BP Finally Admits Not All Oil Will Be Burnt

For years, many activists, scientists, and analysts have warned that if we are to keep global warming to 2 degrees Celsius, we must never burn a significant quantity of fossil fuel reserves.

The latest warning came late last month from the Governor of the Bank of England, Mark Carney, who warned about the risks of climate change - or as he called it - the "tragedy of the horizon".

Carney cautioned that "the vast majority of reserves" of oil, gas, and coal could become "stranded" and "unburnable."

Big Oil's response to Carney and others has been that the world needs oil, so we will continue drilling regardless. The industry has essentially acted like a drunk in a bar, ignoring repeated warnings that drinking too much could have catastrophic consequences. Instead of sobering up, it has continued hitting the bottle. Well, finally, BP has woken up and belatedly smelt the coffee.

Yesterday the company's chief economist gave a speech on the "new economies of oil" and admitted that, due to concerns over climate change, the world's oil resources are unlikely to ever be fully exploited.

"The growing recognition that concerns about carbon emissions and climate change means that it is increasingly unlikely that the world's reserves of oil will ever be exhausted," said Spencer Dale, the Group's chief executive, at a conference in London.

He added that as international concern over climate change increases, especially in the run-up to the Paris meeting in December this year, there may be far-reaching consequences for Big Oil: "If that sense of urgency translates into policies, this could have significant implications for the long-run demand for all fossil fuels."

The speech is the clearest acknowledgment yet by a major oil company that fossil fuels must stay underground. Its significance should not be underestimated. Dale also admitted that the relative oil price will not necessarily increase over time due to climate constraints.

He explained in detail the climate calculations that people have been discussing for a while. Existing reserves of fossil fuels—i.e., oil, gas, and coal—if used in their entirety would generate somewhere over 2.8 trillion tonnes of CO2, well more than the 1 trillion tonnes or so the scientific community considers consistent with limiting the rise in global mean temperatures to no more than 2C," he warned.

"And this takes no account of the discoveries being made all the time or of the vast resources of fossil fuels not yet booked as reserves," he added.

His admission was welcomed by Carbon Tracker, one of the groups that has led on the issue of unburnable carbon and stranded assets.

"As BP now recognizes, there is a substantial risk in the system of 'peak [oil] demand'," Anthony Hobley CEO of Carbon Tracker told the Guardian. "This arises from a perfect storm of factors including ever cheaper clean energy, ever more efficient use of energy, rising fossil fuel costs, and climate policy. These are key factors the industry has repeatedly underestimated."