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Dec 2, 2014

Fossil fuel’s trillion-dollar incentive to rain on Lima climate conference parade

Climate talks are making progress in Peru (with one noted dissenting voice -- no points for guessing). But the fossil fuel industry has a trillion reasons to try to stop climate action.

In a military compound known in Lima as the Little Pentagon, climate change talks resumed today with the most positive atmosphere since, well, Copenhagen. This time round, however, there are no starry eyes about what can be accomplished.

All eyes are on the climate change conference in Paris in 2015, but Lima is a critical step. It will be here that a text on a new treaty will be drafted, where the commitments to be made by individual countries will be defined, and where critical decisions will be made on climate finance and adaptation measures that will help prevent Paris becoming the train wreck that defined Copenhagen.

It won’t be easy. Some delegations expect it to be fiery, the last genuine opportunity for interested parties to declare their grievances. The Chinese delegate chief last week said: “I think the Lima meeting will see a lot of disputes. And every country will try to inject its opinion in the draft agreement.”

But overriding the inevitable caution about corralling 194 different countries into a single agreement is the wave of optimism that has been kindled by the groundbreaking agreement last month between the United States and China.

That does not come anywhere near what these two countries need to achieve to meet the 2-degree target agreed in Paris. But it shows that the two biggest economies and the two biggest emitters will no longer be the roadblock they once were.

“There is a good atmosphere, and there are good signals,” said Peruvian Minister for the Environment Manuel Pulgar-Vidal who, as the representative of the host country, is chairing the talks.

Not that it will be smooth sailing, says Christiana Figueres, secretary of the United Nations Framework Convention on Climate Change. “That is quite an undertaking,” she said. “Getting there is not easy, because we have had a development model that has done exactly the opposite over the last 150 years.”

Over much of the past few decades, it has been the protection of that development model, and the vested interests that benefited from it, that has been the principal roadblock. The fossil fuel industry has succeeded in dominating not just global geopolitics, but the politics of climate change as well.

That is now changing. The US-China deal, according to some analysis, is likely to slash $4.5 trillion off the revenues of the oil and coal industries between now and 2030. And it is but a scratch on the surface.

And that’s because if the stated target of 2 degrees is to be met, the world needs to abide by a “carbon budget” of one trillion tonnes. To meet that budget it will need to leave two-thirds of known fossil fuel reserves in the ground, according to the United Nations Environment Program — the UN science body whose funding Australia has just slashed by 80%.

That would amount to $1 trillion a year in lost revenue by 2050 for big oil and big coal, according to the International Energy Agency.

Which means every year that action can be delayed is a trillion dollars saved for fossil fuels. As the Australian mining lobby so gleefully found in the mining tax debate, that can justify a mighty big lobbying budget.

Right now it seems that the talks are delicately balanced. Figueres says it is clear that the 2-degree “emission gap” — the difference between what the world says it will do and the actions it has agreed to take — will not be met by Paris next year.

That’s because it will take a few years for the mix of the bottom-up initiatives (known as INDCs, or intended nationally determined contributions) and top-down judgement (peer pressure) to take effect.

“It’s going to be an art rather than a science. There will be no environmental police going around making sure they are doing the right thing. As more countries realise that decarbonisation is in their long-term interests, then the gap will reduce,” she said.

One of the big issues hanging over the talks is the current fall in the oil price. There are various views of how this might impact negotiations. Some, such as Kepler Cheuvreux analyst Mark Lewis, says it underlines why big oil needs to reinvent itself: the cost of extracting oil can no longer be justified by its plunging price, and renewables are now competing. The shale oil boom in the US is becoming something of a mirage, or a one-hit wonder. The capital flows will soon change quickly.

Figueres appears to agree. She cites the huge volatility in oil prices as one of the main reasons to justify the move to renewables — because renewables have a predictable fuel cost. And that, of course, is zero.

She notes the move by E.ON to divest its fossil fuel business, and the move by the Rockefeller foundation to do the same. “You know the world has changed when the Rockefeller family decides to divest,” she said.

“We are seeing a turning point, on the part of large foundations realising that investment in fossil fuel is getting more and more risky. Both exploration and exportation of oil is getting more expensive, and renewable technologies are getting cheaper.

“Just from the financial and business perspective, we are getting a stronger case for renewables, and a weaker case for fossil fuels. We will see more of that when we see company boards see that they have a fiduciary duty to act.”

But apart from the Middle East, where the oil industry is state owned and indisputably in the national interest, only one other country is seen to act as a spokesman for the fossil fuel industry. That country is Australia, and Prime Minister Tony Abbott told the G20 meeting that he would “stand up for coal”. But if no one else is, what’s the point?

*This article originally appeared on Renew Economy

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3 thoughts on “Fossil fuel’s trillion-dollar incentive to rain on Lima climate conference parade

  1. cartoonmick

    On occasions such as this, it becomes difficult to differentiate between the words “arrogance” and “ignorance”.

    I really can not think of any other word(s) to describe Australia’s embarrassing stand on climate change.

    This cartoon depicts where we are on energy sources . . . . .


  2. Norman Hanscombe

    cartoon mick, when it comes to devoted acolytes Faux Conservation, while there may be a component of arrogance in how they dismiss without analysis any material which doesn’t help their faith, and accept uncritically anything which superficially is compatible with what they want to believe, it’s unfair to not concede that via cognitive dissonance they genuinely don’t see the logical flaws in their sacred stand.

  3. GideonPolya

    There is a lot more than $1 trillion per annum to be lost to the Big Polluter – ultimately at stake is a $10 trillion annual subsidy for greenhouse gas (GHG) pollution that adds on to the the existing $220 trillion Carbon Debt that will have to paid by future generations.

    According to climate economist Dr Chris Hope from 90-Nobel-Laureate Cambridge University the damage-based Carbon Price of greenhouse gas (GHG) pollution is $150 per tonne CO2, and according to Dr James Hansen from NASA and 101-Nobel-Laureate Columbia University industrial man has added 1,466 billion tonnes CO2 to the atmosphere (1751-2014), this yielding a global Carbon Debt of $220 trillion or about 2.6 times the World’s GDP.

    A revised annual global greenhouse gas (GHG) pollution is 64 billion tonnes CO2-e (CO2-equivalent, including other GHGs like methane, CH4) and thus Carbon Debt is increasing globally each year by $150 per tonne CO2-e x 0.064 trillion tonnes CO2-e = $9.6 trillion i.e. by about $10 trillion annually, to be paid by future generations.

    As a result of the corporatist Lib-Labs (Coalition and Labor Right) allowing unlimited pollution of the oceans and atmosphere, Australia has a Carbon Debt of $5.4 trillion that is increasing at $300 billion annually or increasing at annually by $30,000 per head for everyone under 30 (see “Carbon Debt Carbon Credit”: ; Gideon Polya, “Letter To Young People Over $220 Trillion Carbon Debt: Revolt (Peacefully)”, Countercurrents, 11 July, 2014: ; and Gideon Polya, “ $10 Trillion Annual Carbon Debt Increase For Young People On A Threatened Planet”, Countercurrents, 8 July, 2014: ).

    Young people who vote for the Coalition that is so egregiously deceiving and robbing them of their future are – in the words of the Victorian Traffic Accident Commission (TAC) TV ads – “bloody idiots”. Young people and others who care for young people and future generations will utterly reject the thieving, lying, mendacious, future-stealing, future-eating Coalition, vote 1 Green and put the Coalition last.