Tag Archives: Fossil Fuels

Why cheap oil is the key to beating climate change

Repost from The Guardian

Why cheap oil is the key to beating climate change

Keeping the price of a barrel of crude at $75 or less will devastate the profitability of fossil fuel extraction – as the shelving of three tar sands projects demonstrates

By Mitchell Anderson, 11 December 2015 11.59 EST
‘If the Canadian tar sands investments that were halted this year stay dead, the world will avoid another 1.6tn tonnes of dangerous carbon emissions.’ Photograph: David Levene for the Guardian

As world leaders enter the home stretch of the Paris climate negotiations they should keep in mind a key measure of success in limiting carbon emissions: cheap oil. The lower the global price of oil, the more it stays in the ground – due to the brutal, if counterintuitive, logic of the petroleum marketplace.

Most of the easily extracted oil deposits are long gone. What’s left are high-cost, high-risk long shots such as the Alberta tar sandsdeep-water reservoirs off Brazil, and drilling the high Arctic. Companies hoping to profit from the last dregs of the petroleum age need to convince their investors to part with massive amounts of capital in hopes of competitive returns often decades down the road.

Billions have already fled the Alberta oil sands in the last year as the global price of oil collapsed from over $100 per barrel to below $40. Shell has just called a halt to its Carmon Creek project in Northern Alberta, writing off $2bn in booked assets and 418 million barrels of bitumen reserves. A barrel of bitumen will release about 480kg of carbon dioxide from extraction, refining, transport and combustion. This head office write-down means that 200m tonnes of carbon will not be released into the atmosphere.

Two other tar sands projects were also shelved this year with reserves of about 3bn barrels. If these investments stay dead the world will avoid another 1.6tn tonnes of dangerous carbon emissions. Together the cancellation of these three projects alone amount to the equivalent of taking more than 14m cars off the road for the next 25 years.

There a simple correlation between future emissions and the price of oil needed to make that profitable. Such a graph has been compiled by Carbon Tracker, a UK-based non-profit organisation set up to educate institutional investors on the increasing financial risks of the fossil fuel sector.

Its message to investors is simple: the world must limit additional emissions to below 900 gigatons to avoid potentially catastrophic climate consequences – and 40% of this future carbon budget – about 360 gigatons – is projected to come from the oil sector. Anything more than that must stay in the ground – the so-called unburnable carbon.

And what’s the price of oil that could save to world? Anything below $75 a barrel of Brent crude means that companies cannot profitably extract more than 360 gigatons of the world’s remaining reserves – no messy policy solutions required.

Just last year the price of Brent crude was about $110 a barrel, a price that would gainfully produce about 500 gigatons of carbon emissions by 2050. Now it is less than $50, which would only produce 180 gigatons over the same period. If prices stay where they are, the world will avoid some 320bn tonnes of carbon emissions by 2050 in precluded production from uneconomic oil fields.

To put this in perspective, that is 25 times larger than reductions the Kyoto protocol was supposed to achieve if it had worked (it didn’t), and 180 gigatons below the oil emissions limit scientists say we need to avoid a world with more than two degrees of warming. Economic turmoil aside, the global commodities market just served up massive progress on an issue in desperate need of some good news.

Carbon Tracker recently revised its calculations to include the turmoil in the oil market, but the basic correlation is the same: lower fossil fuel prices devastate the economics of future extraction.

Seen through this lens, a key measure of our success in controlling carbon emissions should be keeping commodity prices of fossil fuels low. And while the main driver of the current slump in prices is the current glut of supply, it’s important to realise that almost every policy intervention to avert climate disaster is directly or indirectly aimed at lowering the price or profitability of fossil fuels such as oil and coal.

Efficiency and conservation incentives reduce demand, as do vehicle emission standards and investing in public transit. Carbon pricing means that fossil fuel companies can no longer use the atmosphere as a free dumping ground for CO2, so also lowering profitability.

But doesn’t cheap gas mean that people just use more of it? Not really. While there is a weak economic link between declining prices and increasing consumption, key producers like Saudi Arabia are in fact fretting that slowing growth in Asian markets and already peaked demand in developed countries will lead to a long-term decline in the world’s appetite for oil.

I dearly hope that world leaders can somehow negotiate transformative change. But perhaps the best they can do is nudge economic indicators like crude prices in the right direction and get out of the way. The unstoppable forces of the global marketplace will hopefully do the rest.

400+ investors with more than $24 trillion support Paris climate agreement

Repost from Ceres – Mobilizing Business Leadership for a Sustainable World

Leading Investors and Businesses Back A Strong Paris Climate Agreement

By Christopher N. Fox

The UN climate conference now underway in Paris represents a critical opportunity to limit the risks of climate change and accelerate the shift to clean energy.  That’s why Ceres and leading investors and businesses are in Paris making the economic case for a strong global climate agreement. Together, we are focused on the dual objectives of addressing climate risks by ratcheting down reliance on high carbon resources, on the one hand, while simultaneously seizing the Clean Trillion opportunity tied to clean energy investment and transition, on the other.

Record investor and business support

As the Paris negotiations officially have kicked off, over 400 investors with more than $24 trillion in assets released a statement [see column at right] calling for an ambitious global agreement on climate change.  That’s the largest-ever group of investors calling for strong government action on climate change.  Investors are publicizing their clean energy investments through the Global Investor Coalition on Climate Change’s Low-Carbon Investment Registry, and announcing other actions they are taking on climate change through the new Investor Platform for Climate Actions.

In addition, more than 1,600 companies have signed Ceres’ Climate Declaration; 147 companies have signed the White House Act on Climate Business Pledge; six major U.S. banks released a statement calling for a strong climate deal; and the CEOs of 14 major food companies have launched a high profile climate pledge.  And thousands of businesses worldwide are joining forces with the We Mean Business Coalition in support of climate policy action.

Tackling climate change is a multi-trillion dollar opportunity

Combating climate change requires rapid, large-scale shifting from fossil fuels to clean energy.  This transition to clean energy is a multi-trillion dollar opportunity.  To limit warming to below two degrees Celsius – a key goal of the Paris climate talks – the International Energy Agency estimates the world needs to invest an additional $40 trillion in clean energy by 2050.  That’s slightly more than an additional $1 trillion invested in clean energy – a “Clean Trillion” – per year for the next 35 years.

The Paris climate talks are catalyzing important momentum toward the Clean Trillion goal.  The national climate plans that almost every nation in the world has submitted to the UN can spur $13.5 trillion in investment in energy efficiency and low-carbon technologies between 2015 and 2030, according to a recent IEA analysis.

Much more action needed after Paris

A strong Paris climate agreement will accelerate the transition to clean energy, but much more action will be needed in the years ahead to limit warming to below two degrees Celsius.  In the months after Paris, the most important single step that the U.S. can take to lead on climate change is to implement the EPA Clean Power Plan, the first-ever nationwide limits on carbon pollution from electric power plants.  This US plan for boosting electric sector clean energy transition is a critically important step for the climate and the economy, as recognized by leading voices in the business community — more than 365 companies and investors announced their support for the plan in a July 2015 lettercoordinated by Ceres.

As aptly noted by Letitia Webster, senior director of global sustainability at VF Corporation, a North Carolina-based apparel company whose brands include The North Face, Timberland and Reef, “The Clean Power Plan will enable us to continue to invest in clean energy solutions and further advance our greenhouse gas reduction goals.”

And as Mars, Inc. Global Sustainability Director Kevin Rabinovitch points out, “It’s going to take action from all of us … For businesses like Mars, that means delivering on efficiency and renewable energy; for the EPA and state governors, that means developing and delivering against initiatives like the Clean Power Plan.”

Both VF Corporation and Mars are represented as part of the delegation of business and investor leaders that Ceres is bringing to the Paris climate talks to support strong climate policy action. By backing a strong Paris climate agreement and the EPA Clean Power Plan, leading investors and businesses are making a smart business decision.  They are supporting policies that will expand investment in the clean energy technologies that the world needs to stabilize the climate and promote a sustainable economy and world.

To learn more about Ceres plans for COP21 in Paris, and what actions leading investor and business leaders have been taking on the road through Paris click here.

Repost from Investor Platform for Climate Actions

Global Investor Statement on Climate Change - groupsGLOBAL INVESTOR STATEMENT ON CLIMATE CHANGE

This statement is signed by 404 investors representing more than US $24 trillion in assets.

We, the institutional investors that are signatories to this Statement, are acutely aware of the risks climate change presents to our investments. In addition, we recognise that significant capital will be needed to finance the transition to a low carbon economy and to enable society to adapt to the physical impacts of climate change.

We are particularly concerned that gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions. In turn, this could jeopardise the investments and retirement savings of millions of citizens.

There is a significant gap between the amount of capital that will be required to finance the transition to a low carbon and climate resilient economy and the amount currently being invested. For example, while current investments in clean energy alone are approximately $250 billion per year, the International Energy Agency has estimated that limiting the increase in global temperature to two degrees Celsius above preindustrial levels requires average additional investments in clean energy of at least $1 trillion per year between now and 2050.

This Statement sets out the contribution that we as investors can make to increasing low carbon and climate resilient investments. It offers practical proposals on how our contribution may be accelerated and increased through appropriate government action.

Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments. We believe that well designed and implemented policies would encourage us to invest significantly more in areas such as renewable energy, energy efficiency, sustainable land use and climate resilient development, thereby benefitting our clients and beneficiaries, and society as a whole.

HOW WE CAN CONTRIBUTE

As institutional investors and consistent with our fiduciary duty to our beneficiaries, we will:

Work with policy makers to support and inform their efforts to develop and implement policy measures that encourage capital deployment at scale to finance the transition to a low carbon economy and encourage investment in climate change adaptation.

Identify and evaluate low carbon investment opportunities that meet our investment criteria and consider investment vehicles that invest in low carbon assets subject to our risk and return objectives.

Develop our capacity to assess the risks and opportunities presented by climate change and climate policy to our investment portfolios, and integrate, where appropriate, this information into our investment decisions.

Work with the companies in which we invest to ensure that they are minimising and disclosing the risks and maximising the opportunities presented by climate change and climate policy.

Continue to report on the actions we have taken and the progress we have made in addressing climate risk and investing in areas such as renewable energy, energy efficiency and climate change adaptation.

SCALING UP INVESTMENT: THE NEED FOR POLICY ACTION

We call on governments to develop an ambitious global agreement on climate change by the end of 2015. This would give investors the confidence to support and accelerate the investments in low carbon technologies, in energy efficiency and in climate change adaptation.

Ultimately, in order to deliver real changes in investment flows, international policy commitments need to be implemented into national laws and regulations. These policies must provide appropriate incentives to invest, be of adequate duration to improve certainty to investors in long-term infrastructure investments and avoid retroactive impact on existing investments. We, therefore, call on governments to:

Provide stable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge.

Strengthen regulatory support for energy efficiency and renewable energy, where this is needed to facilitate deployment.

Support innovation in and deployment of low carbon technologies, including financing clean energy research and development.

Develop plans to phase out subsidies for fossil fuels.

Ensure that national adaptation strategies are structured to deliver investment.

Consider the effect of unintended constraints from financial regulations on investments in low carbon technologies and in climate resilience.


ABOUT UNEP FI – UNEP FI is a global partnership between UNEP and the financial sector. Over 200 institutions, including banks, insurers and fund managers, work with UNEP to understand the impacts of environmental and social considerations on financial performance. Through its Climate Change Advisory Group (CCAG), UNEP FI aims to understand the roles, potentials and needs of the finance sector in addressing climate change, and to advance the integration of climate change factors – both risks and opportunities – into financial decision-making. Visit www.unepfi.org.

ABOUT IIGCC – The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration on climate change for investors. IIGCC’s network includes over 90 members, with some of the largest pension funds and asset managers in Europe, representing €7.5trillion in assets. IIGCC’s mission is to provide investors a common voice to encourage public policies, investment practices and corporate behaviour which address long-term risks and opportunities associated with climate change. Visit www.iigcc.org.

ABOUT INCR – The Investor Network on Climate Risk (INCR) is a North Americafocused network of institutional investors dedicated to addressing the financial risks and investment opportunities posed by climate change and other sustainability challenges. INCR currently has more than 100 members representing over $13 trillion in assets. INCR is a project of Ceres, a nonprofit advocate for sustainability leadership that mobilises investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Visit www.ceres.org.

ABOUT IGCC – IGCC is a collaboration of 52 Australian and New Zealand institutional investors and advisors, managing approximately $1 trillion and focussing on the impact that climate change has on the financial value of investments. The IGCC aims to encourage government policies and investment practices that address the risks and opportunities of climate change, for the ultimate benefit of superannuants and unit holders. Visit www.igcc.org.au.

ABOUT AIGCC – The Asia Investor Group on Climate Change (AIGCC) is an initiative set up by the Association for Sustainable and Responsible Investment in Asia (ASrIA) to create awareness among Asia’s asset owners and financial institutions about the risks and opportunities associated with climate change and low carbon investing. AIGCC provides capacity for investors to share best practice and to collaborate on investment activity, credit analysis, risk management, engagement and policy. With a strong international profile and significant network, including pension, sovereign wealth funds insurance companies and fund managers, AIGCC represents the Asian voice in the evolving global discussions on climate change and the transition to a greener economy. Visit http://aigcc.asria.org/.

ABOUT PRI – The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors working together to put the six Principles for Responsible Investment into practice. Its goal is to understand the implications of Environmental, Social and Governance issues (ESG) for investors and support signatories to incorporate these issues into their investment decision making and ownership practices. In implementing the Principles, signatories contribute to the development of a more sustainable global financial system. Visit www.unpri.org.


ACKNOWLEDGMENTS
The sponsoring organisations thank CDP for its support of the statement. CDP is an international, not-for-profit organisation providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information (www.cdp.net).

THIS STATEMENT WAS LAUNCHED IN SEPTEMBER 2014.


SIGNATORIES

GlobalInvesorStatementClimateChange_Signatories2015-11-22Nov_P1
GlobalInvesorStatementClimateChange_Signatories2015-11-22Nov_P2
GlobalInvesorStatementClimateChange_Signatories2015-11-22Nov_P3

 

Paris Conference: Broad consensus on phasing out of fossil fuel subsidies

Repost from Government Offices of Sweden

Broad consensus on phasing out of fossil fuel subsidies

01 December 2015

Global fossil fuel subsidies totalled USD 548 billion in 2013. At the COP21 climate conference, which is under way in Paris, Prime Minister Stefan Löfven presented a communiqué to the Executive Secretary of the United Nations Framework Convention on Climate Change, Christiana Figueres. The communiqué outlines important messages on how the world can phase out fossil fuels. A large number of countries and organisations are backing the messages, which were produced by the Friends of Fossil Fuel Subsidy Reform group.

Photo: Hanna Björnfors

Sweden, alongside likeminded countries, advocates for the phasing out of subsidies to fossil energy through the Friends of Fossil Fuel Subsidy Reform group. The group’s aim is to promote such a phase-out globally. The communiqué that was presented at the climate conference calls on the international community to mitigate climate change by accelerating action to eliminate fossil fuel subsidies. The communiqué is a politically non-binding pledge on the importance of phasing out fossil fuel subsidies.

“It is impressive that so many countries and organisations are now coming together to phase out fossil fuel subsidies. This is a key issue that the international community must resolve to enable sustainable development,” said Mr Löfven.

Sweden has played an active role in the efforts to gather as many countries and organisations as possible behind the communiqué. Some 39 countries from around the world and 100 international organisations and companies now back the communiqué and its messages. At national level, Sweden is demonstrating its commitment and contributions through the Fossil-free Sweden initiative.

The communiqué was presented on 30 November at the COP21 Leaders Event on the first day of the conference in Paris. Mr Löfven was a moderator at the meeting, which was also attended by heads of state from Norway, New Zealand and the Netherlands, ministers from the Marshall Islands, Morocco and Peru, and representatives of the Organisation for Economic Cooperation and Development (OECD), the International Energy Agency (IEA) and the business sector.

Fact box: Friends of Fossil Fuel Subsidy Reform

Alongside some thirty other countries, Sweden is a member of the Friends of Fossil Fuel Subsidy Reform (FFFSR) group. The group was formed in 2010 to encourage G20 and APEC leaders to deliver on their commitment to phase out ineffective fossil fuel subsidies from 2009 onwards.

Fossil fuel subsidies totalled an estimated USD 548 billion in 2013, which is around five times higher than support to renewable energy. Various studies have shown that if subsidies are eliminated, global emissions would decrease significantly. Phasing out subsidies is an important and cost-effective measure and, moreover, the subsidies primarily benefit middle- and high-income earners.

The FFFSR countries jointly courted the G20 countries between 2011 and 2014 to push for fossil fuel subsidy reform in those countries. The group has also held seminars and workshops at UN climate conferences, the World Bank Spring Meeting and in connection with OECD meetings.

 

Energy-related CO2 emissions decreased in nearly every state from 2005 to 2013

Repost from the U.S. Energy Information Administration

Energy-related carbon dioxide emissions decreased in nearly every state from 2005 to 2013

November 23, 2015, Principal contributor: Perry Lindstrom
graph of per-capita energy-related carbon dioxide emissions by state, as explained in the article text
Source: U.S. Energy Information Administration, Energy-Related Carbon Dioxide Emissions at the State Level, 2000-13.   Note: Click to see information for all states.

The United States has a diverse energy landscape that is reflected in differences in state-level emissions profiles. Since 2005, energy-related carbon dioxide (CO2) emissions fell in 48 states (including the District of Columbia) and rose in 3 states. EIA’s latest analysis of state-level energy-related CO2 emissions includes data in both absolute and per capita terms, including details by fuel and by sector.

This analysis measures emissions released at the location where fossil fuels are consumed. Therefore, to the extent that fuels are used in one state to generate electricity that is consumed in another state, emissions are attributed to the former rather than the latter. An analysis attributing emissions to the consumption of electricity, rather than to the production of electricity, would yield different results.

map of changes in proved reserves by state/area, as explained in the article text
Source: U.S. Energy Information Administration, Energy-Related Carbon Dioxide Emissions at the State Level, 2000-13.   Note: Click to see information for all states.

The 10 states with the highest levels of energy-related CO2 emissions in 2013 accounted for half of the U.S. total. These 10 states also have large populations and account for slightly more than half (53%) of the nation’s total population. California was the second-highest emitter in absolute terms (353 million metric tons of carbon dioxide, or MMmt CO2), behind only Texas (641 MMmt CO2). But California was also the fourth-lowest emitter on a per capita basis, behind the District of Columbia, New York, and Vermont. Relatively small states such as Wyoming and North Dakota had much higher levels of per capita emissions in 2013, nearly seven times and five times the national average, respectively.

Energy-related CO2 emissions come from coal, petroleum, and natural gas consumed within a state to produce electricity (38% of U.S. total), to transport goods or people (33%), to operate industrial processes (18%), or to directly fuel equipment in residential and commercial buildings (10%). The consumption levels by fuel and by sector vary considerably by state. For example, coal consumption accounted for 78% of energy-related CO2 emissions in West Virginia in 2013, while coal only accounted for 1% of emissions in California.

Consumption of petroleum accounted for more than 90% of energy-related CO2 emissions in two states, Hawaii and Vermont, but for different reasons. In both states, emissions from the transportation sector accounted for more than 50% of energy-related emissions. In Vermont, the nonelectric (or direct) residential share of total emissions was 23%, mostly from petroleum-based fuels such as heating oil used to fuel furnaces and water heaters. Vermont’s electric power sector share of emissions from petroleum was only 0.2%, as very little of the state’s electricity in 2013 was generated from petroleum or any other fossil fuels. Hawaii, on the other hand, has very little direct use of petroleum for residential heating but much higher use of petroleum for power generation.

More information about each state’s energy-related CO2 emissions is available in EIA’s report, Energy-Related Carbon Dioxide Emissions at the State Level, 2000-13.

Principal contributor: Perry Lindstrom