Lethal Heating: 01/04/18

04/01/2018

Investors, Now We Have Your Attention On Climate Change

Fairfax - Julien Vincent*

A clarion call from within the industry, and a costly taste of climate reality, saw investors finally wake up to global warming in 2017.
Investors have tended to downplay their role in combating climate change, preferring to cast themselves as helpless bystanders against a lack of stable and clear policy.

The costs of climate change impacts, and the transformation to a low-carbon economy, present an array of financial risks for investors. Photo: Jessica Shapiro JLS

In Australia, you can see why this argument is effective.
Last year, our climate and energy debate has included the Treasurer Scott Morrison gleefully waving a lump of coal around in parliament as Australia suffers a record-breaking heatwave, the Resources Minister Matt Canavan championing the idea of using public money to build a new coal power station, and renewable energy incentives cut against the advice of our Chief Scientist.

Already over 1ºC of warming, the rate of temperature increase is accelerating, making the challenge of outpacing the threat with remedial action even greater.

But the reality is this argument from investors is bogus, regardless of how stable or chaotic the policy context is.

Aside from the principle that the owners of the economy should shoulder some responsibility for its outcomes, a far more compelling argument to investors took hold in 2017: climate risk.
The costs of climate change impacts, and the transformation to a low-carbon economy present an array of financial risks that manifest in the portfolios of investors.
This was the case put by the Financial Stability Board, which set up a Task Force on Climate-related Financial Disclosures (TCFD) to guide investors on how to assess climate risk.
Its final recommendations were released in June and by December the TCFD had the support of over 150 financial firms, responsible for assets of over $US81.7 trillion.
The increased expectation was also starting to get results from companies.
After several failed attempts, investors successfully passed a resolution calling on Exxon Mobil to disclose the risks to its business if the world succeeds in holding global warming below 2ºC.
Australian companies were also starting to move.
By the end of 2017, seven companies had produced scenario analyses of how they stack up in a low carbon economy, with another 12 committed to implement the TCFD recommendations in some form.
Increasing awareness of climate risk also made for a stronger argument that investors divest or withhold finance from companies and projects that have no place in a low-carbon economy.
Banks that had already excluded lending to coal mines and power stations also ruled out extreme oil projects such as tar sands.
NAB and Westpac formally restricted lending to coal, while Commonwealth Bank and ANZ signalled their exposure to coal would continue to fall over time.
The World Bank, which had already excluded coal lending, would do the same for upstream oil and gas from 2019.
AXA made one of the last and the largest divestment announcements of 2017 as the global insurer sold €3.1 billion worth of coal and tar sands stocks.
Financial institutions also received a taste of what physical climate change risk looks like.
Hurricanes Harvey, Irma and Maria, which battered the Caribbean and US Gulf Coast last year, resulted in over a dozen insurance companies recording massive losses.
European insurer Hannover Re took the dramatic step of selling its entire stock portfolio, worth almost €1 billion, to cover the cost of natural hazard claims, while questions were being asked whether the insurance industry could even survive climate change.
If 2017 was the year when investors woke up to the significance of climate risk, 2018 needs to be when finance and investment shifts en masse away from activities that threaten a safe climate future.
We are seriously running out of time if we want to keep a lid on global warming and avoid the worst climate change impacts. 2017 is already expected to join 2015 and 2016 as the three hottest years on record.
Already over 1ºC of warming, the rate of temperature increase is accelerating, making the challenge of outpacing the threat with remedial action even greater.
Seven Australian companies producing scenario analyses of how they perform in a low-carbon economy is a start, and nothing more.
There are dozens of other companies in the ASX200 that are still not bothering, or openly dismissing the idea of managing climate risk.
Investors might feel good by targeting 100+ companies to lead on climate risk disclosure, but when there are over 770 companies just in the global coal supply chain, this is far too narrow a focus.
And with no room left in the carbon budget to expand the fossil fuel industry, policies of financial institutions need to reflect climate reality, even if that means leaving governments behind.
Whether for moral reasons or sheer self-interest, investors have every reason to kick climate risk out of the economy as quickly as possible.

*Julien Vincent is the executive director of Market Forces.

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Quarter Of Land Will Be Drier Under 2C Warming: Study

AFP

A picture shows low water levels at a reservoir in drought-stricken Entrepenas near Sacedon, Spain on November 24, 2017. AFP/File / PIERRE-PHILIPPE MARCOU

More than a quarter of Earth's land surface will become "significantly" drier even if humanity manages to limit global warming to two degrees Celsius, the goal espoused in the Paris Agreement, scientists said on Monday.
But if we contain average warming to 1.5 C (2.7 degrees Fahrenheit), this will be limited to about a tenth -- sparing two-thirds of the land projected to parch under 2 C, they concluded in a study published in Nature Climate Change.

At 1.5 C, parts of southern Europe, southern Africa, central America, coastal Australia and Southeast Asia -- areas home to more than a fifth of humanity -- "would avoid significant aridification" predicted under 2 C, said study co-author Su-Jong Jeong of the Southern University of Science and Technology in Shenzhen, China.
"Accomplishing 1.5 C would be a meaningful action for reducing the likelihood of aridification and related impacts," he told AFP.
Jeong and a team used projections from several climate models, under different warming scenarios, to predict land drying patterns.
Aridification is a major threat, hastening land degradation and desertification, and the loss of plants and trees crucial for absorbing Earth-warming carbon dioxide.
It also boosts droughts and wildfires, and affects water quality for farming and drinking.
The team found that at 2 C, which could arrive any time between 2052 and 2070, between 24 percent and 32 percent of the total land surface will become drier.
This includes land in all five climate categories today -- hyper-arid, arid, semi-arid, dry sub-humid, and humid.
But at 1.5 C -- the lower, aspirational limit also written into the climate-rescue Paris Agreement -- this is reduced to between eight and 10 percent, said Jeong.
Under the pact, signed in the French capital in 2015, countries have filed pledges for reducing climate-altering greenhouse gas emissions from burning coal, oil and natural gas.
But these goals place the planet on track for warming of more than 3 C, which scientists warn will lead to life- and asset-threatening superstorms, sea-level rise, floods and drought.
"Because present mitigation policies do not appear to be sufficient to achieve the 1.5 C temperature goal, more efforts to mitigate global warming are therefore urgently needed to reduce the spread of aridification," the study authors said.

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Keeping global warming within 1.5 °C constrains emergence of aridification

On Its Hundredth Birthday In 1959, Edward Teller Warned The Oil Industry About Global Warming

The Guardian - Benjamin Franta*

Somebody cut the cake – new documents reveal that American oil writ large was warned of global warming at its 100th birthday party.

Physicist Edward Teller pointing at a formula on a blackboard on 22 May 1968. Photograph: STF/AFP/Getty Images

It was a typical November day in New York City. The year: 1959. Robert Dunlop, 50 years old and photographed later as clean-shaven, hair carefully parted, his earnest face donning horn-rimmed glasses, passed under the Ionian columns of Columbia University’s iconic Low Library. He was a guest of honor for a grand occasion: the centennial of the American oil industry.
Over 300 government officials, economists, historians, scientists, and industry executives were present for the Energy and Man symposium – organized by the American Petroleum Institute and the Columbia Graduate School of Business – and Dunlop was to address the entire congregation on the “prime mover” of the last century – energy – and its major source: oil. As President of the Sun Oil Company, he knew the business well, and as a director of the American Petroleum Institute – the industry’s largest and oldest trade association in the land of Uncle Sam – he was responsible for representing the interests of all those many oilmen gathered around him.
Four others joined Dunlop at the podium that day, one of whom had made the journey from California – and Hungary before that. The nuclear weapons physicist Edward Teller had, by 1959, become ostracized by the scientific community for betraying his colleague J. Robert Oppenheimer, but he retained the embrace of industry and government. Teller’s task that November fourth was to address the crowd on “energy patterns of the future,” and his words carried an unexpected warning:

Ladies and gentlemen, I am to talk to you about energy in the future. I will start by telling you why I believe that the energy resources of the past must be supplemented. First of all, these energy resources will run short as we use more and more of the fossil fuels. But I would [...] like to mention another reason why we probably have to look for additional fuel supplies. And this, strangely, is the question of contaminating the atmosphere. [....] Whenever you burn conventional fuel, you create carbon dioxide. [....] The carbon dioxide is invisible, it is transparent, you can’t smell it, it is not dangerous to health, so why should one worry about it?
Carbon dioxide has a strange property. It transmits visible light but it absorbs the infrared radiation which is emitted from the earth. Its presence in the atmosphere causes a greenhouse effect [....] It has been calculated that a temperature rise corresponding to a 10 per cent increase in carbon dioxide will be sufficient to melt the icecap and submerge New York. All the coastal cities would be covered, and since a considerable percentage of the human race lives in coastal regions, I think that this chemical contamination is more serious than most people tend to believe.

How, precisely, Mr. Dunlop and the rest of the audience reacted is unknown, but it’s hard to imagine this being welcome news. After his talk, Teller was asked to “summarize briefly the danger from increased carbon dioxide content in the atmosphere in this century.” The physicist, as if considering a numerical estimation problem, responded:

At present the carbon dioxide in the atmosphere has risen by 2 per cent over normal. By 1970, it will be perhaps 4 per cent, by 1980, 8 per cent, by 1990, 16 per cent [about 360 parts per million, by Teller’s accounting], if we keep on with our exponential rise in the use of purely conventional fuels. By that time, there will be a serious additional impediment for the radiation leaving the earth. Our planet will get a little warmer. It is hard to say whether it will be 2 degrees Fahrenheit or only one or 5.
But when the temperature does rise by a few degrees over the whole globe, there is a possibility that the icecaps will start melting and the level of the oceans will begin to rise. Well, I don’t know whether they will cover the Empire State Building or not, but anyone can calculate it by looking at the map and noting that the icecaps over Greenland and over Antarctica are perhaps five thousand feet thick.

And so, at its hundredth birthday party, American oil was warned of its civilization-destroying potential.
Talk about a buzzkill.
How did the petroleum industry respond? Eight years later, on a cold, clear day in March, Robert Dunlop walked the halls of the U.S. Congress. The 1967 oil embargo was weeks away, and the Senate was investigating the potential of electric vehicles. Dunlop, testifying now as the Chairman of the Board of the American Petroleum Institute, posed the question, “tomorrow’s car: electric or gasoline powered?” His preferred answer was the latter:

We in the petroleum industry are convinced that by the time a practical electric car can be mass-produced and marketed, it will not enjoy any meaningful advantage from an air pollution standpoint. Emissions from internal-combustion engines will have long since been controlled.

Dunlop went on to describe progress in controlling carbon monoxide, nitrous oxide, and hydrocarbon emissions from automobiles. Absent from his list? The pollutant he had been warned of years before: carbon dioxide.
We might surmise that the odorless gas simply passed under Robert Dunlop’s nose unnoticed. But less than a year later, the American Petroleum Institute quietly received a report on air pollution it had commissioned from the Stanford Research Institute, and its warning on carbon dioxide was direct:

Significant temperature changes are almost certain to occur by the year 2000, and these could bring about climatic changes. [...] there seems to be no doubt that the potential damage to our environment could be severe. [...] pollutants which we generally ignore because they have little local effect, CO₂ and submicron particles, may be the cause of serious world-wide environmental changes.

Thus, by 1968, American oil held in its hands yet another notice of its products’ world-altering side effects, one affirming that global warming was not just cause for research and concern, but a reality needing corrective action: “Past and present studies of CO₂ are detailed,” the Stanford Research Institute advised. “What is lacking, however, is [...] work toward systems in which CO₂ emissions would be brought under control.”
This early history illuminates the American petroleum industry’s long-running awareness of the planetary warming caused by its products. Teller’s warning, revealed in documentation I found while searching archives, is another brick in a growing wall of evidence.
In the closing days of those optimistic 1950s, Robert Dunlop may have been one of the first oilmen to be warned of the tragedy now looming before us. By the time he departed this world in 1995, the American Petroleum Institute he once led was denying the climate science it had been informed of decades before, attacking the Intergovernmental Panel on Climate Change, and fighting climate policies wherever they arose.
This is a history of choices made, paths not taken, and the fall from grace of one of the greatest enterprises – oil, the “prime mover” – ever to tread the earth. Whether it’s also a history of redemption, however partial, remains to be seen.
American oil’s awareness of global warming – and its conspiracy of silence, deceit, and obstruction – goes further than any one company. It extends beyond (though includes) ExxonMobil. The industry is implicated to its core by the history of its largest representative, the American Petroleum Institute.
It is now too late to stop a great deal of change to our planet’s climate and its global payload of disease, destruction, and death. But we can fight to halt climate change as quickly as possible, and we can uncover the history of how we got here. There are lessons to be learned, and there is justice to be served.

*Benjamin Franta (@BenFranta) is a PhD student in history of science at Stanford University who studies the history of climate change science and politics. He has a PhD in applied physics from Harvard University and is a former research fellow at the Belfer Center for Science and International Affairs at the Harvard Kennedy School of Government.

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