BP 2014 Annual Report Download - page 231

European Union
• In October 2014, the European Council agreed on new climate and
energy targets for the period up to 2030.
• The 2008 EU Climate and Energy Package is expected to remain in
place until 2020 and includes an updated EU Emissions Trading
System (EU ETS) Directive and the Renewable Energy Directive. The
updated EU ETS 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
sector benchmarks used to calculate the number of free emissions per
installation.
• 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, including mandatory industrial energy efficiency
surveys. This directive is being implemented in the UK by the Energy
Savings Opportunity Scheme (ESOS), which affects our offshore and
onshore assets. ISO50001 is being implemented in some EU states to
meet some elements of the Energy Efficiency Directive.
• The Industrial Emissions Directive (IED) provides the framework for
granting permits for major industrial sites. It lays down rules on
integrated prevention and control of air, water and soil pollution arising
from industrial activities. This may result in requirements for BP to
further reduce its emissions, particularly its air and water emissions. As
part of the IED framework, additional emission limit values are
informed by the sector specific and cross-sector Best Available
Technology (BAT) Conclusions, such as the recently published BAT
Conclusions for the refining sector. Further BAT Conclusions that may
result in additional emission reduction requirements are expected
within the next two years.
• The European Commission’s Clean Air Policy Package (including a new
directive for medium-sized combustion plants, a revised National
Emission Ceilings Directive and a ratification proposal for the amended
Gothenburg Protocol) may – once adopted wholly or in part – 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 freshwater withdrawals and discharges from its EU
operations.
• The EU regulation on ozone depleting substances (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 Montreal Protocol and related
legislation. In addition, the EU regulation on fluorinated gases with high
global warming potential came into force on 1 January 2015. This
might further limit the use of some refrigerants, such as in gas
processing facilities.
• 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, 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. In accordance with
the required phase-in timetable, BP has completed registration of all
substances in tonnage bands equal to or greater than 100 tonnes per
annum/legal entity, and is in the process of preparing registration
dossiers for substances manufactured or imported in amounts in the
range 1-100 tonnes per annum/legal entity that are currently 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 review for potential
authorization and restriction procedures, and possible banning, by the
European Chemicals Agency and EU member state authorities.
• In addition, the EU is implementing the UN Global Harmonization
System for hazard classification and labelling of chemicals and
products through the Classification Labelling and Packaging (CLP)
Regulation. This requires BP to reassess the hazards of all our
chemicals and products against the new GHS criteria as adopted or
modified by the EU and to update warning labels and safety data
sheets accordingly. The CLP will come into effect for mixtures (e.g.
lubricants) in 2015. A separate EU regulation on export and import of
hazardous chemicals requires warning labels and safety data sheets
accompanying EU exports to be compliant with relevant CLP and
REACH requirements (unless this conflicts with requirements in the
importing country) and, as far as practicable, in the official or one or
more principal languages of the intended area of use. Safety data
sheets for the EU market have been or are being updated to include
both REACH and CLP information.
• The EU Offshore Safety Directive, adopted in 2013, is required to be
transposed into national legislation by Member States, including the
UK, by 19 July 2015. 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. As of 6 January 2015, the number of contracting states to
the HNS Convention remained at 14, so it has not yet entered
into force.
• Changes to the permitted level of sulphur in marine fuels under EU
mandated reductions and International Maritime Organization
guidelines over the next 5-10 years are intended to result in the
reduction of sulphur oxides emissions from ships, either through the
burning of low sulphur marine fuels or the use of approved on-board
abatement technology. 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), although there can be no assurance
that a spill will necessarily be adequately covered by insurance or that
liabilities will not exceed insurance recoveries.
Greenhouse gas regulation
Increasing concerns about climate change have led to a number of
international climate agreements and negotiations that are ongoing.
In 2011, parties to the UN Framework Convention on Climate Change
conference in Durban (COP17) agreed to several measures. One was a
‘roadmap’ for negotiating a legal framework for action on climate change
by 2015 that would involve all countries by 2020 and would close the
‘ambition gap’ between existing GHG reduction pledges and what is
required to achieve the goal of limiting global temperature rise to 2°C.
Another was a second commitment period for the Kyoto Protocol to
begin immediately after the first period. An amendment was
subsequently adopted at the 2012 conference of parties (COP18) in Doha
Additional disclosures
BP Annual Report and Form 20-F 2014 227