Climate change is a critical global concern. As the worldwide population grows and standards of living increase within emerging economies, total world energy demand is forecast to double or potentially even triple by 2050.

The large majority of climate scientists believe that greenhouse gas (GHG) emissions from the combustion of the three hydrocarbon fuels – coal, oil and natural gas – directly contribute to climate change. If hydrocarbons continue to dominate the global energy mix, total annual GHG emissions could double by 2050, with severe and lasting global consequences predicted.

The need for the development of significant energy-efficiency measures is clear, as is the case for a global transition to lower-carbon energy sources and technologies.

Natural gas – the core business of BG Group – has an important role in the transition to a lower carbon economy, as acknowledged by the United Nations’ Intergovernmental Panel on Climate Change (IPCC) in its mitigation criteria. Natural gas combustion releases 22% less carbon dioxide than oil and 40% less than coal per unit of energy produced. Strategies to use gas as a substitute for higher-carbon fossil fuels therefore have a direct and immediately positive impact on global GHG reduction targets.

The urgency of addressing climate change

The United Nations’ IPCC has concluded that evidence indicating the “warming of the climate system is unequivocal” and that “most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic (man-made) GHG concentrations.”

Without stabilisation, the IPCC 4th Assessment Report projects global temperatures could increase by between 1 degree Celsius and 6 degrees Celsius in the course of the century.

The majority of climate scientists now believe that any increase of more than 2 degrees Celsius would have potentially disastrous effects on sea levels, freshwater supplies, many flora and fauna species and ecosystems, agricultural productivity and human health.

Key nations attending the UN Climate Change Conference in Copenhagen in December 2009 therefore included in the Copenhagen Accord a recognition that cooperative action must be taken to limit the increase in global temperature to no more than 2 degrees Celsius.

This goal will not be achievable without significant and targeted reductions in GHG emissions. We believe that the global gas industry will play a central role in helping to achieve that critical objective, both in reducing GHG emissions from its own operations and in advancing the development of natural gas as a ‘bridge fuel’ that is well-positioned as a cost and energy-efficient substitute for oil and particularly for coal – still the world’s predominant fuel.

BG Group fully acknowledges that Greenhouse Gas (GHG) emissions from burning hydrocarbons are a significant contributor to climate change.

The Group’s response is to:

• focus on its core business – the discovery, production and delivery to market of natural gas resources – as a key contribution to the global fuel substitution strategies identified by the IPCC as central to mitigating climate change; and
• develop strategies to reduce the GHG emissions produced within our own operations.

In 2009, the Group introduced a Climate Risk Management framework, which supports consideration and mitigation of the operational risks arising from the long-term consequences of climate change.

BG Group is a global leader in natural gas. The Group’s substantial Liquefied Natural Gas (LNG) business and its Transmission and Distribution (T&D) and Power Generation interests are purely focused on the commercialisation and sale of gas to markets in both the developed and developing world. Natural gas accounted for more than 70% of total Group production in 2009.

In 2007, BG Group set itself a target of a one million tonne sustainable reduction in the Group’s annual GHG emissions (against a ‘no-action’ base case) by 2012, and started our enhanced GHG management programme to achieve this. The reductions will be achieved through improvements to existing operations and in the design of new projects. Many improvements have already been implemented in support of this target. As of the end of 2009, 581 000 tonnes of sustainable reductions had been achieved, and the Group is on track to achieve our 2012 target.