Fossil Fuel Companies Risk Wasting $2tn of Investors' Money, Study Says

The Guardian - Damian Carrington

Paris climate deal could render oil, gas and coal projects worthless with US, Canada, China and Australia most vulnerable to losing billions

An oil rig in Culver City, California, US. Photograph: David McNew/Getty Images 

Fossil fuel companies risk wasting up to $2tn (£1.3tn) of investors’ money in the next decade on projects left worthless by global action on climate change and the surge in clean energy, according to a new report.
The world’s nations aim to seal a UN deal in Paris in December to keep global warming below the danger limit of 2C.
The heavy cuts in carbon emissions needed to achieve this would mean no new coal mines at all are needed and oil demand peaking in 2020, according to the influential thinktank Carbon Tracker. It found $2.2tn of projects at risk of stranding, ie being left valueless as the market for fossil fuels shrinks.
The report found the US has the greatest risk exposure, with $412bn of projects that could be stranded, followed by Canada ($220bn), China ($179bn) and Australia ($103bn).
The UK’s £30bn North Sea oil and gas projects are at risk, the report says, despite government efforts to prop up the sector. Shell, ExxonMobil and Pemex are the companies with the greatest sums potentially at risk, with over $70bn each.
The failure of the fossil fuel industry to address climate change is laid out in a second report on Wednesday, in which senior industry figures state there is “a significant disconnect between the changes needed to reduce greenhouse gas emissions to the [2C] level and efforts currently underway”.
Lord John Browne, former BP boss, Sir Mark Moody-Stuart, former Shell and Anglo American chair and others say there must be “fundamental reassessment of the fossil fuel industry’s business models” and that companies should seize commercial opportunities in low-carbon energy.
The Carbon Tracker report looked at existing and future projects being considered by coal, oil and gas companies up to 2025 and determined which could proceed if carbon emissions are cut to give a 50% chance of keeping climate change under 2C.
Many high-cost projects, including Arctic and deepwater drilling, tar sands and shale oil are unneeded and therefore uneconomic in the 2C scenario, the report found, although some are required to replace fields that are already depleting.
“Business history is littered with examples of incumbents – like Kodak and Blockbuster – who fail to see a transition coming,” said Anthony Hobley, chief executive of Carbon Tracker. “Our report offers these companies a warning [about] avoiding significant value destruction.”
For coal, the report found “it is the end of the road for expansion of the sector”, with no new coal mines required anywhere in the world if dangerous climate change is to be avoided.
“In the [2C] scenario, oil demand peaks around 2020,” found the report. “This means the oil sector does not need to continue to grow, which is inconsistent with the narrative of many companies.”
Spending of $1.3tn on new oil projects and $124bn on existing projects is unneeded, it concluded. For gas, demand in a 2C scenario is significantly lower than companies forecast, with $459bn of new projects and $73bn of existing projects surplus to requirements.
The second report is produced by Critical Resource, a firm that advises fossil fuel companies, and involved senior industry and climate figures, including former European climate commissioner Connie Hedegaard .
The report said “meeting [a 2C] target will result inevitably in steep declines in fossil fuel production over the coming decades” but that the “industry has so far generally been locked in defensive mode”. It added: “While most companies recognise the importance of climate change to their businesses, there is little evidence that most are altering their strategic plans.”
However, it concluded: “Companies [should] urgently develop strategic plans to identify how they can compete commercially in a [2C] world. The aim is to unleash the industry’s creativity and innovation in finding profitable solutions.”
“There is a very big gap between what the industry needs to do to compete in a 2C world and what they are doing,” said Daniel Litvin, MD of Critical Resources. “It may be the case that the most effective use of shareholder funds is to pay out more dividends and invest less.” But he said fossil fuel companies’ expertise in managing large projects across the world and long-term relationships with governments could give them an advantage in low-carbon projects.
Litvin said the fossil fuel industry has been too slow in developing carbon capture and storage technology, which could bury emissions but has yet to be proven at commercial scale. “CCS is critically important,” he said. “It is the only way gas or coal will have a long-term future. Companies have waited for governments to move, but governments largely haven’t, yet the industry is facing an existential threat.”
There are signs of structural shifts towards low-carbon energy in the utility sector, following moves from Enel and E.On, and Litvin said such a shift could happen in the fossil fuel sector with ambitious leadership and the right signals from the Paris climate summit.
“The critical mass point could be as soon as a couple of years down the road, which is pretty soon for an industry that has been around for 100 years,” he said.

WMO: 2015 likely to be Warmest on Record, 2011-2015 Warmest Five Year Period

World Meteorological Organization

UN weather body says man-made global warming and El Niño oceanic phenomenon made 2011-2015 the warmest five-year period on record

A picture taken on 1 July 2015 shows a thermometer in Lille as a major heatwave spread through Europe, with temperatures hitting nearly 40C. Photograph: Philippe Huguen/AFP/Getty Images 

Climate Change Breaches Symbolic Thresholds, Fuels Extreme Weather
The global average surface temperature in 2015 is likely to be the warmest on record and to reach the symbolic and significant milestone of 1° Celsius above the pre-industrial era. This is due to a combination of a strong El Niño and human-induced global warming, according to the World Meteorological Organization (WMO).
The years 2011-2015 have been the warmest five-year period on record, with many extreme weather events - especially heatwaves - influenced by climate change, according to a WMO five-year analysis.
"The state of the global climate in 2015 will make history as for a number of reasons," said WMO Secretary-General Michel Jarraud. "Levels of greenhouse gases in the atmosphere reached new highs and in the Northern hemisphere spring 2015 the three-month global average concentration of CO2 crossed the 400 parts per million barrier for the first time. 2015 is likely to be the hottest year on record, with ocean surface temperatures at the highest level since measurements began.  It is probable that the 1°C Celsius threshold will be crossed," said Mr Jarraud. "This is all bad news for the planet."
Greenhouse gas emissions, which are causing climate change, can be controlled. We have the knowledge and the tools to act. We have a choice. Future generations will not."
"Added to that, we are witnessing a powerful El Niño event, which is still gaining in strength. This is influencing weather patterns in many parts of the world and fuelled an exceptionally warm October. The overall warming impact of this El Niño is expected to continue into 2016," said Mr Jarraud.
WMO issued its provisional statement on the status of the climate in 2015, and an additional five-year analysis for 2011-2015, to inform negotiations at the U.N. Climate Change Conference in Paris.
A preliminary estimate based on data from January to October shows that the global average surface temperature for 2015 so far was around 0.73 °C above the 1961-1990 average of 14.0°C and approximately 1°C above the pre-industrial 1880-1899 period.
This temperature tendency indicates that 2015 will very likely be the warmest year on record. The global average sea-surface temperature, which set a record last year, is likely to equal or surpass that record in 2015. The global average temperatures over land areas only from January to October suggest that 2015 is also set to be one of the warmest years on record over land. South America is having its hottest year on record, as is Asia (similar to 2007), and Africa and Europe their second hottest.
According to preliminary figures as of the end of September 2015, 2011-15 was the world's warmest five-year period on record, at about 0.57°C (1.01°F) above the average for the standard 1961-90 reference period. It was the warmest five-year period on record for Asia, Europe, South America and Oceania, and for North America. WMO compiled the five-year analysis because it provides a longer-term climate signal than the annual report.

Highlights of 2015

• El Niño
  The full effect of the strong 2015 El Niño on global temperature is likely to continue after El Niño peaks. However, other impacts are already being felt.  In early October, NOAA declared that record global ocean temperatures had led to a global coral bleaching event. This began in the North Pacific in the summer of 2014 and spread to the South Pacific and Indian Ocean in 2015.
  Consistent with typical El Niño impacts, large areas of Central America and the Caribbean recorded below average rainfall. Brazil, which started the year in drought in southern and eastern areas, saw the focus of the drought shift north with scant rainfall during the dry season over the Amazon. India's monsoon rainfall was 86% of normal. In Indonesia, the low rainfall has likely contributed to the increased incidence of wildfires. Peru was affected by heavy rain and flooding, as was Argentina.
• Ocean heat and sea level rise
  The oceans have been absorbing more than 90% of the energy that has accumulated in the climate system from human emissions of greenhouse gases, resulting in higher temperatures and sea levels. In the first nine months of 2015, global ocean heat content through both the upper 700 meters and 2000 meters of the oceans reached record high levels. The latest estimates of global sea level indicate that the global average sea level in the first half of 2015 was the highest since satellite observations became available in 1993.
  Significant warmth was recorded across large areas of the oceans. The Tropical Pacific was much warmer than average, exceeding 1°C over much of the central and eastern equatorial Pacific, consistent with the signature of a strong El Niño. The northeast Pacific, much of the Indian Ocean and areas in the north and south Atlantic were significantly warmer than average.  Areas to the south of Greenland and in the far southwest Atlantic were significantly colder than average.
• Regional temperatures
  Significant warmer than average temperatures were recorded over the majority of observed land areas, especially western North America, large areas of South America, Africa and southern and eastern Eurasia. China had its warmest January-to-October period on record. For the continent of Africa, 2015 currently ranks as the second warmest year on record. Australia had its warmest October on record and a heatwave early in the month set new records for early season warmth.
  One notably cold area was the Antarctic, where a strong anomaly in atmospheric patterns known as the Southern Annular Mode lasted for several months. Eastern areas of north America were colder than average during the year, but none were record cold. After a warm January to September, Argentina experienced its coldest October on record.
• Heatwaves
  A major heatwave affected India in May and June, with average maximum temperatures exceeded 42°C widely and 45°C in some areas. In southern Pakistan temperatures exceeded 40 °C in June.
  Heatwaves affected Europe, northern Africa and the Middle East through the late spring and summer, with many new temperature records set. In May, high temperatures affected Burkina Faso, Niger and Morocco. Spain and Portugal also saw unusually high temperatures. July brought heat waves to a large area from Denmark in the north, to Morocco in the south and Iran in the east. In early August, Jordan experienced a heatwave, whilst Wroclaw (Poland) experienced an all-time high temperature of 38.9°C on the 8th August. The heat continued into September, shifting further into Eastern Europe.
  During the spring of 2015 in South Africa, record high temperatures were exceeded on a regular basis.
• Rainfall and drought
  Areas of high rainfall included: southern areas of the USA, Mexico, Bolivia, southern Brazil, southeast Europe, areas of Pakistan and Afghanistan. Heavy rain in January led to flooding in Malawi, Zimbabwe and Mozambique, and in February it affected Morocco, Algeria and Tunisia. 2015 saw exceptional seasonal rainfall totals in several parts of Burkina Faso and Mali.
  March in Chile saw unusually heavy rains which caused flooding and mudslides. In August, heavy rain in the Buenos Aires province of Argentina saw several monthly and daily rainfall records broken during the month. Mexico had its wettest March on record (since 1941). It was the wettest May on record for the contiguous USA and the wettest month overall in 121 years of record keeping. Between May and October, China experienced 35 heavy rain events. Subsequent flooding affected 75 million people with estimated economic losses of 25 billion dollars.
  Long-term rainfall patterns can disguise great variability in short-term totals. There were many instances in 2015 of 24-hour totals exceeding the normal monthly mean. For instance, the Moroccan city of Marrakech received 35.9mm of rain in one hour in August, over 13 times the monthly normal. In Pakistan during the monsoon, one station recorded 540mm of rain in 24 hours; the annual normal is 336mm.
  Dry areas included Central America and the Caribbean, northeast South America including Brazil, parts of central Europe and Russia, parts of Southeast Asia, Indonesia and southern Africa. In Western North America, long-term drought conditions continued. Basins across the west depend on snowpack as a water resource. On April 1, the snow water equivalent was 5% of normal.
  The dry and warm conditions observed across much of the western USA during the year favoured the development of wildfires. In Alaska, over 400 fires burned 728,000 hectares in May, breaking the previous record of 216 fires and 445,000 hectares. Over 700 wildfires were reported in Alaska during July, burning nearly 2 million hectares during the summer. Large fires burned throughout the Northwest in August and Washington State suffered its largest fire on record.
• Tropical Cyclones
  Globally, a total of 84 tropical storms formed between the start of the year and 10 November, compared to the 1981-2010 annual average of 85. Hurricane Patricia which made landfall in Mexico on 24 October was the strongest hurricane on record in either the Atlantic or eastern North Pacific basins, with maximum sustained wind speeds of 320 km/hour. In the Northwest Pacific basin, 25 named storms were recorded. Six typhoons made landfall over China, with three leading to combined estimated economic losses of 8 billion dollars.
  Four named storms formed in the Northern Indian Ocean. Rainfall associated with tropical storm Komen contributed to severe flooding and landslides in Myanmar. Bangladesh also suffered from flash floods and landslides. Yemen suffered from unprecedented back-to-back cyclones in early November, with Chapala becoming first tropical cyclone to make landfall, followed by Megh.
  The South Pacific saw 9 named storms. Tropical cyclone Pam made landfall over Vanuatu as a category 5 cyclone on 13 March destroying many homes.
• Arctic and Antarctic
  Since consistent satellite records began in the late 1970s, there has been a general decline in Arctic sea ice extent throughout the seasonal cycle. In 2015, the daily maximum extent, which occurred on 25th February 2015, was the lowest on record at 14.54 million km2. The minimum sea ice extent was on 11th September when the extent was 4.41 million km2, the fourth lowest in the satellite record.
  In the southern hemisphere, the daily maximum extent of 18.83 million km2 was recorded on 6th October in Antarctica. This is the 16th highest maximum extent in the satellite record. The minimum extent, recorded on 20 February, was 3.58 million km2, the 4th highest on record.
• Climate Change Attribution
  Scientific assessments have found that many extreme events in the 2011-15 period, especially those relating to extreme high temperatures, have had their probabilities over a particular time period substantially increased as a result of human-induced climate change – by a factor of 10 or more in some cases.
  Of 79 studies published by Bulletin of the American Meteorological Society between 2011 and 2014, more than half found that anthropogenic climate change contributed to extreme events. The most consistent influence has been on extreme heat, with some studies finding that the probability of the observed event has increased by 10 times or more.
  Examples include the record high seasonal and annual temperatures in the United States in 2012 and in Australia in 2013, hot summers in eastern Asia and western Europe in 2013, heatwaves in spring and autumn 2014 in Australia, record annual warmth in Europe in 2014, and the Argentine heatwave of December 2013.
  Some longer-term events, which have not yet been the subject of formal attribution studies, are consistent with projections of near- and long-term climate change. These include increased incidence of multi-year drought in the subtropics, as manifested in the 2011-15 period in the southern United States, parts of southern Australia and, towards the end of the period, southern Africa. There have also been events, such as the unusually prolonged, intense and hot dry seasons in the Amazon basin of Brazil in both 2014 and 2015 which, while they cannot yet be stated with confidence to be part of a long-term trend, are of considerable concern in the context of potential "tipping points" in the climate system as identified by the Intergovernmental Panel on Climate Change.

WMO Analysis Methods
The WMO reports on the Status of the Global Climate are based on contributions from WMO`s 191 Members.
The global temperature analysis is principally derived from three complementary datasets maintained by the Hadley Centre of the UK's Met Office and the Climatic Research Unit, University of East Anglia, United Kingdom (combined); the US National Oceanic and Atmospheric Administration (NOAA) National Centres for Environmental Information; and the Goddard Institute of Space Studies (GISS) operated by the National Aeronautics and Space Administration (NASA). Global average temperatures are also estimated using reanalysis systems, which use a weather forecasting system to combine many sources of data to provide a more complete picture of global temperatures. WMO uses data from the reanalysis produced by the European Centre for Medium-Range Weather Forecasts and the Japan Meteorological Agency.

Global annual average near-surface temperature anomalies from HadCRUT4.4.0.0 (Black line and grey area indicating the 95% uncertainty range), GISTEMP (blue) and NOAAGlobalTemp (orange). The average for 2015 is a provisional figure based on the months January to October 2015. Source: Met Office Hadley Centre.

Global annual average temperatures anomalies (relative to 1961-1990) based on an average of three global temperature data sets (HadCRUT.4.4.0.0, GISTEMP and NOAAGlobalTemp) from 1950 to 2014. The 2015 average is based on data from January to October. Bars are coloured according to whether the year was classified as an El Niño year (red), a La Niña year (blue) or an ENSO-neutral year (grey).Note uncertainty ranges are not shown, but are around 0.1°C.

Average temperature anomalies for January to October 2015 from the HadCRUT.4.4.0.0 data set. Crosses (+) indicate temperatures that exceed the 90th percentile, signifying unusual warmth, and dashes (-) indicate temperatures below the 10th percentile, indicating unusually cold conditions. Large crosses and large dashes indicate temperatures outside the range of the 2nd to 98th percentiles. Source: Met Office Hadley Centre

Ocean heat content down to a depth of 700m. Three-month (red), annual (black) and 5-year (blue) averages are shown. Source: NOAA NCEI.

Ocean heat content down to a depth of 2000m. Three-month (red), annual (black) and 5-year (blue) averages are shown. Source: NOAA NCEI

Australian Emissions To Grow 6 Per Cent Under Direct Action

Renew Economy - Sophie Vorrath

One week shy of UN climate talks in Paris, a new report has warned that Australia will fall well short of achieving any “real” emissions reductions under its current climate policy, but instead would grow its national emissions by a huge 6 per cent, from around minus 2 per cent on 2000 levels today, to 4 per cent above 2000 levels by 2020.
The report, released on Monday by energy market analysts RepuTex, says the only way Australia will meet its international commitment to cut emissions by 5 per cent on 2000 levels will be via the “accounting benefit” gained through the Kyoto Protocol.
The report also warns that the projected increases in real emissions over 2015-20 will come at a cost, doubling the rate of Australia’s annual abatement task out to 2030.

“While emissions are increasing, we continue to anticipate that the government will utilise more than 130 million carry-over credits under Kyoto, which will give us a large accounting buffer to meet our 2020 target,” said Hugh Grossman, Executive Director of RepuTex.
“While we will meet our international commitment, Australia’s absolute emissions will not reach minus 5 per cent on 2000 levels.”
“We project real emissions will increase to plus 4 per cent on 2000 levels by 2020, or 6 per cent from today, despite current government policy,” he said.
The report comes after the release of the results from the second ERF auction, which contracted for 45 million Australian Carbon Credit Units (ACCUs) to be delivered over 10 years, spending $550 million.
After two auctions – or one year of the scheme – the ERF has contracted 93 million ACCUs, committing $1.2 billion, allocated to 131 projects. This will be supplied over approximately 10 years, an average of 9.3 million per year.
And while Australia will be able to increase its emissions and still meet its 2020 target, analysis indicates that allowing emissions to grow will place significant pressure on Australia’s 2030 abatement task, potentially more than doubling the amount of annual abatement required to meet Australia’s long-term target.
“Unfortunately, current policy can’t keep up with emissions increases. While the ERF has been successful, the rate of annual Australian emissions growth is significantly outpacing any emissions reductions contracted under the scheme,” said RepuTex executive director Hugh Grossman.
“After two auctions, the ERF will supply an average of 9.3 million ACCUs per year prior to 2020, but emissions will grow 43 million tonnes per year over the same period”
According to RepuTex, the surge in Australia’s emissions growth is largely a result of increasing economic output from emissions intensive activities, even accounting for a slowdown in commodity prices.
“Australia is set to experience a period of emissions growth,” Grossman said. “Emissions have increased 2 per cent in the electricity sector over the past year, and coal will continue to dominate the fuel mix in the short-term.”
“In addition, we will see new and expanding Coal and LNG facilities come online over the next five years, plus growing demand for coal in Asia. So given the growing rate of output, domestic emissions are set to increase, despite the ERF.”
“As new facilities come online, emissions will follow. You can’t have one without the other.
The good news, however, is that RepuTex’s forecast for emissions growth of 6 per cent over the next five years is more favourable for the government than its own official figures. The Department of Environment forecast that emissions will increase by 20 per cent over the same period.
Much of this is driven by activity in the resources sector, with Australia’s thermal coal exports forecast to rise 11 percent to 223 million tonnes between 2014 and 2020, according to the Department of Industry.
In addition, new LNG facilities under construction such as Gorgon, Wheatstone, and APLNG are set to become operational in 2016, while new coal mines including Maules Creek, Grosvenor, and Eagle Downs will further increase emissions over 2015 to 2017.
“If emissions increase from today, that growth will need to be made up for later, which will place pressure on policy, and invariably industry, to find more cuts each year,” said Grossman.
“It is more efficient to generate cuts from today’s levels, rather than let any gains be unwound, and then pay to start over again later. By that point the market will have less time to reduce more emissions.”
The government will undertake a review of its Direct Action Plan policy in June 2017, reporting by November 2017. Any policy amendments are expected to take effect by 2018-19, at the earliest, in almost two to three years’ time.
According to RepuTex, the review timeline, combined with the dwindling ERF budget, may place pressure on the government to explore an interim policy.
“Given the remaining ERF budget, there are likely to be just two more auctions in 2016 until funding is exhausted. That will mean there is no mechanism to curb emissions, or support new abatement projects until 2018-19 at the earliest,” said Grossman.
“That may place pressure on the government to explore an interim policy prior to the 2016 federal election, such as more ERF funding, or the scale up of voluntary “early market” rules, to incentivise new projects, particularly from high emitting companies,” he said.
The Paris climate conference will run from November 30 to December 11, with Prime Minister Malcom Turnbull to attend the first day of the conference.

A New Way to Look at Planet Earth

GOOD - Gabriel Reilich

It’s the year 2015 and we’re accustomed to seeing images of Earth from space. But advancements in satellite technology continue to yield profound new ways of looking at our home from afar. For example, NASA put together some stunning composite images of our planet as part of its Blue Marble: Next Generation photography endeavor. By combining thousands of photos, they’ve created a view of our planet without any obstruction from clouds. There are images for each month of the year. When you cycle through these images, something remarkable happens. The first part of this video is made using these unaltered NASA images—no effects are involved.



The second part uses those same images, combined with data from the Geophysical Fluid Dynamics Laboratory (GFDL) regarding the projected warming of Earth and the shrinking of the arctic ice cap. This combination of NASA and GFDL data reveals something unsettling about the next 100 years. Luckily, there’s something we can do about it. Humankind has the unique ability to see into the future, as demonstrated by these visual projections. It’s a special gift that our species has. The question is, what will we choose to do with this knowledge?