Food, Fossil Fuels and Filthy Finance

droughtIt is depressingly apparent that powerful forces in the global economy are set to carry on with the exploration for and use of fossil fuels as a primary source of energy for decades to come. Oxfam has produced a report identifying the confluence of fossil fuel companies, governments and investors which givers momentum to the disastrous course along which we are being impelled.

Food, Fossil Fuels and Filthy Finance pulls no punches. It points to the evidence from the Tyndall Centre that, in the absence of an unprecedented change in the global use of fossil fuels, we are heading for a global temperature rise of 4 to 6 degrees by century’s end.

Warming at this rate would leave hundreds of millions of the world’s poorest people at risk of severe hunger and drought by 2060. Even 2 degrees is going to have widespread human impacts and cause serious setbacks to development. The ‘hunger costs’ of fossil fuels are set to be the most savage impacts of climate change for millions globally. Farmers in many African countries are likely to see decreases in yield decade by decade, in spite of adaptation measures. The report details much more by way of cascading adverse impacts on populations least equipped to cope with them. It also points to severe economic and business risks in store for the developed countries as climate change begins to bite in their regions.

The need to turn away from fossil fuels is obvious, and there are signs that some governments may be waking up to this reality. However such steps as are being taken are far from adequate and some large historic emitters including Canada, Russia, Japan and Australia are actually reneging on existing commitments and embracing the dirtiest and riskiest of fossil fuels, from coal to tar sands and fracking.

At this point the report produces startling financial figures. In the absence of robust climate legislation, finance continues to flow unabated into the fossil fuel industry. In 2012 alone, fossil fuel companies spent $674bn on exploration and development projects. At the current rate of capital expenditure, the next decade will see over $6 trillion allocated to developing the fossil fuel industry.

This private finance is facilitated by public finance, incentives and tax breaks at an extraordinary level. The report estimates $1.9 trillion of subsidies assist the fossil fuel sector globally every year, including the costs of paying for its widespread damage.

Fossil fuel interests spend millions of dollars annually lobbying to stave off ambitious climate regulation. In 2013, fossil fuel industries spent an estimated $213m lobbying US and EU decision makers.

‘Toxic triangle’ is the term the report uses to describe the combination of political inertia, financial short-termism and vested fossil fuel interests which blocks the needed transition away from fossil fuel energy.

“The lack of necessary government ambition to shift away from fossil fuels results in continued investment by the global financial sector based on an assumption that fossil fuels are here to stay – buoyed by the rhetoric of the fossil fuel industry itself.”

All this despite the fact that a low-carbon future is both desirable and possible globally. It is governments who could tip the balance in favour of this future, and the report goes on to urge them to do so, with a series of rational and well-recognised recommendations. The report also addresses how fossil fuel companies could plan to redirect and diversify their operations and how investors could shift their investments to low-carbon development.

There is bite in the comment of Oxfam’s executive director in releasing the report:

“This is all about big profits for the few with little care for the rest of us – particularly the world’s poorest people who are already being made hungry by climate change.”

It’s a justifiable judgment, and one which the members of the toxic triangle ought to be required to face. I found myself often thinking of our New Zealand government when reading the report. We are actively and unreservedly encouraging companies to come and search for oil and gas. Statoil, the giant company soon to begin surveying the waters off Northland, has commented on how attractive the government has made it for them to come here. It sounded like an offer too good to ignore.

We know what the consequences of continued fossil fuel burning will be for some of our Pacific neighbours facing disastrous sea level rise. But there is no hint of acknowledgment of such consequences in the whole-hearted enthusiasm with which the Government pursues the possibility of major wealth in yet undiscovered oil and gas reserves, to say nothing of coal deposits yet to be mined. For that matter there is no acknowledgment of the threats to our own population. The dereliction is wide ranging.

An Oxfam report is hardly likely to attract even cursory attention from such governments as ours, however much it will be welcomed by those who already see their future gravely threatened by rising greenhouse gas emissions. But it matters that the truth continues to be told and who better to tell it than an NGO which works in close proximity to the populations first and most seriously affected. I admire their perseverance.

39 thoughts on “Food, Fossil Fuels and Filthy Finance”

    1. I guess you need to query your perspective Andy!
      Compared to the vast majority of the 7+ Billion people on the planet the number of those who profit from FF shares in their pension funds would be aptly described as “few”.
      Conversely the number of those who will be very adversely affected by a 6 Deg warmer world includes all people alive today plus all generations coming thereafter for a very long time to come. Compared to this number, those who benefit from the FF shares today are not only few, they are negligible!

      1. Yes i agree that 180 million people in the USA alone is relatively few compared with the 7 billion people on the planet

        What do the rest of them have their pension funds invested in? I guess most of them don’t have pension funds, and need to live subsistence lives huddled around dung burning stoves cooking up goat stew.

        Thanks to organizations like Oxfam and wwf, these people will remain living in these squalid conditions and will be denied the wealth that the west enjoys

        1. “Thanks to organizations like Oxfam and wwf, these people will remain living in these squalid conditions and will be denied the wealth that the west enjoys”

          This is incorrect. It assumes that only fossil fuels can lift people out of poverty, and that there is no environmental cost to sustained fossil fuel use. Both are open to considerable debate, and are unlikely to be true.

          Humanity is clever, we can find a way of generating electricity from renewable energy, or modern and safe nuclear, if we really want, and if we stop being in denial about the whole thing.

          1. Speaking of denial, I’d like to know how Oxfam can justify this statement in their report.

            we are heading for a global temperature rise of 4 to 6 degrees by century’s end.

            What RCP and climate sensitivities are assumed for this to be true?

            1. A quote from the report Andy (you should try reading it):

              “…research from the Tyndall Centre commissioned by Oxfam
              shows that, in the absence of an unprecedented change in the global use of fossil fuels, the world is on track for a 4–6ºC temperature rise by the end of the 21st century, which is an even higher temperature rise than the worst-case scenario outlined by the IPCC.

              “This is because current emissions are tracking at or slightly above the IPCC worst-case scenario. Indeed some studies point to emissions exceeding those projected in the IPCC worst-case scenarios by 2–4 times by 2100; ”

              The footnotes carry this additional information:

              “Avoiding dangerous climate change: choosing the
              science of the possible over the politics of the impossible‟. A report commissioned by Oxfam and undertaken by Tyndall Centre researchers.

              Much of the analysis relies on research within: K. Anderson and A. Bows (2011) “Beyond dangerous climate change: emission pathways for a new world‟, Philosophical
              Transactions of the Royal Society A, 369, 20–44, DOI:10.1098/rsta.2010.0290”

            2. Thanks for the references Bryan
              However, I still can’t see where this 4-6 degrees figure comes from. It isn’t in the Anderson/Bows paper as far as I can see

            3. Thanks for the comments AndyS, but you have not falsified anything in the Tyndall centre Research. You provide no commentary on their methodology or equations, that sort of thing.

            4. Andy, the list of references of the Oxfam report lists 162 papers upon which Qxfam bases its findings.

              One of them, the Anderson/Bows says:

              There is now little to no chance of maintaining the rise in global mean surface temperature at below 2°C, despite repeated high-level statements to the contrary. Moreover, the impacts associated with 2°C have been revised upwards (e.g. [20,21]), sufficiently so that 2°C now more appropriately represents the threshold between dangerous and extremely dangerous climate change.

              It would suggest that what might have been thought of as an acceptable risk (2°C warming) should really be considered bordering on the extremely dangerous side.
              We don’t even need to wonder what will become of us at 4-6 degrees warming as even half of that seems to bear totally unacceptable risks.

              I suggest you read the rest of the 162 references in the Oxfam report. If you the still feel you want to debate whether we are on track to a 4-6 degree warming that you then provide evidence to the contrary.

            5. Thanks for your helpful advise Thomas
              I will,read the 162 references as you suggested over he next few years.

              Perhaps we can reconvene in say 2035 and report back in our findings?

              In the meantime, catastrophic shrinkage of chamois (alpine goats) due to climate change is making the likelihood of us all actually turning into miniature poodles a very strong possibly.
              I have 183 papers that support this theory that you might be interested in.

            6. AndyS, you dismiss the Tyndall report. A report that claims there could be quite large temperature increases and sets out how they concluded this. I’m still waiting for some compelling reason why you dismiss the report, but you give nothing.

              Saying you cant find anything in the report, or changing the subject to the size of goats doesn’t really work for me. I was hoping for you to highlight something specific in the report, and some hard evidence on why you disagree, together with proof of your sources.

            7. This is a good question. Figure 10 from the SPM of IPCC WGI suggests you need an acceleration of emissions coupled with moderate or high sensitivities to get to more than 4C by century’s end. RCP8.5 does not look like BAU to me (though it might to the eternally pessimistic Kevin Anderson). And I think the combination of RCP8.5, high sensitivity and large damages functions makes no coherent sense: if the world were cooking and people were suffering in huge numbers, then something very strange must be going on if emissions/decade were to increase to 3 or 4 times what we are experiencing today (for several decades). It’s possible, but only if people (esp. in large developing countries) act perversely over a sustained period, in spite of the suffering of their fellow citizens.

              So while RCP 8.5 tells you something interesting about the climate response, it’s not very compelling as a BAU story.

            8. David do you think we will be able to stop the “train” before we cross 2 Deg and if so, on what evidence?

              I sure hope we can, but in absence of a clear international climate policy response and with growing emissions, this goal would seem almost impossible to reach.

            9. Personally I doubt we’ll stay below 2C. But that doesn’t mean we’ll get T>4C. AS I see it, the area that is most obviously in play is the region between about 2C and about 3 and a bit C.

              [I’ve never understood the idea that if you miss 2C you get 4C, as some seem to allege. It’s a continuous variable problem, not a discrete variable problem. it’s not like junctions on a motorway.]

            10. If the world were cooking and people were suffering in huge numbers, then something very strange must be going on if emissions/decade were to increase to 3 or 4 times what we are experiencing today

              Not so strange, Dave. Surely GHG emissions from warming oceans, soils, forests, tundra, and shallow Siberian seas can lead to this?

              Anthropogenic warming is a likely trigger for Earth systems to change from GHG sinks to sources, as seen already in northern regions and the Amazon Basin.

        2. Of the 180 million people int the USA andy, just how many do you think would be able to afford to contribute to a pension fund?
          Walmart for instance hires most of its staff on a part time basis for 29 or less hours a week – thereby not having to contribute to their pension fund. This is a now common employment practice across many industries and work places. The days of employer funded pension schemes are long gone, and with a minimal wage of just over $8 US an hour, just how many will have the luxury of paying into a pension scheme?

    2. “Approx. 50% of US pension funds are invested in fossil fuel assets, so the claim that it is “profits for the few” is clearly incorrect”

      The only people that seem to profit from them are the fund managers. Judging by the lacklustre returns of my own supposedly award winning fund. Might as well put the money in the bank.

  1. The (current) NZ Government will remain in deep denial until significant chunks of Dunedin, Christchurch, Wellington/Hutt and Auckland (etc) are regularly underwater. It may be sooner if the ENSO swings to El Nino and the weather becomes utterly chaotic but I suspect their heads are buried too deep in the sand for them to notice.

    1. Very likely Kiwiano. This reminds me of something I once read. The Thames River used to be massively polluted in the 19th century. The smell was horrific, but nobody did anything and government was reluctant to spend money or interfere in the issue.

      One day it was very hot a a strong breeze blew the stench right into the houses of parliament. The government immediately decided it was time to clean up the Thames, and set about doing just that. I cant remember where I read this, but as far as I know it is a true account.

      1. Yup, it was called ‘The Great Stink’ and the investment in sewers, pumps, holding lagoons and the massive embankments on both sides of the Thames was astronomical. It did however have impressive economic benefits for London in addition to the mitigation of the man made problem (the new fangled flushing away with water replacing the carting away of nightsoil).

      2. There is a very good read on this, and on Joseph Bazelgette the engineer who was instrumental in solving the problem. Quite an engineering feat. The pump I gather is still operational. Coincidentally there was concern of a Cholera epidemic beginning in the 1840’s – thought to be caused by miasma, but actually the bad water which was tainted by the septic source. The cleansing of the Thames and the eradication of the stench, also had the unforeseen but highly important befit of eradicating the Cholera epidemic from London as well.

        “The Great Stink of London: Sir Joseph Bazalgette and the Cleansing of the Victorian Capital” – Stephen Halliday, Stroud, Gloucestershire: Sutton Pub., c1999 ISBN 0-7509-1975-2

  2. So, do we have to wait until Shonky Jonkey’s Hawaiian condo is washed away by a superstorm, before his sclerotic government deigns to notice that AGW is a real and present danger?

    By which stage, it will be too late to do much about it.

  3. Forbes has an interesting article about the rise of energy use across the world
    The use of coal appears to be a hockey stick, other sources are increasing at a lesser rate.

    So in that respect, the Oxfam report might be correct that the emissions scenario is worse than the IPCC worst case. However, the unknowns are climate sensitivity and future technology shifts (which may be driven by cost, but currently FF costs are dropping dramatically. Brent crude at around $85 a barrel. It was $160 a barrel before the GFC)

    It’s worth noting that a lot of oil and gas projects are at break even at around $80 a barrel, so projects like deep sea NZ are probably uneconomic at current oil prices. I am presuming this because UK North Sea projects are being put on hold because of the low oil price

    1. Climate sensitivity is not an unknown. The current weight of evidence puts climate sensitivity as most likely in the middle of the range. While that is not a certainty it is not an “unknown” either.

      There is no compelling evidence that climate sensitivity is low. The studies indicating it could be low have been heavily criticised, and rely on short term trends.

    2. … and further Andy, your cited lowering of FF cost of recent is certainly not a reason to celebrate as it will obviously increase consumption, lowering prices does just that. And it will decrease the economic rationale for investments into alternatives, and that is certainly part of the strategy of the FF industry.

      1. I wasn’t “celebrating” the lowering of FF. It is causing those in the business of extraction some concerns. For example, the shale gas industry is though to be break even at around $80 a barrel of Brent Crude as a benchmark, which makes many shale gas projects marginal right now.

        I also dispute that decreasing FF costs will increase consumption, If I pay 20c a litre less at the pump, it doesn’t make me want to drive further or buy more “stuff”. It might give a little more towards saving for retirement and other savings, for example

        1. AndyS. Who cares if fracking becomes uneconomic? Who’s side are you on, the fossil l fuel industry, and its worries or combating climate change?

          I doubt fossil fuel prices will remain low for long anyway. It probably just reflects the sluggish global economy. Longer term oil price trends are relentlessly upwards, look up petroleum prices on wikipedia. I don’t think fracking or deep sea drilling will slow that much.

          You dispute decreasing oil prices increase consumption. You do realise you are arguing with basic laws of economics about supply and demand? I don’t think your own personal decision outweighs basic principles in economics that apply to the majority of decisions over time.

          1. I am not on anyones “side”. I am not an #occupy type who thinks that all corporations are evil and Russell Brand is the new messiah

            If shale gas makes development uneconomic in the short term, then it will benefit the Saudis and Gazprom. Some suggest that the Saudis have deliberately oversupplied the market to force prices down and reduce shale gas production.

            Gas in the USA has done more than most to reduce CO2 emissions. I do think that shale is a bit of a bubble though. We apparently have 1500 years of methane hydrates on the sea floor that could be exploited.

            If we find a cheap form of nuclear power that is widely accepted then the energy paradigm could change “overnight”.
            If only energy technology were as fluid as the mobile phone industry.

            1. AndyS. You certainly sound much more concerned about oil company profits than anything else at times.But I will give you the benefit of the doubt.

              No doubt the Saudis are manipulating the market, but it is rather beside the point of the climate change issue. America has to reduce emissions, and cant really dictate what the Saudis do in the market, so it comes down to what limits the Americans put on their own emissions.

              The drop in emissions from Gas is only a lucky coincidence, and has the negative side effect of reducing pressure to more actively and sustainably cut emissions.

              Shale is a sort of bubble. There is a lot of shale gas but reserves of shale oil have been exaggerated. A lot of companies doing shale oil are pretty marginal from what I have read.

              Energy technology is not as fluid as micro electronics. You can only hope there is some real breakthrough in battery technology or nuclear power. The best way to do this is for governments to promote renewable energy, and this will push science in the direction of finding an answer.

  4. “I also dispute that decreasing FF costs will increase consumption, If I pay 20c a litre less at the pump, it doesn’t make me want to drive further or buy more “stuff”.”
    But it certainly doesn’t provide any incentive to walk to the dairy for milk or maybe not take that holiday in Europe.

    I’d be cautious about making any claims as to where fracking is breaking even. It’s a classic bubble, likely to pop any day now and no-one in the industry is actually going to admit they are losing serious dough, let alone take into account the ‘hidden’ costs like badly depleted water reservoirs or contaminated land and water supplies, the tab that the commons is left to pick up.

    1. If you are concerned that people might be able to afford stuff and do unspeakable acts like drive to the corner shop or take an overseas holiday, then why not lobby for higher taxes? E.g a 25% gst rate would be consistent with many countries in Europe

    2. Interestingly there is also growing concern from fracking with regard increasing earthquakes in areas where previously there was none, as well as the concern over pollution of ground water supplies. The earthquakes are not large, but enough for people to wake up to the fact that what oil companies do, actually affects all people. There is a growing realisation that the rape of the commons by a small group for their own profit, at the expense of everyone else, is unethical and cannot be condoned anymore.

      1. Norway has managed to use its oil production to good effect for its nation by investing in their Sovereign fund, which is now the biggest of its kind in the world

        It makes, for example, each Norwegian a Krone millionaire on paper, and owns 1% of the world’s stock market

        1. The Scandinavian economies and the economies of USA/ Canada are as different as chalk and cheese. The former recognises the existence of people, whereas the latter views humans purely as a resource.

  5. You might just have nailed it there, Andy. “Unspeakable”. Our probably not-too-distant descendants are going to have a very dim view of the way that our generations have squandered the Earth’s resources as if there was no tomorrow. Unfortunately they will have to live in our tomorrows and at the rate we are going, they are going to have a real struggle to survive.
    Don’t forget, every litre of fuel in burn in your car will linger in the atmosphere for 1000’s of years and during that time will have trapped the heat equivalent of 1.25 Hiroshima A-bombs. That’s just one litre out of the millions upon millions pouring into the sky every day. No wonder that number in the top end of this blog is getting so large. Is it really OK to just pop down to the dairy for a packet of fags or to visit friends in Ol’ Blighty?

  6. Hi Kiwiano, do you have a reference to the highlighted point you make below?

    every litre of fuel (you) burn in your car will linger in the atmosphere for 1000’s of years and during that time will have trapped the heat equivalent of 1.25 Hiroshima A-bombs.

    1. On the envelopes back… 😉

      Humanity so far has released about 1000GT of CO2 over the last 150 years. This current CO2 is responsible for abou 2W/m^2 of warming. This warming currently is the equivalent of 4 A-Bombs/second.
      If (for the back of the envelope calculation only) we assumed that the current CO2 would play its 2W/m^2 for 1000 years then we would have a total of 1.26E+11 A-Bombs heat equivalent over that time.
      1000GT are 1E+12 T of CO2. Hence each Ton would be responsible for 0.126 A-Bombs over 1000 years.

      A liter of Petrol will emit about 2.4 kg of CO2 or 0.0024 T of CO2.
      Hence 1 L of petrol would commit warming over 1000 years worth 0.0003 A-Bombs. Not quite the 1.25 claimed but still even 0.0003 A-Bombs is a lot.

      If your car consumes 7L/100km and you drive 20,000km/y that works out to be about 0.43 A-Bombs worth of committed warming for each year of driving or in a typical lifetime of 10 years of a car say, you commit 4.3 A-Bombs worth of warming over the next 1000 years.
      Food for thought.

      Again, this is back of the envelope stuff. Not very reliable but it should give the order of magnitude we are talking about. The 1000 year life cycle is probably a bit long as an average. CO2 has a long tail but its an exponential decline over time most likely with initial declines being stronger of cause.

Leave a Reply