BP 2008 Annual Report Download - page 48

BP Annual Report and Accounts 2008
Performance review
BP’s MTSA-regulated facilities will be impacted and will be required to
comply by the end of 2008 or beginning of 2009 in a phased approach.
The BP Americas Response Team consists of approximately
210 trained emergency responders at BP locations throughout North
America. In addition, there are five Regional Response Incident
Management Teams, a number of HAZMAT Teams and emergency
response teams at BP’s major facilities. Collectively, these teams are
ready to assist in a response to a major incident.
In 2008, BP Products obtained and renewed environmental
permits that enabled it to commence construction on the project to
upgrade the Whiting refinery. Various environmental groups have
challenged these permits in state and federal proceedings.
In November 2007, the EPA began issuing a series of notices of
violations, alleging clean air act violations, to the Whiting, Toledo, Carson
and Cherry Point refineries. Settlement negotiations continue between
BP Products, the EPA and the DOJ in an effort to resolve these matters.
In October 2008, the EPA issued an amended notice of violation alleging
that BP Products began construction on the Whiting upgrade in 2005 prior
to receiving the necessary permits. This allegation has been incorporated
into the permit challenges filed by the environmental groups. The subject
matter of the notices of violation could be resolved as an amendment to
the 2001 EPA consent decree or as a separate matter.
See also Legal proceedings on page 92.
European Union
The following is a summary of significant EU level environmental
legislation and UK health and safety legislation affecting BP.
At the March 2007 European Council, the European Heads of
Government decided to adopt:
• a commitment to reduce GHG emissions by at least 20% by 2020 as
compared with 1990 levels and the objective of a 30% reduction by
2020, subject to the conclusion of a comprehensive international
climate change agreement; and
• a mandatory EU target of 20% renewable energy by 2020 including a
10% biofuels target.
In December 2008, the European Parliament approved the
‘Climate Action and Renewable Energy Package’, which:
• revises the EU’s Emissions Trading System to establish auctioning of
emission allowances from 2013;
• sets binding national targets for each EU member state;
• equips power plants to capture and store CO2 underground;
• sets mandatory national targets for each EU member state with the
goal of delivering 20% renewable energy target by 2020; and
• provides for a revised Fuel Quality Directive requiring fuel suppliers to
reduce the life cycle emission of the fuels they provide by up to 10%
by 2020.
BP was involved at the highest levels in the preparation of the ‘Climate
Action and Renewable Energy Package’, as part of our efforts to actively
contribute to the formulation of energy security and climate change
policy in the EU.
An EC directive for a system of integrated pollution prevention
and control (IPPC) was adopted in 1996. This system requires certain
listed industrial installations, including most activities and processes
undertaken by the oil and petrochemicals industry within the EU, to
obtain an IPPC permit, which is designed to address an installation’s
environmental impacts, air emissions, water discharges and waste in a
comprehensive and integrated fashion. The permit requires, among other
things, the application of Best Available Techniques (BAT), taking into
account the costs and benefits, unless an applicable environmental
quality standard requires more stringent restrictions, and an assessment
of existing environmental impacts and future site closure obligations. All
such plants had to obtain such a permit by 30 October 2007 and permits
included an environmental improvement programme where necessary.
In December 2007, the EC issued a proposal for the revision to
the IPPC Directive with the aims of streamlining legislation on industrial
emissions, improving the implementation of BATs across Europe, and
contributing to the achievement of the targets set in the EC’s Thematic
Strategies on Air, Soil and Waste. The proposal merges and revises
several separate directives related to industrial emissions (including the
Large Combustion Plant Directive) into one Directive. It proposes tighter
minimum standards for emissions from large combustion plant
(>50MW), and introduces a mandatory requirement to achieve emission
limit values indicated by use of ‘Best Available Techniques’ (with
derogations from this requirement allowed where justified).
The proposal would also extend the scope of IPPC to specifically
cover organic chemical manufacture by biological treatment (biofuels) and
may open the way for NOx and SOx trading by member states.
The EC proposal has triggered considerable debate and the
timetable for the completion of the legislative process and the likely
outcome are not clear. However, the revision has already triggered a
greater focus on the information sharing process that is used to determine
and document the BAT for each industry sector, and will raise the profile of
the outputs from this process – the BAT Reference Documents (BREFs).
In 2005, the EC published its Thematic Strategy on Air Pollution,
which outlines EU-wide targets for health and environmental benefits
from improved air quality to be achieved through further controls on
emissions of fine particulates (PM 2.5 – particulate matter less than
2.5 microns diameter), sulphur dioxide, oxides of nitrogen, volatile organic
compounds and ammonia. Associated with this is the revision to the
National Emissions Ceiling Directive (NECD), which would introduce new
emissions ceilings for each member state for fine particles and tighten
existing ceilings for sulphur dioxide, oxides of nitrogen, volatile organic
compounds and ammonia. There is currently uncertainty regarding the
costs to industry of implementing possible outcomes from the NECD
and IPPC revisions.
The proposed revision of the current EU Fuel Quality Directive is
referred to in the Climate Change Programmes section above. In addition
to its provisions regarding life cycle GHG emission reductions, it would
also facilitate the introduction of biofuels into gasoline and diesel.
Registration, Evaluation and Authorization of Chemicals (REACH)
legislation became effective 1 June 2007 across all member states of the
EU. All chemical substances manufactured within, or imported into, the
EU in quantities above 1 tonne per annum must be registered fully by
each manufacturer/importer with the new European Chemical Agency
(ECHA). Failure to comply with REACH in respect of such a substance
will immediately remove a company’s legal right to manufacture or import
that substance. Initially all existing manufactured and imported
substances had to be pre-registered by 1 December 2008, to qualify for a
timed phase-in for full registration during the period 2010-2018, with the
exact timing being determined by the volumes of chemicals
manufactured/imported, and by the health, safety and environmental
hazards the chemical may possess. Failure to pre-register an existing
chemical will result in an immediate requirement to register fully the
chemical with the ECHA prior to continued manufacture within, or import
into, the EU. Time-limited authorizations may be granted for substances
of ‘high concern’ and in some cases restrictions in use may apply. Crude
oil and natural gas are exempt from registration requirements, while fuels
are exempt from authorization but not registration. In BP, REACH affects
our refining, petrochemicals and other chemical manufacturing
operations, with many other businesses, such as lubricants, also being
impacted in their roles as major importers and downstream users of
chemicals. In 2008, BP submitted around 700 pre-registrations, covering
approximately 250 individual chemical substances. For almost 60% of
these, ‘full’ registration dossiers must be submitted to ECHA by
1 December 2010, the balance being required in the period 2013-2018.
Total REACH registration fees to be incurred by BP’s businesses are
estimated to be in the region of $15 million and these contribute to an
estimated overall cost of $60 million during the period 2008-2018 for pre-
registration, registration and provision of additional testing requirements.
In the UK, significant health and safety legislation affecting BP
includes the Health and Safety at Work Act and regulations made
thereunder and the Control of Major Accident Hazards Regulations.
Performance review
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