Taking the Money out of Climate Change

Recently I heard a sermon on the kind of world God wants. In God’s world, “the meadows clothe themselves with flocks, the valleys deck themselves with grain,” and “all the trees of the forest sing for joy”. The sermon made me think of the lecture on climate change I had just given to my Biology class. According to the UN Intergovernmental Panel on Climate Change (IPCC), we are heading towards exactly the opposite kind of world from what God wants. The coming decades will see flooded cities, massive hurricanes, devastating floods, and intense drought throughout much of the world.

In fact, early warnings of change are already here. Cyclone Haiyan, hitting the Philippines last fall, was the most powerful hurricane ever recorded. The past year saw record flooding in Alberta, Eastern Europe, and England. Many areas have recently suffered intense drought, including Mexico, the U.S., the Middle East, Australia and China. In a world of more than 7 billion people, intensifying climate change will mean horrendous human suffering on a scale never seen before. To quote the Reverend Stephen Croft of England, “The threat of climate change is a giant evil, a great demon of our day. The damage this great demon will do to this beautiful earth, if unchecked, is unimaginable.” The climate change demon is no longer slowly creeping up on us; it has arrived and is breathing down our necks.

The climate is changing, and it’s our fault. We have been digging up and burning oil, coal, and natural gas – fossil fuels – to fuel the economy. Fossil fuels are used in the production and distribution of everything we make and do, including our food, clothing, housing, medications, electronics, garbage collection, snow removal, and absolutely everything else. In fact, fossil fuels provide 85% of the energy we use. The world economy is a fossil fuel economy.

The problem is that, in burning fossil fuels, we are spewing carbon dioxide into the air – ‘carbon emissions’. The amount of carbon dioxide in the atmosphere is increasing steadily; there is now more carbon dioxide in the atmosphere than at any time in human existence. As carbon dioxide increases, it traps more and more heat, causing the earth to warm and the climate to change. Scientists predicted this a century ago, and the evidence that we are already changing the climate has been clear for at least a decade. But, so far, efforts to reduce carbon emissions have failed. Even as some of us have cut back on our driving and lowered our thermostats, the economy as a whole has continued to grow, and carbon emissions have risen along with it. To avoid the worst of climate change we need stop using fossil fuels altogether and build a ‘fossil-free’ economy that relies on energy sources that do not involve carbon emissions.

This shift will not be easy; money stands in the way. The companies that extract fossil fuels have amassed four times more fossil fuels in their proven reserves than scientists say we can still burn without hitting the ‘climate change cliff’. Scientists estimate that burning just 20% of proven reserves will bring us to the point where there is so much carbon dioxide in the atmosphere that climate change will be unstoppable and catastrophic. Before that point, we have to stop using fossil fuels completely. At current rates, we have only 14 years left before we reach the climate change cliff. To keep from going over the cliff, we need to not burn 80% of the fossil fuels that the fossil fuel companies are counting on us burning.

It is hard to imagine how we will do this, when that 80% is worth over $100 trillion (that’s $100 million million) in gross revenues to the fossil fuel companies. That is a lot of money to leave in the ground. Adding to the challenge, these fossil fuel reserves are already included in the stock values of those companies. What can we do to break through this financial barrier to a fossil-free economy?

Some say that we should use consumer power to reduce demand for fossil fuels by reducing our consumption of them. While this can be part of the solution, alone it will not solve the problem. For example, if everyone in the world decided to stop driving cars right now, we would have about 17 years instead of 14 years before we reach the climate change cliff, but we would still go over it. The problem is that our personal carbon footprint is largely out of our own control. There is no fossil-free option available for almost everything we buy and do (food, clothing, garbage collection etc.) because we live in a fossil fuel economy.

To shift the economy from fossil fuels to fossil-free energy, we need to remove the financial incentive for using fossil fuels. Many organizations – churches, universities, city governments, foundations and others – have embraced fossil fuel divestment as a way of doing this. These organizations have committed to freezing new investments in fossil fuel companies, and to setting a schedule for moving existing investments out of fossil fuels.

Fossil fuel divestment makes sense ethically and practically. On the ethical side, it says that if it’s wrong to wreck the climate, it’s wrong to profit from that wreckage. On the practical side, when an organization divests from fossil fuels it sends the message to other investors and governments that it disagrees with the value that financial markets place on the coal, oil, and gas reserves that we must not burn. This message is already being heard. Some financial leaders are warning investors that the value currently placed on fossil fuel companies is too high, creating a ‘carbon bubble’ in the market. Fossil fuel divestment signals to fossil fuel companies and governments that it is time to change the economy swiftly and completely from fossil fuels to fossil-free energy, before it’s too late for the climate.

Lenore Fahrig is a resident of Ottawa and Biology Professor at Carleton University

 

More reading:

Intergovernmental Panel on Climate change (IPCC) reports: “Climate Change 2013: The Physical Science Basis”; “Climate Change 2014: Impacts, Adaptation, and Vulnerability” (http://www.ipcc.ch/report/ar5/)

Canadian Centre for Policy Alternatives, 2013. “Canada’s Carbon Liabilities: The Implications of Stranded Fossil Fuel Assets for Financial Markets and Pension Funds.” (https://www.policyalternatives.ca/publications/reports/canadas-carbon-liabilities)

List of organizations that have committed to fossil fuel divestment: http://gofossilfree.org/commitments/

Example news reports on the carbon bubble and fossil fuel divestment:

The Guardian, 4 May 2013, “Either governments are not serious about climate change or fossil-fuel firms are over-valued.”

The Financial Post, 22 October 2013, “Activists push big Canadian investors to dump energy stocks”

The Globe and Mail, 30 October 2013, “Global carbon budget is a harsh reality check for Canadian investors”

The New York Times, 29 January 2014, “Foundations Band Together to Get Rid of Fossil Fuel Investments”

The Economist, 6 March 2014, “‘Carbon bubble’ poses serious threat to UK economy, MPs warn”

The Globe and Mail, 24 March 2014, “Exxon leads the charge on the ‘carbon bubble’”

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