Oiling the wheels of an ecological turnaround
Nowhere in global discourse do Big Oil and Big Ecology come together quite so starkly as in the Davos meeting of the World Economic Forum, their two parallel universes briefly intersecting in the capital of cognitive dissonance.
In one room Al Gore gives a masterful tour d’horizon of the predicament we face. ‘‘We are putting 110 million tonnes of man-made, heat-trapping, globalwarming pollutants into the very thin shell of the atmosphere as if it were an open sewer, and we do that every single day,’’ he tells a gathering of ministers, princes and billionaires.
Gore alerts us to a study this month from the Proceedings of the National Academy of Sciences showing that Greenland’s ice is melting four times faster than assumed. He guides us to the terrifying Hothouse Earth report: we are on track for a temperature rise of 4-5 degrees above pre-industrial levels even under the CO2 targets of the Paris Agreement.
Lethal feedback loops will kick in as permafrost melts across Siberia and methane hydrates are released from the ocean. A cascade of critical thresholds will turn the Amazon to semi-desert. The West Antarctic Ice Sheet will plunge into the water. As the dominoes fall, sea levels could rise by 60 metres, though that might be the least of our problems. Much of the world would simply be ‘‘uninhabitable’’.
The Davos elites are reduced to tears by Sir David Attenborough’s gruesome footage of 100,000 walruses crushed together for survival on a thin strip of the north Russia coast because their ice habitats have vanished. The mammals are forced on to cliffs, and then slither down to their deaths in a fantastical apocalypse.
The audience leap to their feet for a triple ovation. At the same time, Opec leaders are in another room asserting that nothing much is going to change. Fossil dominance is ineluctable. Amin Nasser, head of Saudi Aramco, says he is not losing any sleep over peak oil or stranded assets. ‘‘I don’t see it happening in 10 years or even by 2040.’’
Opec chief Mohammed Barkindo is less defiant, and more alert to the fast-changing mood. ‘‘Our industry is literally under siege and the future of oil is at stake,’’ he said. Yet little is actually changing. ‘‘In our projections, the world oil outlook to 2040, oil will continue to dominate the energy basket. The key drivers are trucks, aviation, petrochemicals. Eighty-two per cent of the world’s population has never flown in an aircraft, so there is a huge demand going forward.’’
Opec thinks oil will still be 27 per cent of the global energy mix in 2040, and that fossil fuels will broadly retain the 70 per cent share they hold today. Renewables will still be just 5.4 per cent.
Barkindo notes that the neutral International Energy Agency (IEA) has much the same estimates. He is right.
Oil historian Daniel Yergin, from global information provider IHS, thinks oil demand will peak near 2040 but at a much higher level than today. It will then plateau, held aloft by powerful economic forces. ‘‘I don’t think peak means plummet. We’re going to have two billion more people than now,’’ he said.
In short, Big Oil and those who know its rhythms are in utter irreconcilable conflict with the planet evangelists. It is natural for anybody with a greenish Weltanschauung to feel a sense of moral outrage. Yet as you drill deeper into the global-warming debate, the moral contours become less clear. This complexity too was in evidence at the policy panels and back rooms of Davos.
Shell, BP and Total are all at various stages of reinventing themselves as renewable energy companies. Any non-state oil and gas company that digs in its heels faces a shareholder backlash and the wrath of the disinvestment movement. They are the new tobacco companies.
John Hess, founder of Hess Petroleum, said oil equities are shunned on Wall Street. There is already a fat climate discount on valuations. ‘‘How we get back the hearts and minds of our industry is a real challenge,’’ he said.
Vicki Hollub from Occidental says no major oil and gas company can raise capital or function properly unless it has a climate mitigation plan, and these days it must be more than superficial ‘‘greenwashing’’ or rebranding.
Occidental has teamed up with Net Power in Texas to push for a revolutionary form of carbon capture and storage (CCS). This puts an oil major once decried as a climate villain on the other side of the ledger.
Zero-cost CCS would do more to cut emissions than electric vehicles – marvellous though they may be – even if every fossil-fuelled car on the planet were eliminated.
Fatih Birol, the IEA’s chief, says the emerging economies of Asia are adding a new coal plant every week. The region has 2000 gigawatts of coal power from facilities with another 40 years of life ahead of them. The sunk investments cannot be wished away.
‘‘There is a gross disconnect between all the reports and targets and what people say at Davos, and what is happening in real life,’’ he said. ‘‘I am not saying that oil and gas are innocent, but they are not the main problem. There seems to be a blind spot about this in the climate-change debate.’’
The IEA estimates that coal accounts for 30 per cent of greenhouse gases. ‘‘We have to move to CCS,’’ he said, adding that just 8 per cent of CO2 emissions come from the one billion cars on the roads (to be 2b in another generation). Even if EVs reached 300 million by 2040 – an ambitious target – this would cut new emissions by just 1 per cent. The Tesla effect has distorted public perception.
‘‘I don’t think a lot of policymakers have an understanding of how Herculean the task is,’’ said Hess. He invoked the 15 ‘‘Princeton Wedges’’, the combination of measures that would broadly be needed to cut emissions to zero while meeting the surging energy needs of China, India, the developing economies. The world would have to do the following: triple nuclear power to 1200 gigawatts; increase wind power tenfold to 2m turbines; increase solar panels a hundredfold to 15,000 square miles; replace 1400 coal plants with gas, and fit 800 remaining plants with CCS; double vehicle efficiency from 30mpg to 60mpg, and cut mileage driven by half; raise biomass ethanol from onesixth of the world’s cropland; stop all tropical deforestation; adopt conservation tillage across all global agriculture and so forth. Seen in this light, the vilification of the oil industry alone smacks of scapegoating.
‘‘Climate change is real. You see it in warmer oceans where the water is acidifying, and in melting glaciers. I don’t think anybody disagrees with the ‘what’. It’s the ‘how’ that is the real challenge,’’ said Hess.
The biggest single cause of global warming is farming and loss of forest combined, accelerated by meat-based eating habits. As an impassioned World Bank official told a panel, governments spend $560b a year on farm subsidies. Much of this promotes destructive practices.
The chief culprits are the US, Europe and the rich OECD economies. Part of the money goes into growing animal feed, a subsidy for livestock and cows (methane). Or it goes into the production of sugar and highfructose corn syrup, aiding and abetting our misnamed obesity ‘‘epidemic’’. It is not an epidemic. It is a state-promoted and funded addiction syndrome.
A further $250b goes into fossil-fuel subsidies, mostly in poorer countries.
Rachel Kyte, the UN’s special envoy for sustainable energy, said everybody is to blame. ‘‘There are still fossil-fuel subsidies in G7 countries. That is ridiculous. We are not being consistent and coherent across our economies.’’ With the right policy framework the private sector will pick up the baton and run with it. ‘‘The technology exists and it can be done affordably,’’ she said.
If there is an enemy, it is not the oil industry. It is us. –
Climate evangelists have crossed swords with Big Oil at the World Economic Forum in Davos, but is it possible they are both right, asks Ambrose Evans-Pritchard.