The End of Fossil Fuel Subsidies

Providing handouts to the wealthiest corporations on earth does not make much sense, particularly when their activities are the leading driver of climate change. Ending fossil fuel subsidies is the most obvious next step in our efforts to tackle the climate crisis. In the wake of the Paris Climate Agreement forged at COP21, continuing fossil fuel subsidies is an oxymoron.

These subsidies take many forms including, tax breaks, cheap loans, price controls, purchase requirements, purchasing equipment, royalty breaks and direct spending. According to some reports there are over 800 ways that taxpayers support the fossil fuel industry.

Diminishing Profits Signal the Beginning of the End of Oil

Oil is dying. Low oil prices are erasing profits and setting into motion a death spiral from which fossil fuels will not recover. Big Oil is cutting costs, and scaling back production, this results in smaller returns and diminished investor confidence. The addition of carbon pricing schemes and the elimination of subsidies will ultimately inflate prices and reduce demand.
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Oil is a Bad Investment

Iinvestors can no longer avoid the realization that their fossil fuel holdings are fraught with risks. While there are many factors at play, the 18 month slide and low price forecasts combine to make the point that investing in oil makes no economic sense.

In the short term China's slowing growth and the glut of oil are driving down the price. The situation will be exacerbated by the lifting of sanctions allowing Iran to sell its oil. High production and lower than expected demand mean that oil prices will continue to fall well into 2016.

Fossil Fuel Subsidies and Renewable Energy Post COP21 (Infographic)

One of the most important things we can do to curb climate change is to end fossil fuel subsidies.  This would reduce the amount of fossil fuels burned and it would level the playing field for clean renewable sources of energy. Event thought 60 percent of all new investment is going into renewable energy fossil fuels still get the lions share of subsidies. The International Energy Agency (IEA) say that government subsidies for fossil fuels are 12 times greater than those for renewable energy.

Financial Losses Associated with Fossil Fuels

The losses associated with fossil fuels are staggering and it is not just oil producing states and companies that are feeling the heat. Pension funds going long on oil are getting killed as they hope that prices will rebound.

With oil prices around $50 per barrel, the IEA estimates that OPEC states have lost half a trillion dollars a year in revenues since the oil price fell from over $100 a barrel in 2011-2014 to current levels. The declining price of oil is also creating volatility in the stock market and significantly impacting the petro-economies of both Russia and Canada.

Summary of Recent Reports on the Costs of Climate Action/Inaction

Reports are coming in that make it hard to ignore the economic benefits of action on climate change. This includes recent reports from Citi the world's third largest bank and the London School of Economics, one of the most prestigious and respected schools in the world.

In April 2015 the World Health Organization (WHO) and the US Department of Energy published reports that demonstrate just how high the costs of inaction could be.

An LSE Cost Benefit Analysis Supports Climate Action

Research from the London School of Economics (LSE) makes the economic case for acting on climate change. This study along with many others (see related posts below) make the point that the costs of inaction on global warming are far greater than the costs of acting. This is in addition to the costs directly related to the damage caused by climate change.

Much has been said about the costs of combating global warming but a slew of independent research indicates that the benefits of climate action far outweigh the costs. This was also the conclusion of Citibank study published in August.

Two research institutes at the London School of Economics found that there are significant economic gains from limiting emissions. The LSE study published in July says that improved air quality, energy efficiency and energy security combine with falling renewable energy prices to make climate action the more economically compelling option.

Acting on Climate Change Makes Good Economic Sense According to Citibank

A recent Citibank report showed that if we act to slow climate change we could save as much as $50 trillion. This finding is significant because cost is one of the most common reasons put forth to avoid acting on climate change. The Citi report is but the most recent study to soundly refute the contention that acting on climate change is too expensive. Research shows that climate action offers excellent ROI not to mention saving trillions of dollars of additional costs associated with the damaging affects of a warmer world.

In a report entitled, "Energy Darwinism II: Why a Low Carbon Future Doesn’t Have to Cost the Earth," Citi Global Perspectives & Solutions (GPS), conducted a cost benefit analysis of a low carbon energy economy. The research explored the costs of inaction (business as usual) versus the costs of acting (transitioning to a low-carbon energy economy).

Low Oil Prices Offer an Opportunity to Combat Climate Change

The plunge in the price of oil makes this an ideal time to deploy market disincentives that can cut emissions and combat climate change. We know that if we are to stave off the worst impacts of climate change we must substantially reduce our emissions. As the leading cause of climate change fossil fuels are the most obvious focal point.

All but the willfully ignorant understand that the economic costs of inaction far outweigh the costs of engagement. We have seen a number of studies which suggest the longer we wait the more it will cost.

Video - WEF Global Risks Report

The 2015 edition of the Global Risks report completes a decade of highlighting the most significant long-term risks worldwide, drawing on the perspectives of experts and global decision-makers.

The report is broken down into the following areas:

1. Global Risks Landscape 2015
2. Global Risks 2015 Interconnections Map
3. Risks-Trends 2015 Interconnections Map
4. Executive Opinion Survey 2014

Click here for more information on environmental issues in the Global Risks 2015 Report.

Related
Risks Associated with Environment, Climate, Water Crisis and Extreme Weather in the 2015 Global Risks Report
Infographic - Global Risks Report
Video - Climate Risks: Abrupt Unpredictable Irreversible Changes
Video - UN Report on the Business Risks from Climate Change
Managing Materiality, Risk and Stakeholder Engagement in Sustainability Reporting
Infographic - Sustainable Business Risk Management
Rise Initiative: Helping Businesses and Investors Manage the Risks Associated with Climate Change
Factoring Climate Risks for Business
Sectors Most at Risk from Climate Change
World Economic Forum Risk Report Singles Out Climate Change
World Economic Forum Report: '"Global Risks 2014"
Guide - Physical Risks from Climate Change (Ceres)
Global Risks Report 2013: Interconnectedness of the Economy

Video - Climate Risks: Abrupt Unpredictable Irreversible Changes

People often think that global warming is a slow and gradual process that will take generations. However, this film from the American Association for the Advancement of Science (AAAS) (the world's largest scientific society), warns that we are at risk of pushing the earth’s climate system toward, "abrupt, unpredictable, and potentially irreversible changes."

Related
Risks Associated with Environment, Climate, Water Crisis and Extreme Weather in the 2015 Global Risks Report
Infographic - Global Risks Report
Video - 2015 Global Risks Report
Video - UN Report on the Business Risks from Climate Change
Managing Materiality, Risk and Stakeholder Engagement in Sustainability Reporting
Infographic - Sustainable Business Risk Management
Rise Initiative: Helping Businesses and Investors Manage the Risks Associated with Climate Change
Factoring Climate Risks for Business
Sectors Most at Risk from Climate Change
World Economic Forum Risk Report Singles Out Climate Change
World Economic Forum Report: '"Global Risks 2014"
Guide - Physical Risks from Climate Change (Ceres)
Global Risks Report 2013: Interconnectedness of the Economy

Infographic - Global Risks Report

Risks Associated with Environment, Climate, Water Crisis and Extreme Weather in the WEF Report

In the 2015 edition of the Global Risks report environmental risks are viewed as more prominent than economic risks. At the very top of the list are international conflicts although water crises rank highest in terms of impact. Overall, geopolitical and societal risks dominate as the biggest threat to global stability.

The 10th edition of the Global Risks report, was published on January 15, 2015 by the WEF. The annual report features an assessment by nearly 900 experts on the top 28 global risks in terms of likelihood and potential impact over the coming 10 years.

Course - Ecological Risk Assessment: Practice and Protocols

This course will take place on March 17-18, 2015 from 9 a.m. - 4:30 p.m. at Trayes Hall - Douglass Campus Center, 100 George St, New Brunswick, NJ. Help your client understand how the ecological risk assessment process aids in developing realistic approaches to remediating sites.

For LSRP's,understand the role that ecological risk assessment plays in developing clean-up goals for your site. This two-day program will provide you with a comprehensive overview of regulatory expectations of ecological risk assessments from both federal and state perspectives.

Falling oil Prices and a Global Climate Agreement

The decline in oil prices underscores the risk associated with fossil fuel investment. On December 1 as the COP20 talks began in Lima Peru, the UN's climate chief said that falling oil prices show the "high risk" of fossil fuel investments compared with renewable energies. This perspective was underscored by the December 14th Lima draft agreement that included mention of a world free from fossil fuel emissions by 2050. A final global climate agreement is scheduled to be signed in 2015 at COP21 in Paris. Prior to the Lima agreement there were agreements by the US and China and the European Union to cut greenhouse emissions from the burning of fossil fuels.

Video - Why Oil Prices Will Keep Falling

Oil prices are already low and they continue to decline as more downward pressure is expected. On Friday December 12th the International Energy Agency (IEA) forecast a decline in demand for 2015 and they further predicted that healthy non-OPEC supply gains were poised to aggravate a global oil glut. The current outlook for global oil demand for 2015 was cut from 230,000 barrels per day (bpd) to 0.9 million bpd.

An Upside to Low Oil Prices?

While there is a clear downside to lower oil prices for renewable energy, there may also be a silver lining. Low oil prices are bad for renewable energy, but if they fall low enough they could decrease extraction of some of the dirtiest fossil fuels.

Declining oil prices are attributable to the fact that there is now more supply than demand. The low oil prices may be part of an effort by OPEC to leverage market forces that will slow extraction of tar sands oil in North America.

The Economic Costs of Canada's Oil Obsession

Canada's dependence on fossil fuels not only contributes to climate change it represents a serious threat to the economy. As oil prices plummet to a five year low, the Canadian economy is feeling the heat.  The declining price of hydrocarbons have driven down the value of the Canadian dollar and impacted stock prices on the TSE.

Canada's ruling Conservatives have bet on oil and this has disastrous implications for all Canadians. The fact that Canada is so closely tied to fossil fuels means that the nation's petro-currency is subject to profound market volatility.

Low Oil Prices will Slow Renewable Energy and Impede the Growth of the Green Economy

With oil prices at a 5-year low, renewable energy and the green economy are being hit with some serious headwinds. Low oil prices are not only detrimental to the growth of renewable energy it is also decreases demand for hybrid and electric cars as well as cleantech in general. High oil prices buoy interest in renewables, while low oil prices put downward pressure on the growth of the low carbon economy.

For more than a quarter century we have been exploring the ways in which oil prices are related to renewable energy. A 1989 World Bank study showed how renewable energy technologies are directly impacted by the price of oil. However this study added the caveat that the impact is muted in remote and rural applications (where fossil fuels are less available).

Event - Risk Assessment & Remediation Conference, plus Awards Ceremony

This conference and awards ceremony will take place on October 23-24, 2014 at the Grange Tower Bridge Hotel, 45 Prescot St., London, UK. Brownfield Briefing is the host for these two seminal events. The first of these, Risk Assessment and Remediation 2014, takes place in London on 23-24 October, with the first day focusing on remediation and the second on risk assessment (both days bookable separately).