BP 2013 Annual Report Download - page 259

has been expanded to include, among others, the petrochemical
sector. Installations in sectors at risk of “carbon leakage” (i.e.
production transfers out of the EU ETS trading area) are partially
compensated with free allocation of emission allowances based on
benchmarks used to calculate the number of free emissions per
installation. There is no free allocation for electricity generation and
production installations; instead these allowances are auctioned off to
market participants.
• The Energy Efficiency Directive (EED) was adopted in 2012. It requires
EU Member States to implement an indicative 2020 energy saving
target and apply a framework of measures as part of a national energy
efficiency programme. Such measures include mandatory industrial
energy efficiency surveys, to obtain data on both new plants and the
replacement of large plants.
• The Industrial Emissions Directive (IED) provides the framework for
granting permits for major industrial sites. It imposes emission limit
values, based on the use of Best Available Techniques (BAT), for
discharges to air and water. The emission limit values are informed by
the sector specific and cross-sector BAT Reference Documents
(BREFs), which are reviewed periodically. The outcome of the review
of several BREFs relevant to our major sites is expected in 2014. The
IED transposition and output from the BREF revisions may result in
requirements for further emission reductions at our EU sites.
• The European Commission’s Air Policy Review and the related work on
revisions to the Gothenburg Protocol and National Emissions Ceiling
Directive (NECD) may lead to national ceilings for emissions of a
variety of air pollutants in order to achieve EU-wide health and
environmental improvement targets. Along with the proposed Directive
on medium combustion plants, this may result in requirements for
further emission reductions at BP’s EU sites.
• The implementation of the Water Framework Directive and the
Environmental Quality Directive may mean that BP has to take further
steps to manage water discharges from its refineries and chemical
plants in the EU.
• The EU regulation on ozone depleting substances (ODS), which
implements the Montreal Protocol (Protocol) on ODS requires BP to
reduce the use of ODS and phase out use of certain ODSs. BP
continues to replace ODS in refrigerants and/or equipment, in the EU
and elsewhere, in accordance with the Protocol and related legislation.
Methyl bromide (an ODS) is a minor by-product in the production of
purified terephthalic acid in our petrochemicals operations. The
progressive phase-out of methyl bromide uses may result in future
pressure to reduce our emissions of methyl bromide. In addition, the
impending adoption of a revised regulation to phase out the use of
fluorinated gases, including hydrofluorocarbons (HFCs) may have an
impact on some of BP’s operations.
• The EU Fuel Quality Directive affects our production and marketing of
transport fuels. Revisions adopted in 2009 mandate reductions in the
life cycle GHG emissions per unit of energy and tighter environmental
fuel quality standards for petrol and diesel.
• The EU Registration, Evaluation and Authorization of Chemicals
(REACH) Regulation requires registration of chemical substances,
manufactured in, or imported into, the EU in quantities greater than
1 tonne per annum per legal entity, together with the submission of
relevant hazard and risk data. REACH affects our refining,
petrochemicals, exploration and production, biofuels, lubricants and
other manufacturing or trading/import operations. Having completed
registration of all the substances that we were required to submit by
the regulatory deadlines of 1 December 2010 (>1,000 tonnes per
annum/legal entity) and 31 May 2013 (100-1,000 tonnes per annum/
legal entity), we are now preparing registration dossiers for substances
manufactured or imported in amounts in the range 1-100 tonnes per
annum/legal entity that are due to be submitted before 31 May 2018.
Some substances registered previously, including substances supplied
to us by third parties for our use, are now subject to thorough
evaluation and/or potential authorization/restriction procedures by the
European Chemicals Agency and EU Member state authorities.
Legislation similar to REACH is in place in Turkey, which requires the
registration of manufactured and imported chemicals.
• In addition, Europe has adopted the UN Global Harmonization System
for hazard classification and labelling of chemicals and products, which
has been fully implemented in a number of countries outside the EU,
through the Classification Labelling and Packaging (CLP) Regulation.
This requires BP to assess the hazards of all of our chemicals and
products against new criteria and will result in significant changes to
warning labels and material safety data sheets. All our European
Material Safety Data Sheets are being updated to include both REACH
and CLP information. We have also notified the European Chemicals
Agency of hazard classifications for our manufactured and imported
chemicals, for inclusion in a publicly available inventory of hazardous
chemicals. CLP will also apply to mixtures (e.g. lubricants) by 2015.
Activities covered by both CLP and REACH are subject to enforcement
activity by national regulatory authorities. Several BP entities were
already subject to inspections. All observations made were minor in
nature, and were readily rectified to the satisfaction of the authorities.
• The EU Commission has issued the Offshore Safety Directive which is
now required to be transposed into national legislation by Member
States, including the UK. Its purpose is to introduce a harmonized
regime aimed at reducing the potential environmental, health and
safety impacts of the offshore oil and gas industry throughout EU
waters. Implementation into UK legislation will involve alignment of the
regime currently operating in the UK.
Environmental maritime regulations
BP’s shipping operations are subject to extensive national and
international regulations governing liability, operations, training, spill
prevention and insurance. These include:
• In US waters, OPA 90 imposes liability and spill prevention and
planning requirements governing, among others, tankers, barges and
offshore facilities. It also mandates a levy on imported and
domestically produced oil to fund oil spill responses. Some states,
including Alaska, Washington, Oregon and California, impose additional
liability for oil spills. Outside US territorial waters, BP shipping tankers
are subject to international liability, spill response and preparedness
regulations under the UN’s International Maritime Organization,
including the International Convention on Civil Liability for Oil Pollution,
the International Convention for the Prevention of Pollution from Ships
(MARPOL) Convention, the International Convention on Oil Pollution,
Preparedness, Response and Co-operation and the International
Convention on Civil Liability for Bunker Oil Pollution Damage. In April
2010, the Hazardous and Noxious Substance (HNS) Protocol 2010, was
adopted to address issues that have inhibited ratification of the
International Convention on Liability and Compensation for Damage in
Connection with the Carriage of Hazardous and Noxious Substances by
Sea 1996 (the HNS Convention). As at 9 January 2014, there were
14 contracting states to the HNS Convention but it had not yet entered
into force.
• In April 2008, the International Maritime Organization (IMO) approved
amendments to Annex VI of the MARPOL to reduce the sulphur
content in marine fuels. Since 1 January 2012 the global limit on
sulphur content in marine fuels may not exceed 3.50%. This global
limit will be further reduced to 0.5% in 2020, provided there is enough
fuel available. Annex VI also provides for stricter sulphur emission
restrictions on ships in SOx Emission Control Areas (SECAs). EU ports
and inland waterways and the North Sea and Baltic Sea have been
covered by SECAs since 2010 imposing a sulphur content limit of
0.1%. These restrictions require the use of compliant heavy fuel oil
(HFO) or distillate, or the installation of abatement technologies on
ships. These restrictions are expected to place additional costs on
refineries producing marine fuel, including costs to dispose of sulphur,
as well as increased GHG emissions and energy costs for additional
refining.
To meet its financial responsibility requirements, BP shipping maintains
marine liability pollution insurance in respect of its operated ships to a
maximum limit of $1 billion for each occurrence through mutual
insurance associations (P&I Clubs) but there can be no assurance that a
spill will necessarily be adequately covered by insurance or that liabilities
will not exceed insurance recoveries.
Additional disclosures
BP Annual Report and Form 20-F 2013 255