Climate change is a demand-side problem

Today we examine two approaches to the Paris climate debate.  One points out the inadequacy of the carbon targets being talked about for Paris.  The other cites the massive costs for doing nothing.  Both suggest the futility of such gatherings.

Regular readers understand I think it insane to fly in a bunch of delegates from around the world (at significant expense to the atmosphere) to attempt to find an agreement on targets that governments will pinky-swear to meet by methods still to be determined.  It is insane.  If these people were at ALL serious about the climate-change problem, the FIRST thing they would do is cancel these goofy conferences to show that they intend to at least address their OWN carbon footprints.

But the problem is worse than even that madness.  The environmental bureaucrats on their way to Paris have a serious flaw in their reasoning—they think they can fix the problem on the supply side.  Beat up on the oil companies.  Stop building pipelines.  Tax the shit out of hydrocarbons so people will think harder about their energy-buying decisions.  You know the drill.  But when it comes to addressing the demand side, their suggestions are usually worse than lame.  Of course, they're lame—we can't have carbon considerations change things like big climate conferences or Al Gore flying around in a Gulfstream.

It's kind of like the thinking that gave us the war on drugs.  Use military methods to stop the supply but do nothing to dry up demand (assuming any such thing is possible.)  One might argue that there is essentially an infinite demand for liquid fossil fuels just like there seems to be an unlimited demand for feel-good drugs.  One big difference, however.  If we cannot dry up demand for fossil fuels through intensive infrastructure redesign, we will most certainly destroy the biosphere for human habitation.

Will the Paris Climate Talks Deliver the World We Need? Not likely.

Even as governments set climate targets, they're working hard to expand the extractive global economy with measures that could deepen the climate crisis.

By Janet Redman, November 12, 2015.

We need to leave more than 80 percent of known oil, coal, and gas reserves in the ground to avoid triggering catastrophic climate change. That means shifting away from an economy driven by digging, pumping, and burning fossil fuels to one that puts people and the planet first.

On this the science is simple, but the politics are fraught.

The upcoming UN summit in Paris, where governments from almost every country on Earth will meet to hammer out a new global climate deal, would seem the logical place to set that change in motion. These forums are the only place where nations sit together as equals, at least ostensibly, to address what’s truly a global problem.

So can these talks deliver an agreement that moves us into a post-fossil fuel world? The simple answer is no.

For starters, the draft ­agreement they’ll be using as the basis for discussion makes no reference to fossil fuels at all. Perhaps that should come as no surprise, given that dirty energy companies and their financial backers are among the sponsors of the summit.

In the absence of a concrete plan to roll back our reliance on coal, oil and gas, governments are kicking around climate “solutions” that let countries keep on burning them.

They’re entertaining ideas like carbon capture, use, and storage, or CCUS — a technology that would allow facilities like power plants to pump carbon emissions into the ocean or underground geologic formations. The approach is unfeasibly expensive, risky, and unproven at scale, but the U.S. and China favor it as an option that would preserve the role of dirty fuels.

The emerging concept of “net-zero” emissions goes a step further. Under that scheme, countries would be allowed to “offset” their carbon pollution with technologies that are meant to pull carbon dioxide out of the air, like producing vast quantities of charcoal and adding it to soils. The Intergovernmental Panel on Climate Change estimates that 6 billion hectares of biomass — that’s four times the total land used today to grow all the world’s food — would be needed to match our fossil fuel use.

In other words, even as governments are talking about setting climate targets, they’re working hard to expand the extractive global economy with measures that could deepen the climate crisis. That’s ridiculous. We need to cut carbon, not find new places to bury it.

More fundamentally, we need a new economy based on using less — and sharing it better.

Luckily, tens of thousands of people will also converge in Paris this December in spaces like the World Village of Alternative Solutions. They’ll share their visions of systemic change and offer concrete examples of places where people are experimenting with new forms of enterprise, energy systems, mechanisms for wealth distribution, and governance.

Workers from India’s Solid Waste Collection and Handling cooperative, for example, will be on hand to share their experiences providing grassroots, front-end waste management services in the city of Pune. The 2,300 worker-members, mainly women from marginalized castes, have on average tripled their income since joining the cooperative. And through improving recycling rates and diverting organic matter from landfills, they’ve mitigated 640,000 tons of greenhouse gas emissions annually and minimized pressure on forest resources.

To challenge undemocratic corporate influence in the climate talks, meanwhile, civil society groups are also proposing that a new climate deal follows the example of the international Tobacco Treaty, which bars tobacco companies from participating in treaty negotiations or interfering in national public health policy. Proponents say it could go a long way to protect climate policy from the stranglehold of Big Oil, Big Gas, and King Coal.

New ways to distribute wealth, especially by disrupting the concentration of money and power at the top, are being brought to the table, too. A movement across Europe has already succeeded in pushing 11 countries to agree to a small tax on financial transactions (aka the Robin Hood Tax) that could pull down €35 billion from the big banks each year to invest in climate solutions in the hardest hit communities.

These are just a few concrete actions to help build a new economy that puts more control in the hands of the communities most impacted by climate change — and gets to the heart of the relentless drive for growth that’s causing it.

Any decision emerging from the Paris climate summit will almost certainly fail to confront the real problem: a global economic model that relies on fossil fuels to power the engine of expansion. Luckily, people in communities all across the planet are willing to take the lead. more

Climate change could pummel stocks: study

Mara Bierbach, 12.11.2015

Environmentalists aren't the only ones fretting over climate change. A new study has calculated the risk to financial markets if temperatures are allowed to rise uninhibited. Inaction, it said, would be a bad investment.

A fresh study by the Cambridge Institute for Sustainable Leadership has put a price tag on climate change mitigation. Investment portfolios primarily made up of stocks could lose nearly half of their value if global warming isn't curbed.

By contrast, if the Earth's temperature is prevented from rising more than 2 degrees above pre-industrial levels, global GDP could be 20 percent higher in 2050 than it is now, according to the study, which was released on Thursday.

With the next United Nations Climate Conference less than three weeks away, the study was one of the first of its kind to primarily focus on the effect global warming has on financial markets.

The researchers stress-tested financial portfolios, simulating market shocks generated by different climate change scenarios.

Short-term costs, long-term benefits

The study posits that radical political measures to mitigate climate change would initially have a negative impact on the real economy and the financial sector. Yet, in the long term, global economic output would benefit from limiting global warming to two degrees Celsius above pre industrial levels.

If the two-degree target is reached, global GDP could be more than 20 percent higher by 2050, compared to a scenario where no political action is taken and the use of fossil fuels increases, the study found.

Financial investors face serious challenges in the five years leading up to 2020. Investment portfolios consisting mainly of stocks are at risk of losing up to 45 percent of their value if no political action is taken to combat climate change and fossil fuel use continues to increase, with the markets in the developing world hit hardest.

By contrast, if radical political actions were taken to limit climate change to two percent, the scientists also expect portfolio values to plummet initially, but never by more than 15 percent. In addition, they expect markets to recover much faster.

A call for action

According to the study, investors could avoid half of these risks by restructuring their portfolios. Early movers would have an advantage by shifting their capital to investments in industries and countries less likely to be effected by climate change. But this still leaves half of the risks associated with climate change unable to be hedged. These risks affect the entire market, the researchers say.

Scott Kelly, one of the authors, sees the study as yet another reason for policy makers to commit to drastic measures at the upcoming UN climate conference in Paris.

"Our key messages are that the risk of climate change are real and that the investment community needs to take these risks into consideration," Kelly told DW.

"One of the key risk factors of climate change is that the longer we wait to make the transition, the higher the cost is going to be," Kelly added. "What the financial markets and businesses want to see is an orderly transition to a low carbon future."

"The greatest market failure the world has ever seen"

The findings of Kelly and his colleagues are largely in line with other studies on the economic impact of climate change. Nicholas Stern published a widely discussed report in 2006 that argued that climate change was "the greatest market failure the world has ever seen."

Stern, a former chief economist at the World Bank, found that the benefits of strong and early action against climate change would clearly outweigh the economic costs of not acting. More recently, Stern has argued that political action would be even more urgent than his report initially stated.

In July of this year, two scholars from the London School of Economics published a study arguing that the benefits of preventing climate change were larger than the drawbacks - not just on a global scale but also for individual countries, pushing against the common view of climate change as a "tragedy of the commons".

In a speech in September, the governor of the Bank of England, Mark Carney, called climate change a significant threat to financial stability, arguing that, among other things, the costs of weather-related insurance claims had risen dramatically since the 1980s. "The challenges currently posed by climate change pale in significance compared with what might come," Carney stated. more