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EARTHFUTURE.COM by Guy Dauncey
BP's quarterly quandary: go green or go greedy
It’s noon on a Tuesday morning in late April 2005, and you are in your office at BP’s London HQ. As chair of the company, you’ve just received the happy news that your quarterly profits have come in at a record $5.49 billion, thanks to the rising price of oil.
“Gosh, Billy-boy, what shall we do with all this loot?” you ask Bill Bonkins, your PA. “It’s rolling in at $1.9 million an hour!”
“Give some to our shareholders, and stash the rest in an offshore bank account, telling them it’s being invested in exploration and research?”
“Good try Billy. But where’s you imagination?”
“Use it to buy 5,000 more lobbyists for the oil industry, at a million dollars a pop?”
“I was thinking something more, er, sustainable. Very fashionable word, ‘sustainable.’ What if we invested it in solar energy? Where would that take us?”
Billy rifles through a file, and pulls out a document called Beyond Petroleum: Building a Sustainable Energy Future.
“Well sir, it says here that the current price for solar photovoltaics is $4 a watt. Our information tells us that when it falls to $2, it’ll make good financial sense for people to install solar PV systems on their roofs. If we used the $5.49 billion to create a $2 solar subsidy on the sale of BP’s solar systems, that would trigger the installation of 3,000 MW around the world; that’s three times the entire world’s annual production. This would allow our solar division to move to mass production, and bring the price down permanently. We’d probably recover our investment in two years, and leave the other solar companies in the dust.”
“Hmm. Good thinking. What if we were to concentrate all our solar support in one area, to create a global showcase?”
“Three thousand MW would install 2kW solar systems on 1.5 million homes, providing power to 5 million people. If we combined it with our next quarter’s profits, we could see a system installed on every house in London. We have big markets here and even bigger markets in Asia.”
“Now China, there’s a huge population. What would happen if we invested a whole year’s profits in China? After all, the gravy train’s only going to improve as the price of oil goes up. Just think what we’ll earn when our oil sells for $100 a barrel!”
“It says here that China is using about 450,000 MW of power, sir. If our full 2005 profits are $22 billion and we used our third quarter profits to subsidize 6 million 500 watt solar systems, cutting the price to $2 a watt, that would reduce the price permanently, and make it possible for every household in China to install a solar system, making most communities relatively self-sufficient in electricity. We could invest the fourth quarter profits in wind turbines. The current price for wind is $1 million per MW, but with local production and assembly, I’m sure we could cut that by half. One quarter’s profits would allow us to install 11,000 MW of wind energy, which would kick start the Chinese wind economy.”
“Interesting. What about transport? Do you think we could buy ourselves into a sustainable car industry in China?”
“Well sir, there’s a lot of interest in electric vehicles in China. You can run a smart urban electric vehicle off a 200 watt solar system, and I’m sure we could manufacture them for under $5,000. On that basis, we could produce a million cars with our first quarter’s profits, which would be enough to kick-start the electric vehicle revolution. We could probably also make a smart sports bicycle for $250. If we produced 20 million with our second quarter profits, that might help restore China’s cycling tradition.”
“Hmm. This is getting interesting, Billyboy. I get the feeling that we could make a lot of money in a world without oil. It’s a good thing we changed our name to Beyond Petroleum.”
“So what’s it to be, sir? The solar strategy or the off-shore tax-haven?”
“Oh, I don’t know. If it wasn’t for those darned shareholders, I’d probably go for the solar. But they’re bound to want their pound of flesh. Better do the tax-shelter thing. And Billy? Can you make sure whatever island you choose is well above sea-level?”
Guy Dauncey is president of the BC Sustainable Energy Association, www.bcsea.org. BP’s website and contact details are at www.bp.com
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