Archive for the ‘Economics’ Category
I know this is very late but, it is such significant moment, I feel I must comment on the recent decision of Lancashire County Council to refuse to allow fracking to proceed in their county.
Never mind that their decision was primarily the result of NIMBYism… spurious worries about earth tremors; slightly-less spurious worries about groundwater contamination; and probably-valid worries about methane escaping into overlying aquifers (rather than being sucked out of the ground)… this was a great result for anti-fracking campaigners all around the world.
This decision sets an important precedent that I hope will not be overturned by the inevitable appeal by Cuadrilla; and/or over-ruled by the same national government that has promoted the cause of NIMBYism when it comes to opposing onshore wind turbines and solar farms.
Our supposedly “greenest government ever” could and should therefore be decried as hypocritical if they try and go against the wishes of local people in Lancashire.
Long-standing readers of this blog, written as it is by someone with a geological and hydrogeological background, may recall some of my previous posts on the subject of fracking. However, in a nutshell (or perhaps I should say “in a drill casing”), my opposition to fracking has hardened over time. Initially, my opposition was based on the same logical grounds as that against drilling for oil in the Arctic: Having established that burning fossil fuels is changing our climate, humans should now be trying to stop burning them as soon as possible. Now, however, I am also against it because it has been proven to give rise to methane contamination of groundwater; and because as little as 3% of the gas will actually be recoverable.
Given that China has now announced that it intends to make its carbon emissions peak within 15 years, can the G7 now be shamed into doing the same? We can but hope.
However, I digress from fracking (and Lancashire): In May this year, I was delighted by the appointment of Amber Rudd, as the new Climate Change Minister. This was partly because she is a woman. However, I was mainly pleased because, unlike so many totally ill-qualified, ‘sceptical’ non-experts — with Degrees in subjects like economics (Lord Lawson), Sociology (Benny Peiser), English (James Delingpole) or Classics (Christopher Monckton) — Amber Rudd accepts that the IPCC is not part of a global conspiracy to foist environmental alarmism upon a credulous world.
Amber Rudd, in common with the vast majority of relevant experts with a history of producing peer-reviewed scientific research, has concluded that the growing disruption to the Earth’s climate is being predominantly caused by the burning of fossil fuels in the last 200 years.
The only people now disputing this (as-near-as-science-ever-gets-to) certain fact are those with a vested interest in the perpetuation of the oil industry… and a handful of credulous (or wilfully blind) economists and journalists who perpetuate the myth that the science is uncertain.
Sadly, whether deliberately or otherwise, these very same people have, just as they did for the tobacco industry, succeeded in delaying for decades the effective regulation of an environmentally-damaging product.
That being the case, investment in fossil fuel companies should not only be seen as financially unwise; it should be seen as corporately irresponsible and socially unacceptable. We can but hope.
However, in the UK at least, there is of course the problem of the Energy Gap: The UK is being forced to close down it’s ‘dirty’ (i.e. high carbon intensity) coal-fired power stations. Unfortunately, the mix of low-carbon and renewable sources (i.e. wind, solar, tidal, and nuclear) — which even the fossil fuel executives of 50 years ago thought would have become dominant in the power-generation sector by now — is nowhere near to being in a position to replace coal. This leaves the UK importing huge amounts of liquefied natural gas (LNG).
As a quick aside, I would like to encourage all non-scientific types not to be intimidated by jargon. Take “carbon intensity” as an example. This is merely a reference to the number of carbon atoms in the product being burnt. As such, mining tar sands is ‘highest’ and burning methane is ‘lowest’.
Sadly, however, none of this changes the fact that burning any fossilised carbon increases the total amount of CO2 circulating within the biosphere, which is warming the planet as a result of the basic Laws of Physics. To make matters even worse extra atmospheric CO2 is slowly reducing the pH of seawater, which is making it harder for shellfish of all kinds to live and grow. This is a much more serious problem because they are the only means Nature has for removing excess carbon from the biosphere (by the processes that created the fossil fuels in the first place)…
Getting back to LNG: Clearly, it would be much better if the UK did not have to do this. However, if we accept the science, we do not have the luxury of taking decades to phase-out fossil fuel use.
China is right and the G7 should follow their lead.
As many economists have now pointed out, humanity needs to treat climate change as an existential threat — far more potent than any Earthbound terrorist group — that requires mobilisation of the military-industrial complex to minimise and/or adapt to it. Sadly, far too much of the military-industrial complex is still fighting a rear-guard action to perpetuate its own existence — rather than on trying to safeguard the habitability of planet Earth for future generations.
World-famous film director, James Cameron, might well have cited the ill-fated MS Titanic as an analogy for humanity today. However, I am sure we would all rather that money would be invested in minimising climate change; rather than on constructing Elysium.
We can but hope.
Despite the scientific and economic consensus – that 80% of known fossil fuels must be left in the ground if humanity is to avoid allowing climate change to become unstoppable and irreversible (IEA, IMF, IPCC, OECD, etc.) – the best the G7 can do is propose that we stop burning fossil fuels by the end of the century…
If the BBC report of the second day of this week’s G7 Summit in Germany is to be believed, this may be due to more tangible fears of a Greek exit from the Euro-zone and/or emerging threats like Islamic State.
However, I suspect that our global politicians are simply unwilling or unable to face the reality that such a proposal – that humanity can take 85 years to wean itself off its hydrocarbon addiction – is not a strategy that a significant proportion of species on Earth are likely to survive…
But please don’t take my word for it, just Google “80% of species face extinction by climate change” and take a look at the results you get, like this one: One in six species faces extinction as a result of climate change (i.e. even 17% would be significant).
The above article, on The Conservation website, cites research recently published by the author, Mark Urban, in the Science journal; the abstract of which reads as follows:
Current predictions of extinction risks from climate change vary widely depending on the specific assumptions and geographic and taxonomic focus of each study. I synthesized published studies in order to estimate a global mean extinction rate and determine which factors contribute the greatest uncertainty to climate change–induced extinction risks. Results suggest that extinction risks will accelerate with future global temperatures, threatening up to one in six species under current policies. Extinction risks were highest in South America, Australia, and New Zealand, and risks did not vary by taxonomic group. Realistic assumptions about extinction debt and dispersal capacity substantially increased extinction risks. We urgently need to adopt strategies that limit further climate change if we are to avoid an acceleration of global extinctions.
Urban, M.C. (2015), ‘Accelerating extinction risk from climate change’, Science 348 (6234) pp.571-573
17% may be a lot less than 80% but, as this most recent synthesis of available research states, previous estimates of the risk “vary widely” and – given the complexity of ecological systems upon which we rely for food production (etc) – I think most biologists would agree that 17% is still very significant.
The scientific and economic consensus is that global CO2 emissions must peak within a decade in order to avoid a runaway greenhouse effect taking hold. Is failing to do this really a risk that humanity should be taking?
As the BBC has pointed out, the G7’s stance may well signal (to investors) that the end of fossil fuel era is approaching. However, whereas the G7’s mid-century target is for emissions to be cut 40-70% globally compared with 2010, the scientific and economic consensus makes the G7 appear reckless and/or complacent in suggesting that we can afford to burn fossil fuels at all past 2050.
Ultimately, I think the reason for humanity’s collective failure to address the urgency of the need for action on climate change comes down to psychology. After all, being in denial is cheaper than being in therapy.
Also worthy of note is this attempt by The Carbon Brief to be positive about the G7’s communique:
Australian Prime Minister Tony Abbott has announced that Australian taxpayers are now going to finance attempts to disprove the need to decarbonise our global power generation systems as fast as possible (see yesterday’s article on the Guardian website). However, Lomborg’s position is very confused (and confusing):
Lomborg: “Natural science has undeniably shown us that global warming is manmade and real. But just as undeniable is the economic science which makes it clear that a narrow focus on reducing carbon emissions could leave future generations with major costs, without major cuts to temperatures.”
Reality: Natural science has undeniably shown us that global warming is real and predominantly manmade. Just as undeniable is the economic assessment that any further delay in reducing carbon emissions will make it harder and more expensive to mitigate and/or adapt to increases in global temperatures.
My suggestion to both Lomborg and Abbott is that they should take time out to read the assessment of the formerly-skeptical Yale Professor of Economics, William D. Nordhaus:
‘Why the Global Warming Skeptics Are Wrong’ by William D. Nordhaus (2012).
Writing in response to an article in the Wall Street Journal signed by sixteen fossil fuel-funded ‘Merchants of doubt’ (including Richard Lindzen), Nordhaus began thus:
I have identified six key issues that are raised in the article, and I provide commentary about their substance and accuracy. They are:
— Is the planet in fact warming?
— Are human influences an important contributor to warming?
— Is carbon dioxide a pollutant?
— Are we seeing a regime of fear for skeptical climate scientists?
— Are the views of mainstream climate scientists driven primarily by the desire for financial gain?
— Is it true that more carbon dioxide and additional warming will be beneficial?
As I will indicate below, on each of these questions, the sixteen scientists provide incorrect or misleading answers. At a time when we need to clarify public confusions about the science and economics of climate change, they have muddied the waters. I will describe their mistakes and explain the findings of current climate science and economics…
Therefore, if anyone is inclined to think Bjorn Lomborg’s position on climate science has any credibility, I would suggest that they need to read (or if necessary re-read) what Nordhaus wrote over three years ago.
I know I have been a bit slow but, I have now signed the Guardian’s new climate change petition.
Indeed, I was – and am – very pleased to see editor-in-chief Alan Rusbridger leading their campaign to phase-out institutional investment in the fossil fuel industry over the next five years, which includes an online petition, at:
Alan begins by pointing out that:
The world has much more coal, oil and gas in the ground than it can safely burn. That much is physics… Anyone studying the question with an open mind will almost certainly come to a similar conclusion: if we and our children are to have a reasonable chance of living stable and secure lives 30 or so years from now, according to one recent study 80% of the known coal reserves will have to stay underground, along with half the gas and a third of the oil reserves…
He then goes on to explain why divestment campaigns are working based on two arguments; one moral and the other financial.
The basis of the moral argument for divestment is summarised as follows:
The moral crusaders… see divestment from fossil fuels in much the same light as earlier campaigners saw the push to pull money out of tobacco, arms, apartheid South Africa – or even slavery. Most fossil fuel companies, they argue, have little concern for future generations. Of course, the companies are run by sentient men and women with children and grandchildren of their own. But the market pressures and [their duty to their shareholders] compel… [directors to pursue…] business as usual, no matter how incredible it may seem that they will be allowed to dig up all the climate-warming assets they own…
As such, there is a moral imperative to demand an end to the enormous subsidies that enable fossil fuel companies to pursue such an insanely short-sighted and ultimately self-destructive business strategy.
The pragmatic basis of the financial argument for divestment is summarised as follows:
If… the companies cannot, for the sake of the human race, be allowed to extract a great many of the assets they own, then many of those assets will in time become valueless. [Therefore, people…] managing endowments, pension funds and investment portfolios… will want to get their money out of these companies before the bubble bursts…
However, Alan makes it clear that:
The intention is not to bankrupt the companies, nor to promote overnight withdrawal from fossil fuels – that would not be possible or desirable… Divestment serves to delegitimise the business models of companies that are using investors’ money to search for yet more coal, oil and gas that can’t safely be burned. It is a small but crucial step in the economic transition away from a global economy run on fossil fuels.
Finally Alan explains why the Guardian‘s campaign is focussed on two organisations:
The Wellcome Trust handles a portfolio of more than £18bn and invests around £700m a year in science, the humanities, social science education and medical research. The Bill and Melinda Gates Foundation has an endowment of $43.5bn. Last year it gave away $3.9bn in grants towards health and sustainable development… Because both foundations are a) so progressive in their aims and actions and b) have human health and science at the heart of everything they do, we hope they, of all institutions, will see the force of the call for them to move their money out of a sector whose actions, if unchecked, could cause the most devastating harm to the health of billions [see footnote]… We understand that fund managers do not like to make sudden changes to their portfolios. So we ask that the Gates Foundation and Wellcome Trust commit now to divesting from the top 200 fossil fuel companies within five years… [and] immediately freeze any new investment in the same companies.
If you have not done so already, I would encourage all to read the full article and sign the petition at:
Footnote: See a landmark report by the Lancet and University College London, which concluded in 2009: “Climate change is the biggest global health threat of the 21st century.”
In my original email to LEGO (via the Greenpeace website), I tried to be as brief as I could. Sadly, all I got was a generic reply that did not address the issues I was raising. Here is the correspondence to-date (any further responses from Lego will be appended as comments by me):
From: Martin Lack
Sent: 04 July 2014 19:48
Subject: Invest in the future not the past – stop sponsoring Shell
Fossil fuels are a 19th century technology and a finite resource. A post-carbon era is inevitable, the only question that remains is whether 10 billion humans will be able to share in it.
I’m really disappointed to learn that you have agreed to help Shell clean up its image, while it helps to endanger the environmental biodiversity of the Arctic.
You claim that it is your ambition to protect children’s right to live in a healthy environment, both now and in the future. If that is true, please cut your ties with Shell now.
On 17 July 2014 10:08, CustomerResponseTeam@LEGO.com <CustomerResponseTeam@lego.com> wrote:
Dear Martin Lack,
Thanks for getting in touch with us.
I’m sorry to hear you feel so strongly about our co-promotion with Shell. We really appreciate you taking the time to write and share your concern with us, and I’ve passed your thoughts and opinions to our promotions team.
We’re determined to help make the world that children will inherit a better place. Our unique contribution is to inspire and develop children through creative play. By entering a co-promotion like the one with Shell, we can put LEGO® bricks into the hands of even more children around the world. This allows more children to develop their imagination and creative skills through building and creating models with LEGO bricks.
The Greenpeace campaign focuses on how Shell operates in one specific part of the world. We expect that Shell lives up to their responsibilities wherever they operate and that they take appropriate action to any potential claims should this not be the case. We’re sad to see the LEGO brand used as a tool in any dispute. We believe this is a matter where Greenpeace and Shell must work out their differences between themselves.
For more information, you’re welcome to read our CEO Jørgen Vig Knudstorp’s comment on this Greenpeace campaign. There’s also more information about our responsibility agenda in this area of LEGO.com. More information on the environmental targets that we have set for ourselves can be found here.
Please let us know if you need anything else.
Thank you for taking the time to personalise your response to me; and for explaining LEGO’s thinking in working with Shell. I understand and accept that, since Lego is itself a product of the petrochemical industry, such a “co-promotion” makes good business sense. However, the Arctic is not just a “specific part of the world” in which Shell is operating. In order to preserve a habitable planet for future generations, the Arctic is somewhere that Shell should not be operating! Even if it were good, therefore, this makes Shell’s operational safety record (etc) irrelevant.
The only reason it is now possible to operate in the Arctic is because the ice is melting; and most of the ice is melting because of the exponential growth of fossil fuel use since the Industrial Revolution. Humans may well use fossil fuels to make all sorts of things (including Lego) but this does not make it right for us all to disregard the long-term consequences of continuing to pump geospheric carbon (i.e. that derived from fossil fuels) – in the form of CO2 – into the biosphere (i.e. the atmosphere and the oceans). In combination with deforestation and the exponential growth of livestock farming, global warming and ocean acidification were therefore an inevitable result of the exponential growth of the human population on this planet since the Industrial Revolution. However, now we know we are in a hole, is it not time we stopped digging? See my blog post regarding the Rio+20 Summit: ‘When in hole keep digging?’ (21 June 2012).
If LEGO truly wants to preserve a habitable environment and planet, it should place conditions upon its support for Shell. Given that the vast majority of relevant scientists agree that there are now 5 times more fossil fuels left on this planet than it would ever be safe for us to burn – something the IEA, IMF, OECD and Pentagon all acknowledge – LEGO needs to encourage Shell to find alternative means to meet (or reduce) global demand for fossil fuels. As such, although “turkeys will never vote for Christmas”, the petrochemical industry needs to invest in finding non-fossil alternatives for its current products. Such things definitely exist (e.g. biosythetic fuels and energy from waste products). What is lacking is the corporate will or political incentive to pursue them. Things that are worth doing are rarely the easy option. Shell’s exploration in the Arctic is both the wrong option and the lazy option; one that is collectively endangering the future habitability of this planet.
Therefore, I hope I may look forward to LEGO placing conditions upon its future support for Shell, which needs to adopt a long-term business strategy that does not contradict the science and economics underlying the call for humans to leave the vast majority of fossil fuels in the ground. For more information, please see this recent blog post: ‘Geoscientists get all ethical about climate change’ (2 May 2014).
Yours very sincerely,
But Greenpeace UK will just keep re-posting it… Here is the latest email from their Head of Arctic Campaigns, Ben Ayliffe:
I think we might have offended someone. This morning we were shocked to learn that our viral video calling on LEGO to break its lucrative partnership with oil giant Shell has been REMOVED from YouTube!
More than 3 million people have viewed this video in less than three days. People everywhere are sharing it with friends and loved ones, shocked to learn that this dearly-loved children’s toy brand is helping Shell clean up its image. Now our important message is being attacked, and it’s time to ramp our efforts and fight back.Our ad might have offended the likes of LEGO, Shell, and its corporate pals. But this is nothing compared to what Shell wants to do to our beautiful Arctic. Despite the real risk of a terrible and unstoppable oil spill, it continues to forge ahead to plunder every last drop of oil it can from this pristine environment.
The only reason Shell can get away with it is by forming public partnerships with the brands we all love. And we’re sorry to say this includes LEGO. Their deal involves everything from incentivising fuel purchases with free Lego kits, to plastering the Shell logo on the side of millions of children’s toys.
If Shell had its way, it would drill for oil in every corner of the planet. So it’s up to people like you and me to make sure that doesn’t happen. Not now, not ever. Ask Lego to stop its partnership with Shell today.
In the past we’ve helped delay Shell’s plans in the Arctic and opened up the public’s eyes to their dangerous plans. Now Shell is desperately trying to rebuild its reputation by partnering with beloved brands like LEGO. But LEGO doesn’t have to play along.
Please watch this video and send your message to LEGO right away. Let’s move one step closer to kicking Shell out of the Arctic.
Thanks for getting involved.
The Adaptation Sub-Committee of the Committee on Climate Change has today published its 2014 progress report. The report considers preparedness to climate change in England related to major infrastructure, business, public health and emergency planning. It also provides an update to the ASC’s previous analysis of flood risk management.
This report is the last in a series that will feed in to the ASC’s first statutory report to Parliament on the National Adaptation Programme in 2015.
A copy of the report can be found on our website at: www.theccc.org.uk/wp-content/uploads/2014/07/Final_ASC-2014_web-version.pdf
The associated news story is available at: www.theccc.org.uk