SPEAKER

James J. Mulva Chairman President and CEO ConocoPhillips Executive Interview

At Tuesday’s lunch Daniel Yergin, CERA Chairman, thanked the CERAWeek Strategic Sponsors Chevron, StatoilHydro, ExxonMobil, Saudi Aramco, BP, and ConocoPhillips. He welcomed Keynote Luncheon speaker James J. Mulva, Chairman, President, and CEO of ConocoPhillips. On the twin challenges of energy security and climate change, Mr. Mulva exhorted the energy industry to be actively involved as society develops policies. “The train is leaving the station without the industry onboard,” he cautioned.

Mr. Mulva cited three “facts”: a scientific consensus that fossil fuel emissions play a role in climate change, public opinion hardened by the media, and a mix of federal and state regulatory efforts. The industry must continue to build infrastructure and find resources in this environment, he said. Yet the industry can also meet the public’s concerns because of its technical expertise in reducing carbon intensity. “We have the skills to make carbon storage a reality,” he said. Most important, “if we do not engage, we lose the option of influencing policy, our concerns are marginalized, policies that cost too much will erode security,” and the industry will experience “greater alienation from the public,” he said. For example, the continuing US opposition to growing worldwide concern means a loss of geopolitical influence in issues from trade to terrorism.

A comprehensive energy policy must go beyond vehicular regulations to increase access to fuels, provide “a consistent framework for managing carbon emissions,” and encourage research and development through financial and educational supports. He spoke against the patchwork of “well-intended” state efforts. “We need bridging strategies” for climate change and energy security solutions, Mr. Mulva said. The public must be educated and informed, as “it will take many years for the new technologies to develop at the needed scale.”

Governments should assess the ultimate local energy potential, and logically determine the best energy development options, under stringent environmental guidelines. Access to the off-limit areas of the Atlantic and Pacific offshore, the Rocky Mountains, and the Gulf of Mexico, together with development of unconventionals despite their higher carbon emissions, is a necessity. Government should set a value on carbon avoidance, phased to match the development of technology. The cap-and-trade solution offers offsets in the United States and around the world that must be verifiable, enforceable, and effective. Any regulatory framework must provide certainty to investors. In turn industry must reduce its own carbon intensity. He also advocated the use of low-carbon sources such as nuclear and removing the tariff on Brazilian ethanol.

None of these steps will be easy for everyone, Mr. Mulva concluded. Industry must help to inspire political will and educate the public. “In many respects the public is out in front of the government,” he said. As the government catches up, “we have a chance to influence” policies.

Answering questions from Dr. Yergin, Mr. Mulva said ConocoPhillips had joined the US Climate Action Partnership, which supports a cap on carbon emissions, after “an evolution of our thought process” and has opted to advocate in the debate. He recognized the public’s desire to get the necessary energy at an acceptable price and with minimal impact on the climate; but he disagreed with the idea of “energy independence” for an import-dependent economy using 85 percent fossil fuel. He also commented on partnerships, natural gas use, and finding skilled international employees to meet staffing needs.