas, in the Permian Basin, we have more than 40 years of storage of carbon dioxide, mainly in hydrocarbon reservoirs. We have a great deal of experience from the Bravo Dome in terms of producing pure CO₂ and transporting it long distances. The technology is available to deal with at least the surface part of the infrastructure required for carbon dioxide.

Regarding putting it into action in In Salah, we will be sequestering about one million tonnes per year of carbon dioxide in a gas reservoir. There are still a number of things to learn about what will happen to the gas when it is injected and stored in the reservoir. The experience in Sleipner, on the project there in the North Sea, is that you can actually see the CO₂ as it is accumulating in the reservoir. Therefore we feel pretty comfortable that we can demonstrate and verify that it is going to stay there. However, I think it has also become clear that the time frames we have been working on in the industry, 50 to 100 years, need to be extended and we need to be thinking about storing the carbon dioxide for several hundred years or possibly thousands of years. That is a challenge that we still have to face and I am pretty confident that we can deal with it. It is a cost, however.

Our internal calibration is that we are talking in single digits dollars per tonne to store carbon dioxide in a reservoir. When we put in the cost of capturing carbon dioxide, the cost can go up significantly if you are capturing the carbon dioxide from dispersed sources. If it is a concentrated source, it is still fairly attractive compared to some of the alternatives.

Lowering Carbon Intensity

I think we all recognise that a large proportion of the greenhouse gases that are emitted are caused by the consumption of our products, as opposed to our operations. So BP has set about very aggressively lowering the carbon intensity of our products as they are consumed. Generally, that means natural gas is a preferred fuel compared to oil and heavier oils. We believe that we will have to move very aggressively from the current phase of innovation to a phase of development and building out infrastructure to allow us to do this. We are working in the short term on fuel switching and cleaner fuels.

There is some technological progress being made here, for example the combination of different kinds of diesel with lubricants has allowed us to demonstrate about a 10% improvement in energy efficiency in vehicle fleets. That is an area where we continue to believe that we can make progress. Governments need to be involved here, however, in setting frameworks and in ensuring that there is a level playing field. Governments need to provide a clear framework to encourage companies to continue to develop products that are cost competitive and are not being penalised by the investment required to rebuild and renew the infrastructure.

Flexible Mechanisms

Moving on to the flexible mechanisms – we call them ‘the emissions markets’; this is a rapidly expanding area (Figure 3). The World Bank predicts that by 2009 this will be a several billion dollars per year trading market. It is not going to be of the scale of the crude oil market that exists today but we think several billion dollars per year is worth pursuing. We believe that the value of emissions trading and emissions markets will be to provide an open and transparent way of providing an alternative value for dealing with emissions. It provides some flexibility to meet environmental targets and it allows us to rank our projects internally, such that we know what the alternatives would be compared to investing real capital.

Inside the company, the emissions trading scheme that we did run for a few years significantly raised the awareness of all 100,000 of our employees about what was involved in dealing with this issue. It gave them some real life experience about what an individual person could do to reduce the greenhouse gas emissions from the things that they were causing to happen in the company. So there is a long way to go here. One of the areas that we are currently working on – and an area that we are making significant progress on as an industry – is how to verify and how to report emissions on a consistent basis. I think that you will hear from Frank that Exxon is also actively involved in this area. Some day, we will have the equivalent of International Accounting Standards for greenhouse gases because that will be the way to determine if people are actually making progress. This is something that the international community could really help with.

Partnerships

Lastly, just to talk about partnerships, there are a number of different players that need to be involved in making something actually feasible and practical for the world so that we do not have to slow down or stop economic growth (Figure 4). We need governments to be involved and the UK Government is taking a lead in having a UK emissions trading system. It actually subsidised it, if you will, by contributing money to get the system going. I think that learning by doing continues to be something that we believe is valuable.

The automobile manufacturers and general industry are making significant progress. Both we and Exxon, and most of the companies in our industry, are working actively with the automobile manufacturers on anything from engine technology to the simple process of burning hydrogen. We are continuing to learn things about what that efficiency is and how hydrogen actually burns, which is something I thought we had figured out a long time ago. As I mentioned earlier, we have significant programmes at Princeton University, Tsinghua, Cambridge and a number of other universities in the United States, looking at both the science of climate change and the technology programmes that can help significantly reduce the cost of dealing with greenhouse gases.

Customers, at the end of the day, have a most significant part to play here because they are creating the emissions through their use of our products. We think it is a factor of 10 times what we are generating in our own internal operations. Getting customers to recognise that there is a cost in the way they use energy is important, whilst also recognising at the same time that customers are not prepared to pay a premium to have a cleaner and greener fuel. At least they have not demonstrated that they are prepared to pay a premium. So we have some work to do there. Last, but not least, we have found NGOs to be very helpful and constructive in coming up with solutions and in challenging us to think creatively and to move into action.

Summary

I personally believe that the geological community has a lot to offer. We should be looking for natural gas, not crude oil, if you are looking for a less carbon-intensive fuel and if you are exploring for hydrocarbons. Demonstrating that carbon dioxide and greenhouse gases can be stored safely, effectively and for a long time is something that the geological community can certainly work on. Developing options for the use of carbon dioxide in the geological horizons is critically important. Helping us built partnerships with academia, technology firms and interested scientists is also important.

When I first broached the subject of making beach sand, I actually thought is was ridiculous, but now I hear people talking about it and I think that is something that I would personally find attractive. There is also, of course, geological history, although no geologist has yet convinced me that they understand it. They just like to talk about it a lot. I will stop there. Thank you very much.

ExxonMobil and Climate Change, Dr Frank Sprow, Vice President of Safety, Health and Environment, ExxonMobil

First of all, I am very honoured to be here today. This is a very prestigious organisation and I have had a chance to sit in on about half of the sessions so far. I have found that the quality of the talks has been extremely high. I do have a couple of worries about this session, however. The first worry was when I opened the session book and found this symbol. Seeing ‘Beyond Petroleum’ on the very first page gave me a bit of a concern. Next, although Sir Mark is undoubtedly a distinguished and honoured person who is quite unbiased in his approach, he did lead one of our more vicious competitors at one time so I brought a little help, this policeman’s hat, provided by Hamleys, to ensure a fair session.

The first thing that I would like to do is to tell you about my credentials and perhaps make a confession. This is a childhood photo and it is very emblematic of the fact that I really do like cars. I will admit it. I like sports cars; I like SUVs – this is a very heretical thing to say in Europe – I like fuels and I like the oil business a whole lot. I like science and technology even more, which perhaps is a common grounding here. I have lost some hair since that photo, so perhaps some other things have also changed.

ExxonMobil’s Position

I thought it would be worthwhile to take a moment and state our position on the subject of climate change. I think that, from time to time, this is not terribly well understood and I take all of the blame for that. I think that means we are not doing a very good job of articulating it, but here is another try. I think that you will note some common themes with Greg’s comments. We feel that certainly for a long time – we would say until mid-century – fossil fuels are very likely to remain the dominant source of energy.

The world needs affordable energy to drive economic growth and human progress and to a large extent, that is going to take fossil fuels. Thank goodness for geologists, who keep finding a fair amount of fossil fuels. I should emphasise, however, that meeting this demand will require our best efforts. One thing that is often forgotten in this overall discussion is that is takes a good deal of work to keep finding fossil fuels faster than you are using them. Our projections would show – and I do not think these differ very much from anyone else’s – that about half of the oil and gas that will be needed in 10 years is not yet in production.

The other thing that might be said, and perhaps today’s international situation makes this really clear, is that many parts of the world where oil and gas reserves remain are not particularly friendly places to work. The bullets are flying in many of them from time to time. So just the fact that the oil is in the ground does not mean that it can be extracted in a way that will put in at the fuel pump or in the heating oil tank.

The second point is that by our analysis – and I do not think this differs from most other analyses – renewables are non-economic. In niche markets, you can get cases where solar cells make sense and where windmills provide an attractive source of energy but by the by, and I will come back and talk about energy forecasts in a bit, they are non-economic at this point. A significant role for renewables is only possible with substantial government incentives and mandates, which basically means that the taxpayer is paying the bill instead of the customer. A societal question is ‘where is it best for governments and others to spend their money?’

The third point is that whilst we may pick about the climate science and talk about the uncertainties that are there, which we have done and do and probably will continue to do as long as those uncertainties remain, the important thing to us is that the risk of adverse climate change is high enough to take strong and effective action. That is our conclusion on dealing with the risk. We also note that the actions taken to mitigate climate risk must take into account their impact on economic growth and impact on societal values as well.

Mitigating Climate Risk

I would also point out that climate actions, that is actions to mitigate climate risk, must ultimately be low cost because they must be borne in the developing part of the world where affordability is low but the demand increase will be most dramatic. The lion’s share of carbon dioxide emissions over the next 50 years are likely to come from those countries where advanced technology, if it is expensive, can be afforded the least. We think actions that are appropriate to meet this risk reduction should include continued scientific research into understanding climate change so that we can better define the nature, the impact and the timing of the problem.

We need to implement economic steps now to reduce greenhouse gas emissions and energy efficiency is such a key step. One of the earlier talks in this conference talked about reduction of methane releases and we believe that is an area of opportunity. We need to do research on advanced technologies in which we have the potential to have our cake and eat it too. We have a lot of history in our societies of banking on technology to solve very intractable problems. It is certainly the case in the oil industry and I think it is the case everywhere. This is basically a technological and science-oriented group here and I think most of you undoubtedly share that belief. But it is not just a religious belief. We need to do it and spend money on it and we need to advance innovative concepts to practice. I will talk in a moment about what we are doing there.

We also believe – and Greg mentioned this one as well – that if we are going to improve something, if we are going to reduce greenhouse gas emissions in a big way, we need to measure them and we need to have everyone reporting them. This includes generators and consumers and we need to account for all the greenhouse gas emissions. We think that should be done on a mandatory basis through government reporting and we also think that it should be done on an equity basis. There I mean that if you are an investor in a plant that is operated by somebody else, you should carry the burden for your investment in terms of the emissions that it generates. So we end up counting everything, as opposed to relying totally on operators to generate that information.

Current Activities

Are we walking the talk? I hope so and let me just describe some of the things that we are doing. We are actively involved in climate science and we have many people around the corporation that are working in this area tangentially. We have some people at this meeting from our upstream research organisation and other upstream organisations. We have two people in the company, one of whom is here, who are pretty much totally devoted to tracking the science and helping us understand its implications at the corporate level. We have briefings for our full board of directors at least annually and climate science is always on the agenda. We support work at a number of prestigious institutions in Europe, the US and Asia in climate science and also in economics and in determining what appropriate public policy steps should be.

We devote a substantial portion of internal R&D – and we have a big R&D machine in the company – to developing technology and systems to drive efficiency improvements in our own facilities. Perhaps one difference we have from the approach that Greg outlined is that we use other systems than establishing targets and timetables to drive that improvement, but I think time has proven that our systems work well, as do BP’s systems. Maybe we can talk about that a bit more later. We have had very good results from our efforts in improved efficiency. One area that I would point out is co?generation, where you simultaneously generate steam and power. I think as a corporation we have the largest co-generation programme and it has saved an enormous amount of energy in our operations. See our website for details.

We have been involved in a number of collaborations with OEMs, including Toyota, GM, Peugeot and others over the years to develop advanced fuels in vehicles to lower emissions. Some of them have borne fruit. Since this is an area where we seek competitive advantage, I cannot tell you what is coming but clearly there is a lot of room for improvement in gasoline and diesel engines. I do not want you to believe that they are at the end of their maturity curve. We continually surprise ourselves that they are not.

Fuel cells, either running on neat hydrogen or gasoline, offer a significant potential to reduce greenhouse gas emissions. Greg said that much of the greenhouse gas emissions come from the use of the products rather than their manufacture and we would say that is about 87%. We want to work on the 13% and we are working hard there but you are going to have to affect the products and the way that they are used in devices if you are really going to ring the bell here.

On reporting greenhouse gas emissions, quite frankly, BP and Shell got the jump on us there. They got into a position to measure them accurately and began reporting them well ahead of ExxonMobil, but when we had our procedures in place, we started reporting them. We are just about to report them for the second cycle and we actively benchmark with BP, Shell and our other competitors to ensure that we have got common standards for doing this.

The Global Climate and Energy Project

One thing that we are doing – something that I am particularly proud of because I spent a lot of time helping to put it together – is a very large programme called The Global Climate and Energy Project. If you want to find out about it, go to www.gcep.stanford.edu. It is a programme that is managed by Stanford University but will involve the efforts of a number of other universities in Europe, the US and in Asia. It is not on climate science but rather on innovative technologies to reduce climate risk. We are just beginning to put the programmes in place now but I am really excited by what is going on. What is unique about this programme is that it is one that hardwires companies back into the process, not in terms of dictating what they think are technology solutions but rather hardwired in terms of using the output.

The companies that are part of this programme include ExxonMobil at the $100 million level, Schlumberger, which got by with a mere $25 million – I do not know how we let that one slip by – General Electric at $50 million and Toyota at $50 million. That is a lot of money; that is well over $200 million. Now it is true that there is no university that has the amount of money they want but I think this will make a big difference. We are going to establish an advisory board comprised of non?industrial participants to guide the work, to provide input to Stanford and the sponsors on the most attractive areas of endeavour and to establish the quality of the work that is going on.

I will just mention the first four programmes. They are in:

• Advanced devices
• Biological generation of hydrogen, i.e. hydrogen from renewables
• Geological sequestration
• An economic assessment process to that the sponsors and Stanford can keep track of the progress that we are making

We expect that there will be probably about a dozen programmes running at a steady state, with some falling off the radar screen and some being added.

Climate Change and Science

I do not even need to talk about this chart (Figure 1) because it has already been used in the session today. I will just say that there is a large amount of really complicated stuff going on. We need further elucidation of what is going on, what is related to greenhouse gas generation, what are other anthropogenic forces and what are just natural forces. This still needs to be worked out. There are a fair number of unanswered questions but, again, we are not cursing the darkness. We are saying that there are unanswered questions but we need to move forward in terms of trying to find greenhouse-friendly approaches.

There is a little challenge for geology, which is a critical science in this area, if you do not mind. My primary plea is that when in comes to climate science, in trying to tease out the relationship between natural variability and human-caused climate change, it is easier for scientists to continue to do work in the area that we are most familiar with. If rather the geological community could have some mechanism to focus on those areas that are likely the most critical, or the resolution of which would be the most instructive, that would be very helpful.

In my experience with science – and you can criticise this – there has only been one science community that I have ever seen to have done that job well, and that is the high-energy physicists. They can relentlessly go off in a room by themselves, the walls reverberate, but when they come out they have a unified programme by and large or in many cases they have worked those priorities and they have focused on the critical areas. I am not holding them out as paragons but few other areas have that capability. To try to come up with a research agenda in climate science that is focused on the most important areas, I think, is very important.

Sequestration

It does not need any additional boost at this meeting to emphasise that means to sequester carbon dioxide emissions from central sources are critical. Whilst it is very important to do that work in ways that will ensure that we do not threaten the environment more than we help it, the reality is that we are going to have to use a lot of coal if we are going to have the energy we need for at least the next 25 or 50 years. I say that without bias because we are out of the coal business and I am delighted that we are out of it. But there is going to be a great deal of coal used at generating stations if we are going to have to power that we need. The only way that can be consistent with a carbon-constrained future is by the capture and sequestration of those CO₂ emissions from those large generating stations. The geology here is likely to be critical.

Energy Projections

These are our company’s projections (Figure 2) but if you compare them with those of
the IEA or others, you will not find any difference. I do not know why we pay our planners when they come up with the same stuff that everybody else does, but that is another question. You will find that even as we get more efficient as a society and our energy and GDP ratio continues to fall, the demand for energy, particularly in the developing parts of the world, continues to increase and is expected to continue increasing. That efficiency has not yet enabled us to actually start reducing energy consumption, nor do we see it doing so over this forecast period.

Where is the energy going to come from? Again, these forecasts (Figure 3) are not much different to anyone else’s. We can see the fractions of the total energy made up of the different sources. Gas, we expect is going to make up the largest share of the additional supply but since renewables are something of interest to most groups these days, let us look at this other section and see where that is coming from. Please do not get excited about biomass because that is a really bad thing. That is basically people burning wood, dung and peat in their dwellings and generating enormous quantities of air pollution and difficulties. I will leave it to your judgement as to whether nuclear is good or bad. There is not much additional potential in hydro, as has been said earlier.

So here is wind and solar up top and our best projection is that little green band up there. Actually, it is pretty bullish so we have gone through and looked at the technologies, the rate of technological improvement and we have made some fairly bold assumptions about how technology and applications can proceed. But let us forget about the little green slice and assume that wind and solar can grow by 20% per year. Then you get this chart over on the right with wind and solar, but even with strong growth you can see that it is unlikely with anything like today’s technology assumptions that they are going to play a very large role. That is just the way we see it. I think that Nick Riley’s talk earlier this afternoon made the same kind of comments so I do not think they are that striking.

Demand Growth

Where is that demand going to come from as we see it? Again, I do not think this is much different from how the IEA sees it and the answer is to a very large extent Asia (Figure 4). That is where the demand growth is likely to be predominant so if you are interested in watching demand and the way that materialises, keep an eye on Asia. If you are talking sector by sector, we feel that is likely to be in transportation (Figure 5). The more money people have, the more they want to go someplace that they are not and so the transportation sector and transportation systems will be critical in sorting all of this out. So those are the charts that I wanted to share and we will look forward to a bit of discussion.