Rising temperatures around the globe are a reality, and so too is the primary cause: Energy-related CO2 emissions caused by human-beings. Long term energy analysis by the highly respected International Energy Agency (IEA) shows the world traveling down a very, very unsustainable track. In its business as usual scenario, energy-related CO2 emissions grow 1/3rd by 2035 and double by 2050.
Emerging markets, through growth in populations and economies, are expected to keep fossil fuels dominant world-wide through 2035. 1.3 billion people are still without electricity. In the emerging markets, six billion people get along on the same amount of power as one billion people consume in OECD countries. This sort of imbalance cannot continue, and, as a matter of decency, must not. The IEA predicts the emerging markets will account for 80% of growth in electricity demand to 2035.
Looking back over past decade, coal was the largest source of electricity supply and met 50% of new electricity demand. Coal, as is well known, is worst fossil fuel for CO2 emissions.
And what's wrong with a warmer planet? Recent disasters around the globe illustrate the problem: rising sea levels, changing rainfall patterns, more droughts, floods and heat waves, all adversely affecting ecosystems, food production and water resources. Scientists predict ocean level rises of three to six feet in this century, triggering massive evacuations. What's worse, we know scientists systematically understate the case -repeatedly discovering the globe's climate system is more, not less, sensitive to man-made assault.
So, what is the world doing about this existential peril to our planet? It's not just resting in neutral. Having put the car in reverse, it is picking up speed towards the cliff. In 2011, across the globe, fossil fuel subsidies increased by 30%, to $523 billion. Subsidies for renewables that year were a pitiful $88 billion. Can this be anything other than collective madness? Are the people whose taxes fund these subsidies aware? Do they care? It's time to wake up. CO2 emissions are at a record high and renewables industries are under strain, due to the surge in unconventional oil and gas. Just a few days ago, CO2 in the atmosphere hit 399.72 ppm ( that's parts per million) and is likely to exceed 400 ppm later this month.
The IEA reports that just meeting the emission goals currently pledged by countries under the UN Framework Convention - itself a doubtful probability -- still leaves the world some 13.7 billion tons of CO2 -- or 60% -- above the level needed to remain on track with the 2 Degree Centigrade goal in 2035.
Why aren't Governments acting? Jeremy Grantham, the investment guru turned passionate environmentalist, answered that question in his April Quarterly Letter: "Aversion to bad news."
"Historians have pointed out the bias against the need for change: there are always clear beneficiaries of the current state of affairs but the benefits of a changed world in contrast will look vague and uncertain to the likely beneficiaries. ... What is less common ... is what we have today: the near complete control of government by the powerful beneficiaries of the current system."
And who are these beneficiaries? The giant oil, gas and mining companies.
So, hope - real hope - for changing government policy to save the planet rests with the people -- those whose children and grandchildren will inherit this tragic whirlwind, and, most importantly, the younger generation - those now in high school and college. Students are especially important because, being young, they tend toward optimism, self-confidence and belief in the possibility of change, and they possess the audacity and ambition to make a difference in the world. Looking back with the experience of age, we older ones know that the young have a far better chance of fulfilling that ambition if they start early. Thus, it becomes our duty to encourage them, or at least get out of the way.
To save the planet, we need to create a global movement of ordinary people demanding action now. The people, young and old, rich and poor, must seize power over global policy by taking control away from the fossil fuel companies who now wield it.
How? A place to start is by finding the owners of these companies, and asking them why they continue to be owners.
Consider the top 200 publicly listed oil and gas and mining companies. They carry on their balance sheets fossil fuels equal to some 20%-40% of the world's proven reserves. The IEA calculates that, to avoid a rise in global temperature over the danger threshold of 2 Degrees Centigrade to 2050, only 20% of total fossil fuel reserves can be burned. Assuming a pro-rata allowance for the 200 companies, this means that 60% to 80% of the reserves of these 200 are unburnable. Yes, unburnable!
Assuming Governments act -- which is nothing more or less than a bet on the Darwinian drive of human beings to survive -- these companies are severely mispricing their assets and misleading the investing public about their future prospects. Analysts at HSBC bank, in a recent report, reckon the current market value of these companies -- $4 trillion -- would fall by 40% -60% should Governments act to hold temperature below 2 degrees. And act they will if the tight grip they are held in by these companies can be stripped away.
The story gets worse. Last year, these 200 companies allocated some $674 billion for finding and developing new reserves and new ways of extracting them. Here they follow the conventional business model of recycling fossil fuel revenues into replacing reserves. Isn't this wasted capital spent on finding unburnable assets? Perhaps they don't care if the business model is broken. Exxon recently described its large CAPEX program as "a moral imperative" to provide energy to the world. This claim echoes Dow Chemical's infamous claim during the Vietnam War that, despite losing money on every gallon of napalm it sold to the Government, it had a moral duty to the country to make the stuff for use in Vietnam.
So, what can private citizens do? Here are four ideas, briefly sketched.
- Join the divestment movement being led by Bill McKibben through 350.org. Unlike the divestment project initiated against companies doing business in pre-Mandela South Africa, this project can rest not just on grounds of morality or an investor's chartered purpose, but on financial grounds as well. This gives the divestment movement aimed at fossil fuel companies a huge advantage. The South Africa-free project had to contend with the fact that some of the best corporations in America were doing business in South Africa and were not willing to withdraw. Thus, the divestment argument had to overcome the possible, even likely, portfolio costs of ceasing to hold those corporations. Despite this difficulty, which for some institutional investors proved insuperable, the South Africa-free movement was, according to close and well informed observers, including Nelson Mandela, an important contributing factor in ending apartheid. The facts above demonstrate that, in the case of fossil fuel companies, divestment can rest comfortably and alone on the financial grounds of due care and caution.
In searching for the way ahead, one can usefully look back at the experience of the tugboat T.J. Hooper, as interpreted by Learned Hand.
Note: Important material used above comes from The Carbon Tracker Initiative's report: Unburnable Carbon 2013: Wasted Capital and Stranded Assets. See www.carbontracker.org.