Climate changes poses significant challenges to the oil and gas industry. Specifically, risks arise from the following aspects:
- Lack of water resources: oil and gas production relies on water resources. According to relevant research, it can take as much as 1.8 gallon of water to produce 1 MMBtu of natural gas. Climate change causes water shortage that may lead to operational disruptions.
- Dysfunctional Assets: oil industries’ existing infrastructures were designed based on normal weather and may fail to work properly under extreme climate conditions.
- Jeopardize public image: oil and gas companies generate greenhouse gases (GHG) throughout their entire working process, from exploration and production of oil and gas to refinery and delivery to end users. it will hugely damage the corporate’s public image if an oil and company does not take actions towards GHG emissions,
Unfortunately, GHG emission will continue to grow in the foreseeable future. It is predicted that by 2035 CO2 emission from fossil fuel will increase by 20% compared to 2014 level. BP, one of the largest international oil and gas companies, needs to come up with a plan to deal with the climate change. 
BP’s action plan
BP works to meet the demands of a lower-carbon future through switching to gas supply and by reducing carbon emission throughout the production process. 
Supplying natural gas
Not all fossil fuels generate the same amount of GHG. When used in power generation, natural gas generates significantly less CO2 compared to those generated by coal. Therefore, natural gas is clearly a “more sustainable energy” within the fossil fuel family and creates less climate change problems compared to other conventional energy.
Historically BP’s portfolio leaned heavily towards oil. But now it is building significant share in the gas sector. Now almost 50% of BP’s portfolio is natural gas and this percentage is expected to grow even further going forward. This trend is not surprising and is actually considered as a consensus throughout the oil and gas industry. Take Shell’s acquisition of BG as an example. One of the key reasons why Shell was interested in BG is that BG has an outstanding gas value chain throughout the world. By taking over BG, Shell has now become the No.1 Liquefied Natural Gas (LNG) supplier in the world.
Pursuing efficient operations
Efficient operations not only contribute to BP’s commitment to mitigating climate change, but also make economic sense. For instance, BP’s Zhuhai 3 petrochemicals plant produces purified terephthalic acid (PTA) with the latest technology. Compared to traditional PTA plants with conventional technology, Zhuhai 3 emits 65% lower GHG. And at the same time, even though many BP’s local competitors use low-cost feedstocks like coal, Zhuhai 3 plant still enjoys the lowest cost position in the industry.
Investment in renewables for the future
Lord Browne, Former CEO of BP, is a big supporter of renewables and under his leadership BP has already become one of leading investor in renewable energies. BP invests in wind farms in US. It owns significant interests in 16 wind farms across the country. BP also invests in biofuels in Brazil. It owns and operates three sugar cane ethanol mills, farming around 127,000 hectares. Both wind energy and sugar cane based ethanol significantly reduce GHG emission and generate sizeable benefits for the public. According to BP, the power generated by its wind farms can meet the need of a city like Dallas and avoid 2.7 million tonnes of CO2 emission. 
Admittedly, fossil fuel is still dominant in primary energy supply. But the consensus is that renewables will account for more and more significant shares in the future. According to BP energy outlook, the demand for renewables grows very fast. By 2035 renewables will account for 10% of primary energy in the world. BP should consider making more investment in this area. 
Carbon pricing and quota trading mechanism needed
One way to deal with excessive carbon emission is to put a price on its externalities. At current stage human society still cannot simply stop emitting GHG, but a pricing and trading mechanism can at least help to promote its efficient usage. For example, suppose there are two plants emitting CO2. Plant A generates $100 per unit of CO2 emitted and plant B generates $1 per unit of CO2 emitted. Without a carbon pricing and quota trading system, both plants will operate as usual and generate $101 at the cost of 2 units CO2 emission. If there is a carbon pricing and quote trading mechanism in place, then plant B can sell its quota to plant A and then in total they can generate $200 profit with the same amount of CO2 emission. 
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 BP Energy Outlook: http://www.bp.com/en/global/corporate/energy-economics/energy-outlook-2035.html
 BP’s initiatives on renewable energy: http://www.bp.com/en/global/corporate/sustainability/our-activities/renewables.html
 BP’s Statistical Review of World Energy: http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html
 World Bank: http://www.worldbank.org/en/programs/pricing-carbon