Climate Change: Calm Down on the Celebrations, it’s Getting Worse.
The release of the International Energy Agency’s (IEA) World Energy Outlook report proves much of what the climate movement has been saying for sometime - emissions are rising, we have little time left to prevent catastrophic climate change, and the World’s leaders seem content to let it happen.
The report predicts that unless international action is taken soon, the world will exceed it’s carbon budget by 2017. That is, we will effectively eliminate our chances of stopping runaway climate change within the next five years if we continue to do nothing. The IEA fact sheet notes:
We calculate that 80% of the cumulative CO2 emitted worldwide between 2009 and 2035 in the 450 Scenario is already “locked-in” by capital stock – including power stations, buildings and factories – that either exists now or is under construction and will still be operational by 2035, leaving little additional room for manoeuvre. If internationally co-ordinated action is not taken by 2017, we project that all permissible emissions in the 450 Scenario would come from the infrastructure then existing, so that all new infrastructure from then until 2035 would need to be zero-carbon…
Shocking, ain’t it? The consequences of climate change have been known for decades now yet emissions intensive infrastructure has continued to be built, with the knowledge that they will be in place, active and polluting, for decades to come. Even worse is that such infrastructure will continue to be built for next few years, locking in emission rises for decades to come. This comes on top of record emission increases in spite of the Global Financial Crisis.
And it gets worse. The report also exposes the extent to which Governments subsidise the use of fossil fuels which are driving us closes to the brink of a climate crisis. It notes that in 2010, US$409 billion was given out in Government subsidies to aid fossil fuel consumption. To add to this, the IEA estimates that by 2035 this amount will rise to US$660 billion.
In a line that is sure to raise the ire of right wingers and free marketeers the IEA states:
Despite a projected decline in unit production costs due to cost reductions and rising wholesale prices for electricity and transport fuels, subsidies would need to expand even further to meet existing targets for renewable energy production. In all three scenarios most renewable energy sources need to be subsidised in order to compete in the market.
You can almost here it now, the cries of “picking winners” around renewable energy. But of course governments have already picked the winner. In contrast to the fossil fuel industry, renewables recieved US$66 billion in subsidies, 16% of what is given to the polluting energy sources.
This disparity is crucial. Renewable energy, as it currently stands, is not competitive with fossil fuels, yet it must be rolled out in order to avert dangerous emission rises. Furthermore, the only way to substantially reduce the cost of renewable is with a wide scale role out, which would bring about mass production of components and experience in their installation. That can only occur with mass investment that would inevitably have to involve some public subsidy.
The reason I know this you ask? Because it was the logic that was used to build the current fossil fuel energy system. A recent survey by Nancy Pfund and Ben Healey for DBL Investors argues the case well. The study found that in the US the average adjusted historical spend on subsidies to coal amounted US$4.86 billion, compared to US$370 million for renewable energy. The report shows that renewable energy has had the lowest level of government support compared to all other energy sources, noting remarkably that even at its highest point, government support for renewable energy is lowing than support for oil and gas production during the Great Depression.
The Australian context isn’t much different. Much of electricity infrastructure was built using direct Government investment, with the infrastructure later privatised in many cases. Subsidies too is biased towards fossil fuels, with AU$12 billion spent on fuel and mining deductions compared to the AU$1 billion spent on renewable energy. Historically fossil fuels have also received far higher subsidies than renewables.
Not only was the fossil fuel industry dependent on Government money for its development, but the mere existence of the industry remains dependent on externalising costs to the public. A classic example was pointed out by Giles Parkinson earlier this month when he noted that the NSW Government subsidised coal generation to the tune of AU$4 billion dollars when partial privatising the electricity system for a return of AU$1.5 billion. Indeed, the only way the system could be privatised was if the Government absorbed the costs associated with coal.
But the externalising of costs goes even further than that. In an article published by the American Economic Review, authors note that the costs associated with air pollution alone were larger than the value added by coal power. This doesn’t even begin to account for the other costs associated with coal, including pollution of water, the land, the workers, not to mention climate change. It is clear that the only way fossil fuels stay so affordable is because the lion share of costs are picked up by the public.
The question then becomes; why spend the money on fossil fuels? With catastrophic climate change coming ever closer there is no reason for continuing the mass subsidies that sustain polluting industries. Their redirection to renewables will make possible the necessary mass roll out of renewable energy needed to avoid a climate crisis.
Alas, Governments remain committed to the continuation of the fossil fuel industry. Even in Australia, after the passing of the Clean Energy Future bill and the much discussed carbon tax, the Government maintains its alliance with the Big Polluters. Treasury modelling shows that under the carbon price Australia’s domestic carbon dioxide reduction will be reduced by just 2%. The the remaining 78% of reductions will be sourced from overseas abatement schemes, which are notoriously difficult to police. Domestic reductions rely heavily on the use of natural gas, which is increasingly being shown to be almost no better than coal in avoiding climate change, due to the significant increase in methane emissions. Even research conducted by the gas industry shows that the use of gas will not stem greenhouse gas emissions. Despite this, the Government remains happy to advertise Australia as a place where investment in gas is safe.
What the IEA report does is cement the idea which many of us have known for sometime. We are rapidly running out of time to stop the globe falling into a climate crisis. Yet Governments and Industry around the World are committed to running us off the cliff. A transition is needed to rapidly shift away from the fossil fuel industry, with a concurrent rise in renewable energy infrastructure. With such little time left, this is no longer an option, but a necessity.
Image from: http://www.ourbreathingplanet.com/lets-deny-climate-change/
