It's not enough to bash in heads, you have to bash in minds
            

Global Warming’s Terrifying New Math

Bill Mckibben has just written a must read article in Rolling stone, ignore the initial error which I also made here on P3, and go read it now.

Here are a few highlights:

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. It’s why they’ve worked so hard these past years to figure out how to unlock the oil in Canada’s tar sands, or how to drill miles beneath the sea, or how to frack the Appalachians.

If you told Exxon or Lukoil that, in order to avoid wrecking the climate, they couldn’t pump out their reserves, the value of their companies would plummet. John Fullerton, a former managing director at JP Morgan who now runs the Capital Institute, calculates that at today’s market value, those 2,795 gigatons of carbon emissions are worth about $27 trillion. Which is to say, if you paid attention to the scientists and kept 80 percent of it underground, you’d be writing off $20 trillion in assets. The numbers aren’t exact, of course, but that carbon bubble makes the housing bubble look small by comparison. It won’t necessarily burst – we might well burn all that carbon, in which case investors will do fine. But if we do, the planet will crater.

What wont work:

This record of failure means we know a lot about what strategies don’t work. Green groups, for instance, have spent a lot of time trying to change individual lifestyles: the iconic twisty light bulb has been installed by the millions, but so have a new generation of energy-sucking flatscreen TVs. Most of us are fundamentally ambivalent about going green: We like cheap flights to warm places, and we’re certainly not going to give them up if everyone else is still taking them. Since all of us are in some way the beneficiaries of cheap fossil fuel, tackling climate change has been like trying to build a movement against yourself

And what might:

If you put a price on carbon, through a direct tax or other methods, it would enlist markets in the fight against global warming. Once Exxon has to pay for the damage its carbon is doing to the atmosphere, the price of its products would rise. Consumers would get a strong signal to use less fossil fuel – every time they stopped at the pump, they’d be reminded that you don’t need a semimilitary vehicle to go to the grocery store. The economic playing field would now be a level one for nonpolluting energy sources. And you could do it all without bankrupting citizens – a so-called “fee-and-dividend” scheme would put a hefty tax on coal and gas and oil, then simply divide up the proceeds, sending everyone in the country a check each month for their share of the added costs of carbon. By switching to cleaner energy sources, most people would actually come out ahead.

But even this will be an uphill battle.

There’s only one problem: Putting a price on carbon would reduce the profitability of the fossil-fuel industry. After all, the answer to the question “How high should the price of carbon be?” is “High enough to keep those carbon reserves that would take us past two degrees safely in the ground.” The higher the price on carbon, the more of those reserves would be worthless. The fight, in the end, is about whether the industry will succeed in its fight to keep its special pollution break alive past the point of climate catastrophe, or whether, in the economists’ parlance, we’ll make them internalize those externalities.

No one said this would be easy

5 Responses to Global Warming’s Terrifying New Math

  1. Several months ago a panel of leading British scientists, investors and senior politicians met with the governor of the Bank of England to warn that the London Stock Exchange was vulnerable to an enormously petroleum “bubble” in the form of energy stocks. They too argued that the world can consume no more than 20% of known fossil fuel reserves if mankind is to survive which meant the reserves being carried on the books of Big Fossil were dangerously sub-prime.

    Big Oil, Big Coal and Big Gas are fully aware that once the basic principle of excess, unusable reserves is acknowledged, they’re effectively ruined. Hence they’re more than willing to richly reward political benefactors.

    Sure there are solutions but everything I have observed convinces me we’ll be well past the point of no return before we’re willing to act.

  2. The hook to this conundrum surfaced a few years ago when two teams of researchers each independently calculated remarkably similar estimates of the maximum safe carbon carrying capacity of the atmosphere. Once they had a workable number the dynamics of emissions reduction changed. Instead of a chorus of voices promising some percentage reduction by some particular date, it became possible to approach the issue from an allocation focus. How would the world allocate the remaining carbon carrying capacity? Who should get how much?

    More than half the total man-made carbon carrying capacity was gone, largely due to the industrialized Western economies. The non-industrialized countries were quite generous. They were willing to spot us what we had already done but they argued, quite persuasively, for the remaining capacity to be allocated on a per capita basis. But the West recoiled at the suggestion even though it let us off the hook for post-Industrial Revolution emissions. Why? Because our unstated bottom line is to claim the lion’s share of the remaining emissions capacity also.

    If the industrialized nations were to go for a per capita allocation it would mean pricing carbon realistically and transferring considerable wealth from the First World to the Third World to purchase their carbon allocation. That, in turn, would virtually spell the end of our reliance on fossil fuels, something Big Fossil will not abide.

    What this sort of thinking does is it establishes the reality of “commons” for basic, life-supporting resources whether that be the atmosphere or global fisheries. And that is key to shifting the world from outdated and no longer viable “growth-based” economics to allocation based models. It is the triumph of domestic-based production and consumption over unsustainable globalization. The vested interests imperiled by this are multi-national and extremely powerful. They’ll not accept this without a fight and right now the battleground is the atmosphere.

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