UN Climate Chief: Carbon Bubble Is Now a Reality
The so-called "carbon bubble" is no longer a concept, it's a reality, according to UN climate chief Christiana Figueres, who will oversee the crucial UN climate conference in Paris in December.
Photo credit: Shutterstock
Investors who sunk their money into the fossil fuel sector are going to come up losers, she suggested, as plummeting oil prices have made new extraction projects too costly to continue to pursue and concerns about global warming have made them too risky.
"A lot of the stranded asset conversations we’ve been having for a long time are now coming true,” she told RTCC, speaking from the World Future Energy Summit in Abu Dhabi. “Those expensive oil projects—deep sea, Arctic, tar sands—those are actually beginning to be taken off the table because of the low oil prices.”
That's good news for the environmental groups that have long warned about "stranded assets"—coal, oil and gas that would have to be left in the ground to slow climate change—and how that was leading to an overvaluation of these reserves.
RTCC cited a number of expensive exploration and extraction projects that have already been cancelled. Chevron has delayed plans to drill in the Canadian Arctic. Norway's Statoil has returned three licenses to explore for oil off the Greenland coast. And Shell and Qatar Petroleum announced last week they were scrapping a planned $6.5 billion petrochemical project in Qatar, saying it was "commercially unfeasible, particularly in the current economic climate prevailing in the energy industry." Qatar's state-controlled petrochemical company Industries Qatar abandoned plans for another $6 billion plant last September. Many of these projects were planned when oil was $100 a barrel. It's now under $50.
In the U.S., Texas is feeling the brunt of the oil bust, as extraction companies lay off workers. The New York Times reported yesterday, "With oil prices plummeting by more than 50 percent since June, the gleeful mood of recent years has turned glum here in West Texas as the frenzy of shale oil drilling has come to a screeching halt. Every day, oil companies are decommissioning rigs and announcing layoffs. Small companies that lease equipment have fallen behind in their payments." And the once seemingly unstoppable growing of fracking in North Dakota's Bakken shale region has also come to a screeching halt.
Carbon Tracker Initiative, a independent nonprofit think tank that analyzes energy from both an environmental and financial standpoint, coined the term "carbon bubble" and has continuously warned investors about the risks of sinking money into fossil fuel-related businesses, due to the 2c target of limiting global warming to 2 degrees to stave off the worst impacts of climate change.
"If the 2C target is rigorously applied, then up to 80 percent of declared reserves owned by the world’s largest listed coal, oil and gas companies and their investors would be subject to impairment as these assets become stranded,” the group said in its report Unburnable Carbon.
Figueres told RTCC she believed investors and investment firms would be taking notice, opening up the possibility that investment assets might begin to shift more decisively to renewables.
“When you begin to see very specific examples of a concept that was previously only a concept, I do think it’s going to be taken much more seriously on the part of investors,” she said. “That volatility in prices is one that incrementally and gradually makes investment in oil and gas more risky than investment in renewables, where it is very predictable what the upfront cost of infrastructure is, and then the price of fuel from then on is very predictable and certain.”
YOU MIGHT ALSO LIKE
By Simon Montlake
For more than a decade, Susan Jane Brown has been battling to stop a natural gas pipeline and export terminal from being built in the backcountry of Oregon. As an attorney at the nonprofit Western Environmental Law Center, she has repeatedly argued that the project's environmental, social, and health costs are too high.
All that was before this month's deadly wildfires in Oregon shrouded the skies above her home office in Portland. "It puts a fine point on it. These fossil fuel projects are contributing to global climate change," she says.
Moderates Feeling the Heat<p>If elected, Mr. Biden has vowed to stop new drilling for oil and gas on federal land and in federal waters and to rejoin the 2015 Paris climate accord that President Donald Trump gave notice of quitting. He would reinstate Obama-era regulations of greenhouse gas emissions, including methane, the largest component of natural gas.</p><p>The Biden climate platform also states that all federal infrastructure investments and federal permits would need to be assessed for their climate impacts. Analysts say such a test could impede future LNG plants and pipelines, though not those that already have federal approval. </p><p>Climate change activists who pushed for that language say much depends on who would have oversight of federal agencies that regulate the industry. Some are wary of Biden's reliance on advice from Obama-era officials, including former Energy Secretary Ernest Moniz, who is now on the board of Southern Company, a utility, and a former Obama environmental aide, Heather Zichal, who has served on the board of Cheniere Energy, an LNG exporter. </p>
The Push for U.S. Fuel Exports<p>As vice president, Biden was part of an administration that pushed hard for global climate action while also promoting U.S. oil and gas exports to its allies and trading partners. As fracking boomed, Obama ended a 40-year ban on crude oil exports. In Europe, LNG was touted both as an alternative to coal and as strategic competition with Russian pipelines.</p><p>That much, at least, continued with President Trump. Under Energy Secretary Rick Perry, the agency referred to liquified U.S. hydrocarbons as "<a href="https://www.nytimes.com/2019/05/29/us/freedom-gas-energy-department.html" target="_blank">freedom gas</a>."</p><p>Mr. Trump has also championed the interests of coal, oil, and gas while denigrating the findings of government climate scientists. He rejected the Paris accord as unfair to the U.S. and detrimental to its economy, but has offered no alternative path to emissions cuts. </p><p>Still, Trump's foreign policy has not always served the LNG industry: Tariffs on foreign steel drove up pipeline costs, and a trade war with China stayed the hand of Chinese LNG importers wary of reliance on U.S. suppliers. </p><p>Even his regulatory rollbacks could be a double-edged sword. By relaxing curbs last month on methane leaks, the U.S. has ceded ground to European regulators who are drafting emissions standards that LNG producers are watching closely. "That's a precursor of fights that will be fought in all the rest of the developed world," says Mr. Hutchison. </p><p>Indeed, some oil-and-gas exporters had urged the Trump administration not to abandon the tougher rules, since they undercut their claim to offer a cleaner-burning way of producing heat and electricity. "U.S. LNG is not going to be able to compete in a world that's focused on methane emissions and intensity," says Erin Blanton, a senior research scholar at the Center on Global Energy Policy at Columbia University. </p>
Stepping on the Gas<p>In July, the Department of Energy issued an export license to Jordan Cove's developer, Canada's Pembina Pipeline Corp. In a statement, Energy Secretary Dan Brouillette said the project would provide "reliable, affordable, and cleaner-burning natural gas to our allies around the world."</p><p>As a West Coast terminal, Jordan Cove offers a faster route to Asia where its capacity of 7.8 million tons of LNG a year could serve to heat more than 15 million homes. At its peak, its construction would also create 6,000 jobs, the company says, in a stagnant corner of Oregon.</p><p>But the project still lacks multiple local and state permits, and its biggest asset – a Pacific port – has become its biggest handicap, says Ms. Blanton. "They are putting infrastructure in a state where there's no political support for the pipeline or the terminal, unlike in Louisiana or Texas," she says. </p><p>Ms. Brown, the environmental lawyer, says she wants to see Jordan Cove buried, not just mothballed until natural gas prices recover. But she knows that it's only one among many LNG projects and that others will likely get built, even if Biden is elected in November, despite growing evidence of the harm caused by methane emissions. </p>
- Biden Commits to Banning Fossil Fuel Subsidies After DNC Dropped It ›
- As Biden Embraces More Ambitious Climate Plan, Fossil Fuel Execs ... ›
- Biden Announces $2 Trillion Climate and Green Recovery Plan ... ›
EcoWatch Daily Newsletter
By Grayson Jaggers
The connection between the pandemic and our dietary habits is undeniable. The stress of isolation coupled with a struggling economy has caused many of us to seek comfort with our old friends: Big Mac, Tom Collins, Ben and Jerry. But overindulging in this kind of food and drink might not just be affecting your waistline, but could potentially put you at greater risk of illness by hindering your immune system.
- 15 Indigenous Crops to Boost Your Immune System and Celebrate ... ›
- 15 Supplements to Boost Your Immune System Right Now - EcoWatch ›
- Should I Exercise During the Coronavirus Pandemic? Experts ... ›
- The Immune System's Fight Against the Coronavirus - EcoWatch ›
As the world continues to navigate the line between reopening and maintaining safety protocols to slow the spread of the coronavirus, rapid and accurate diagnostic screening remains critical to control the outbreak. New mobile-phone-based, self-administered COVID-19 tests being developed independently around the world could be a key breakthrough in making testing more widely available, especially in developing nations.
- FDA Approves First In-Home Test for Coronavirus - EcoWatch ›
- When Should You Get a COVID-19 or Antibody Test? - EcoWatch ›
- Trump Plans to End Federal Funding for COVID-19 Testing Sites ... ›
- Trump Insider Embeds Climate Denial Into Agency Reports ... ›
- Climate Denier Is Named to Leadership Role at NOAA - EcoWatch ›
New Jersey is one step closer to passing what environmental advocates say is the strongest anti-plastic legislation in the nation.