A big week coming: meanwhile Anglicans divest

It’s shaping up to be a big week. On Friday in Stockholm (Saturday in NZ) the IPCC will release the final version (not the one that’s been leaked to and seen by all and sundry) of the Summary for Policy Makers of the Working Group One report of their Fifth Report (AR5 — official web site here). As you might expect, the usual suspects have been lining up to try and dominate the news media — to provide a carbon friendly “frame” through which to view the IPCC’s findings. Most of it has been singularly ineffective, as Graham Readfearn noted in the Guardian, but I’ll hold my fire until the final SPM is released. Watch this space…

Meanwhile, the Anglican Diocese of Wellington voted this weekend to join their colleagues in Auckland by divesting itself of any fossil fuel investments in its portfolio. The Auckland synod at the beginning of the month took the opportunity to listen to two presentations that I think it worth drawing attention to here. First, Jim Renwick from VUW (an IPCC lead author) lays out the basic science that underlies the case for action to reduce emissions:

…then economic commentator Rod Oram explains the “carbon bubble” in market valuations of fossil fuel energy stocks, and why it would make sense to avoid that risk:

Two compelling presentations, with an obvious conclusion that the members of the Anglican church were happy to accept. We should not be investing in companies whose value depends on the burning of excessive amounts of carbon.

McKibben: NZ needs to move away from oil and coal

Bill McKibben‘s on the New Zealand leg of his Do The Maths downunder tour, and I got the chance for a quick chat with him earlier today1. Bill lays out the essence of the carbon budget we have to live within if we’re to avoid roaring past 2ºC, explains the carbon finance bubble, discusses China’s approach to renewables, and why NZ should avoid exploiting its oil and coal reserves. See Bill in Dunedin tonight, and Wellington tomorrow.

  1. Rosie the truffle machine would like to apologise for her decision to whimper in the background. []

Time for NZ to Do The Maths – McKibben’s coming

Bill McKibben — that most thoughtful and interesting of climate campaigners — is bringing his very successful Do The Maths campaign to New Zealand next month, and will be speaking in Auckland, Wellington and Dunedin. Bill’s argument is straightforward:

The maths are simple: we can burn less than 565 more gigatons of carbon dioxide and stay below 2°C of warming — anything more than that risks catastrophe for life on earth. The problem? Fossil fuel companies have 2,795 gigatons in their reserves, five times the safe amount. And they’re planning to burn it all — unless we do the maths to change our future.

Talks are scheduled for:

  • Auckland – Tuesday, 11 June, Epsom Girls Grammar School Hall, 7-8.30pm
  • Dunedin – Wednesday, 12 June, venue tbc
  • Wellington – Thursday, 13 June, The Embassy Theatre, 7-8.30pm

I had the great pleasure of sharing the stage with Bill in Wanaka during his last NZ visit, and would urge HT readers to go along and listen to what he has to say. Details and tickets are available at maths.350.org/nz.

[Edited to add the trailer to the soon-to-be-released documentary of McKibben’s Do The Math tour of the US last year…]

Carbon budgets begin to bite: unburnable carbon not an asset, HSBC reports

The world’s big oil and gas companies could face cuts in market valuation of up to 60% if the world acts to cut carbon emissions, a report by bankers HSBC warned last week. Business Green summarises the report’s findings:

A new report from the banking giant finds that 17 per cent of Norwegian company Statoil’s reserves would become “unburnable” in a world where oil and gas use falls as countries seek to keep carbon concentrations in the atmosphere to 450 parts per million (ppm), the level the International Energy Agency (IEA) estimates is necessary to deliver a 50 per cent chance of limiting long-term temperature rises to 2°C.

HSBC estimates that as much as 6% of BP’s reserves could be at risk, 5% of Total’s, and 2% of Shell’s. But the biggest risk to oil company values could come from reduced demand for oil and gas leading to a fall in prices. Business Green notes:

…the potential value at risk for leading fossil fuel firms could rise to between 40 per cent and 60 per cent of current market capitalisation. BP’s market capitalisation currently stands at around £90bn, compared to Shell’s £147bn, Statoil’s £53bn and BG Group’s £39bn.

The HSBC report is the first acknowledgement by a mainstream financial institution that fossil fuel companies may be over valued in a world where steep cuts in carbon emissions are (one hopes) inevitable. The idea was first mooted in 2011 by the Carbon Tracker Initiative, whose Unburnable Carbon report estimated that as much as 80% of proven fossil fuel reserves would have to remain in the ground. That idea fuelled 350.org’s latest campaign, as Bill McKibben explained in an influential Rolling Stone article last year:

We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn. We’d have to keep 80 percent of those reserves locked away underground to avoid that fate. Before we knew those numbers, our fate had been likely. Now, barring some massive intervention, it seems certain.

Yes, this coal and gas and oil is still technically in the soil. But it’s already economically aboveground – it’s figured into share prices, companies are borrowing money against it, nations are basing their budgets on the presumed returns from their patrimony. It explains why the big fossil-fuel companies have fought so hard to prevent the regulation of carbon dioxide – those reserves are their primary asset, the holding that gives their companies their value.

Stockmarket prices are supposed to factor in — or take into account — all of the assets and risk a company faces, but to date there has been little sign that markets have seriously considered “unburnable carbon” as a liability. The HSBC report may be the first sign of a shift in financial markets, but I suspect it will take clear evidence of concerted global action to cut emissions before markets will run scared of carbon. However, when it happens, the change could be swift. There could be carbon carnage on the trading floors as financial markets ditch fossil fuels for renewables.

There’s a stark lesson there for government and business leadership in Australia and New Zealand — and everywhere else where public money is subsidising the production and use of fossil fuels. Today’s investments in extracting fossil carbon only make sense if you are blind to the climate consequences. Those are now inevitable, and so oil and gas reserves — and especially coal fields — will inevitably become stranded assets, a millstone round the neck of the national and global economy.

A Celtic New Year: lilt or lament?

Mr Morrison invites us all to come on home, and have a Celtic new year — which is always a good thing, as I can testify, being a Celt of many generations standing. While I wait for the ham to subside and the cabernet merlot to wash out of the system1, I’ll point you to the thoughts of George Monbiot, who is less than impressed with the old year:

It was the year of living dangerously. In 2012 governments turned their backs on the living planet, demonstrating that no chronic problem, however grave, will take priority over an immediate concern, however trivial. I believe there has been no worse year for the natural world in the past half-century.

Nor do the efforts of the British government bring him much cheer:

Continue reading “A Celtic New Year: lilt or lament?”

  1. Tomorrow, of course. []