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Presentation titlesecond line if required

Sustainability and bp biofuels

Rebecca Heaton

Presentation to FAO, Rome, July 2nd 2007

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Presentation overview

• What are the issues?

• What are bp doing?

• Overview of standards and

initiatives

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Key environmental issues:

• Deforestation - destruction of High

Conservation Value Forest

• GHG balance:

− Peat soils

− Use of fertilisers

• Bio-diversity - Sumatran tiger;

Orang-utans

• Pollution and environmental

damage (water / soil / air):

− Emission from conversion

processes

− Run-off of by-products

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Economic issues

• Profitability: The enterprise

should be profitable for parts

of the value chain

• Need to ensure the farmer

benefits.

• EU farmers?

• Poor pay below the poverty

line

• Mechanization: more efficient

but replacing human laborers

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Social issues

Use of resources:

• Food vs. fuel

• Electricity vs. transport fuel

• Using up scarce water supplies for irrigation

Labour:

• Child labour?

• Treatment of migrant workers

• Worker representation

Community conflict issues:

• Land rights

• Displacement of rural farmers

• Migration to cities

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External drivers and influences

• Media – influencing public perception:

− Increasing media coverage of negative impacts of biofuels,

particularly around rain forest destruction, rising corn prices (food

fuel), both in EU and US

• NGO :

− Supportive in US, becoming sceptical in the EU, with particular

concerns over GHG balance and imported fuels.

• Government:

− US: political support for biofuels for security is strong,

− EU: political support for biofuels for climate mitigation remains

strong, but NGO concern has the potential to undermine political

support. Sustainability Standards being developed.

Standards:

These will shaping the sustainability aspects of the industry

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1. Sustainability is a key

part of our brand values

2. We want a sustainable

industry to for

government support to

continue

3. By driving standards we

will shape an industry

which we can operate in

4. We want to minimise the

risk to our reputation

through unsustainable

practices

Our group values

Why we support sustainability

Regulatory Support

Public Goodwill

Sustainable Growth

PositiveBenefits

Negative Consequences

Societal Concern

Regulatory Withdrawal

Unsustainable

Growth

Biofuels Industry

+ -

Regulatory Support

Public Goodwill

Sustainable Growth

PositiveBenefits

Negative Consequences

Societal Concern

Regulatory Withdrawal

Unsustainable

Growth

Biofuels Industry

+ -

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What is bps current position?

We are integrating sustainability into the whole business We are integrating sustainability into the whole business We are integrating sustainability into the whole business We are integrating sustainability into the whole business

through:through:through:through:

• Developing basic standards below which we won’t go

• Developing principles for sustainability

• Participating in debates to drive the whole industry to

sustainability

• Playing a role within the creation of sustainable standards

• Communication: with NGO’s governments, and to the

public

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Specific actions to date:

• Sourcing guidelines: clear guidelines to our traders on

how to purchase sustainable biodiesel and so creating

a market for sustainable feedstocks

• Participating in debates within EU standards for

biofuels: in UK, Netherlands, Germany

• Membership of the Roundtable on Sustainable Palm

Oil (first major oil company to do so)

• On the steering committee of the global Roundtable on

Sustainable biofuels

• Applied for membership of the Roundtable on

Responsible Soy

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Trading activities: Palm oil case study

• We are requesting audits and chain of

custody – which precludes us from the Spot

market

Issues:

• New arena for biofuel suppliers and traders

– need for awareness raising and providing

guidance on how to source sustainably

• How to trace chain of custody using either

mass balance or segregation

• Small holder – risk of cherry picking ‘safer’

larger plantations

• RSPO lacks GHG assessment – we

particularly need to exclude peat soils

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Specific projects: Best practice biofuels production (FAO)?

Economic developmentEconomic developmentEconomic developmentEconomic development

• Mobilizes investment in rural areas

• Generates new business opportunities

• Generates income (and jobs)

Social benefitsSocial benefitsSocial benefitsSocial benefits

• Increases access to modern energy services,

improving quality of life

Environmental advantagesEnvironmental advantagesEnvironmental advantagesEnvironmental advantages

• Promotes resource conservation and ecosystem

rehabilitation

• Climate change mitigation through use of cleaner

fuels

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Translating this into practice:

• The basic bp way of operation (through our

Environmental Performance Requirements)

is sustainable

• Sustainability could be inherent in the

feedstockfeedstockfeedstockfeedstock type: eg: Jatropha– that can grow

on land not suitable for food production

• We could look at IrrigationIrrigationIrrigationIrrigation of land for food

production alongside biofuels – and using

efficient irrigation

• Using manuresmanuresmanuresmanures instead of inorganic

fertilisers - increased GHG benefit

• Working with development development development development agencies

• Integrate sustainability rather than have bolt

on projects

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International biofuels initiativesComparison of different opportunities

InvolvedBest

practice– established

– seeded

Oil industry

-Social

- Bio

IPIECA working groups:

Not involved.Individual

research

projects

EstablishedIndustry

NGO .

RCI (Responsible

Commodity Initiative)

www.sustainablefoodlab.or

g/bio-fuels-team

Global

umbrella

standard

Trade

policy and

sustain’lity

principles

Objective

Standard in

development

Early stages

Progress

On the steering ctteIndustry

NGO

Roundtable on sustainable

biofuels

http://cgse.epfl.ch/page6566

0.html

?Governments

NGOs and

Industry

organisations

GBEP: G8/FAO & UN family

BP InvolvementEngagementInitiative

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Region specific initiativesComparison of different opportunities

Led by GM

lobby. No NGO

involvement

unknownIndustryJust initiatedUSCSEP

Govt?

Govt +

industry

Engageme

nt

Standard

developed

Standard

developed

EU Meta

Standard being

developed

Progress

Well linked to

UK initiative

YesNetherland

s

CRAMER

Well linked to

Dutch initiative

YesUK LCVP

We are

supporting

Pan Europe

harmonisation

GermanyMEO (Min of

Agriculture)

CommentsCertification?CountryInitiative

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Crop specific schemesComparison of different opportunities

No: applies

to bananas

& wood

Establishe

d; very

successful

NGO, small

holders

Rainforest

alliance

(SAN/RA) -

In

discussion

Not known

Not yet- we

could take

role

Biofuel

included

Just

starting

Standard

in

progress

Standard

written

and

agreed

Progress

Considering

membership

No

certification

proposed

NGO –little

industry yet

BSI - sugar

Applied to joinEventual aimIndustry

NGO

RTRS - soy

Members.

Support Biofuel

workshop in

Malaysia

Eventual aimGov’t

NGO

Industry

RSPO – palm

BP InvolvementCertification?EngagementInitiative

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General agricultural schemes – a selectionComparison of different opportunities

Industry

Industry

NGO

Industry

Engagem

ent

Combinable

crops

Farm level

sustainability

Combinable

crops: e.g.:

wheat, rape

Crops

Some Malaysian palm certified

to this - a good general

standard for rape

GlobalEurepGAP

UKLEAF

Can use as a toolUKACCS

CommentRegionInitiative

NO biofuel specific aspects , ie GHG balance, in any of

these schemes

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Biofuels standards: how will they shape the industry?

Key predictions/assumptions:Key predictions/assumptions:Key predictions/assumptions:Key predictions/assumptions:

• Biofuels standards are likely to become operational by 2008

• For the EU there will be mandatory reporting by the organisation with

the Obligation from April 2008 to Dutch , German and UK governments

How will the industry react?How will the industry react?How will the industry react?How will the industry react?

• Some smaller players may ignore voluntary reporting

• Likely other oil majors will ensure some level of sustainability?

Meeting the standardsMeeting the standardsMeeting the standardsMeeting the standards

• Standards likely to be stringent and hard to implement practically

(using palm and soy as an example)

• The industry will evolve to handle the complexities of this