In the Carbon Wars, Big Oil Is Winning
Three Signs of Retreat in the Global War on Climate Change
Listening to President Obama’s State of the Union address, it would have been easy to conclude that we were slowly but surely gaining in the war on climate change. “Our energy policy is creating jobs and leading to a cleaner, safer planet,” the president said. “Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth.” Indeed, it’s true that in recent years, largely thanks to the dampening effects of the Great Recession, U.S. carbon emissions were in decline (though they grew by 2% in 2013). Still, whatever the president may claim, we’re not heading toward a “cleaner, safer planet.” If anything, we’re heading toward a dirtier, more dangerous world.
A series of recent developments highlight the way we are losing ground in the epic struggle to slow global warming. This has not been for lack of effort. Around the world, dedicated organizations, communities, and citizens have been working day by day to reduce greenhouse gas emissions and promote the use of renewable sources of energy. The struggle to prevent construction of the Keystone XL tar-sands pipeline is a case in point. As noted in a recent New York Times article, the campaign against that pipeline has galvanized the environmental movement around the country and attracted thousands of activists to Washington, D.C., for protests and civil disobedience at the White House. But efforts like these, heroic as they may be, are being overtaken by a more powerful force: the gravitational pull of cheap, accessible carbon-based fuels, notably oil, coal, and natural gas.
In the past few years, the ever more widespread use of new extractive technologies -- notably hydraulic fracturing (to exploit shale deposits) and steam-assisted gravity drainage (for tar sands) -- has led to a significant increase in fossil fuel production, especially in North America. This has left in the dust the likelihood of an imminent “peak” in global oil and gas output and introduced an alternative narrative -- much promoted by the energy industry and its boosters -- of unlimited energy supplies that will last into the distant future. Barry Smitherman of the Texas Railroad Commission (which regulates that state’s oil industry) was typical in hailing a “relatively boundless supply” of oil and gas worldwide at a recent meeting of the Society of Exploration Geophysicists.
As oil and gas have proven unexpectedly abundant and affordable, major energy consumers are planning to rely on them more -- and on renewable sources of energy less -- to meet their future requirements. As a result, the promises we once heard of a substantial decline in fossil fuel use (along with a corresponding boom in renewables) are fading. According to the most recent projections from the U.S. Department of Energy, global fossil fuel consumption is expected to grow by an astonishing 40% by 2035, jumping from 440 to 615 quadrillion British thermal units.
While the combined share of total world energy that comes from fossil fuels will decline slightly -- from 84% to 79% -- they will still dominate the global energy marketplace for decades to come. Renewables, according to these projections, will continue to represent only a small fraction of the total. If this proves to be accurate, there can be only one plausible outcome: vastly increased carbon emissions leading to rising temperatures and the sort of catastrophic climate change scenarios that now seem almost impossible to imagine.
Think of it this way: in our world, the gravitational pull of carbon exerts itself every minute of every day, shaping the energy decisions of individuals, companies, institutions, and governments. This pull is leading to defeat in the global struggle to slow the advance of severe climate change and is reflected in three recent developments in the energy news: a declaration of surrender by BP, a major setback in the European Union, and a strategic end-run by Canadian tar sands companies.
BP Announces the Defeat of Renewables
Every year, energy giant BP (once British Petroleum) releases its “Energy Outlook” for the years ahead, an analysis of future trends in global production and consumption. The 2014 report -- extending BP’s energy forecast to the year 2035 -- was made public on January 15th. Typically, its release is accompanied by a press conference in which top BP executives offer commentary on the state of world energy, usually aimed at the business media. This year, the company’s CEO, Bob Dudley, spoke with unbridled optimism about the future market for his company’s energy products, assuring his audience that the global supply of fossil fuels would remain substantial for years to come. (Dudley took over the helm at BP after his predecessor, Tony Hayward, was dumped in the wake of the 2010 Deepwater Horizon disaster in the Gulf of Mexico.)
“The picture in terms of resources in the ground is a good one,” he noted. “It’s very different to past concerns about supply peaking. The theory of peak oil seems to have -- well -- peaked.”
This, no doubt, produced the requisite smiles from Dudley’s oil-friendly audience. Then his comments took a darker turn. Can we satisfy the world’s energy requirements with fuels that are sustainable, he asked. “Not at the moment,” he admitted. Because of a rising tide of fossil fuel consumption, he added, “carbon emissions are currently projected to rise -- by 29% by 2035, we estimate in the Outlook.” He acknowledged that, whatever good news might be found in that document, in this area “steps are needed to change the forecast.”
Next, Dudley tried to put a hopeful spin on the long-term climate prospect. By replacing coal-fired power plants with less-carbon-polluting natural gas, he indicated, overall greenhouse gas emissions can be reduced. Increasing the efficiency of energy-consuming devices, he added, will also help. All of this, however, adds up to little when it comes to the big picture of carbon emissions. In the end, he could point to few signs of progress in the struggle to slow the advance of climate change. “In 2035, we project that gas and coal will account for 54% of global energy demand [and oil another 27%]. While renewables will grow rapidly, their share will reach just 7%.”
Most of the media coverage of Dudley’s appearance focused on his expectations of long-term energy abundance, not what it would do to us or our planet. Several commentators were, however, quick to note how unusual it was for an oil company CEO to address the problem of carbon emissions at all, no less express something verging on despair over the prospect of making any progress in curbing them.
“[Dudley] concludes... [that] the world is still a long way from delivering the peak in greenhouse gas emissions many scientists advise has to be achieved within the next decade to minimize the risk of dangerous climate change,” observed energy analyst James Murray at businessGreen.com.
The member states of the European Union (EU) have long exercised global leadership in the struggle to reduce greenhouse gas emissions and slow the pace of climate change. Under their justly celebrated 20-20-20 plan, adopted in December 2008, they are committed to reducing their emissions by 20% over 1990 levels by 2020, increasing their overall energy efficiency by 20%, and achieving 20% reliance on renewables in total energy consumption. No other region has embraced goals as ambitious as these, and none has invested greater resources in their implementation. Any wavering from this path would signal a significant retrenchment in the global climate struggle.
It now appears that Europe is preparing to rein in the pace of its drive to slow global warming. At issue is not the implementation of the 20-20-20 plan, which is well on its way to being achieved, but on the goals that should follow it. Climate activists and green energy entrepreneurs have been calling for an even more ambitious set of targets for 2030 and beyond; many manufacturers and other major energy consumers have been pushing for a slower pace of change, claiming that increased reliance on renewables is driving up energy prices and so diminishing their economic competitiveness. Already, it appears that the industrialists are gaining ground at the expense of climate action.
At stake is the EU’s climate blueprint for 2030, the next major threshold in its drive to slow the pace of warming. On January 22nd, the EU’s executive arm, the European Commission (EC), released its guidelines for the new plan, which must still be approved by the EU Parliament and its member states. While touted by some as a sign of continued European commitment to decisive climate action, the EC’s plan is viewed as a distinct setback by many environmental leaders.
At first glance, the plan looks promising. It calls for a 40% reduction in emissions by 2030 -- a huge drop from the 2020 requirement. This is, however, less dramatic than it may appear, analysts say, because energy initiatives already under way in Europe under the 20-20-20 plan, coupled with a region-wide economic slowdown, will make a 40% reduction quite feasible without staggering effort. Meanwhile, other aspects of the plan are downright worrisome. There is no mandate for a further increase in energy efficiency and, far more important, the mandate for increased reliance on renewables -- at 27%, a significant gain -- is not binding on individual states but on the EU as a whole. This makes both implementation and enforcement questionable matters. Jens Tartler, a spokesperson for the German Renewable Energy Federation (which represents that country’s wind and solar industries), called the lack of binding national goals for renewables “totally disappointing,” claiming it would “contribute to a marked reduction in the pace of expansion of renewables.”
To explain this evident slackening in Europe’s climate commitment, analysts point to the immense pressures being brought by manufacturers and others who decry the region’s rising energy prices caused, in part, by increased subsidies for renewables. “Behind the heated debate in Brussels about climate and renewable energy targets, what is really happening is that concern over high energy prices has taken precedence over climate concerns in Europe,” says Sonja van Renssen, the Brussels correspondent for Energy Post, an online journal. “Many [EU] member states and industry fear that a strong climate and energy policy will be bad for their economies.”
In arguing their case, proponents of diluted climate goals note that EU policies have raised the cost of producing a metric ton of aluminum in Europe by 11% and that European steel companies pay twice as much for electricity and four times as much for natural gas as their U.S. counterparts. These, and similar phenomena, are “dragging the EU economy down,” wrote Mark C. Lewis, former head of energy research at Deutsche Bank.
Not surprisingly, many European manufacturers seek to reduce subsidies for renewables and urge greater reliance on less-costly fossil fuels. In particular, some officials, including British Prime Minister David Cameron, are eager to follow the U.S. lead and bring advanced technologies like hydro-fracking to bear on the extraction of more oil and natural gas from Europe’s domestic reserves. “Europe’s hydrocarbons production is in decline,” noted Fatih Birol, the chief economist at the International Energy Agency, but “there may be some opportunities... to slow down and perhaps reverse some of these trends” -- notably by imitating the “revolution in hydrocarbon production” now under way in the United States.
Read this another way and a new and truly unsettling meaning emerges: the “shale gas revolution” being promoted with such fervor by President Obama as a “bridge” to a more climate-friendly energy system in the United States is having the opposite effect in Europe. It is weakening the EU’s commitment to renewable energy and threatens to increase Europe’s reliance on fossil fuels.
Canada’s End-Run Around Keystone XL Pipeline Opposition
Much to the surprise of everyone, climate activists in the United States led by environmental author and activist Bill McKibben and the action group he helped to found, 350.org, have succeeded in delaying U.S. government approval of the Keystone XL pipeline for more than two years. Once considered a sure thing, the pipeline, if completed, will carry 830,000 barrels per day of diluted bitumen (“syncrude”) some 1,700 miles from the Athabasca tar sands in Alberta to refineries on the U.S. Gulf Coast. It has, however, been held up by detailed environmental impact studies and other procedural steps ordered by the U.S. State Department. (Because the pipeline will cross an international boundary, it requires approval from the Secretary of State and, ultimately, the president, but not Congress.)
Opponents of the pipeline claim that by facilitating the exploitation of particularly carbon-dense Canadian tar sands, it will substantially increase greenhouse gas emissions into the atmosphere. The use of this bitumen-based fuel releases more carbon per unit of energy than conventional petroleum and its energy-intensive extraction generates additional carbon emissions. Should all of the bitumen in Canada -- the equivalent of 1 trillion barrels of oil -- be consumed, it’s “game over for the climate,” as former NASA climate scientist James Hansen has famously written.
How the Obama administration will come down on Keystone XL is still unknown. In a speech on climate policy last June, the president indicated that he would give highest priority to climate considerations when deciding on the pipeline. “Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest,” he said. “And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.” At the time, his comments raised the hopes of climate activists that Obama would ultimately decide against the pipeline. More recently, however, an environmental assessment conducted at the behest of the State Department and released on January 31st cast doubt on this outcome. The report’s reasoning: even though the exploitation of Canada’s tar sands will increase the pace of carbon emissions, their extraction and delivery to refineries is assured by alternative means -- mainly rail -- if the pipeline isn’t built and so its construction will not “significantly exacerbate” the problem of greenhouse gas emissions.
While this is certainly a uniquely sophistic (and shaky) argument, it is important to note that the Canadian producers and their U.S. partners are indeed attempting to stage an end-run around opposition to the pipeline by increasing their reliance on rail cars to deliver tar sands.
“The indecision on Keystone XL really spawned innovation and mobilized alternatives, and rail is a clear part of the options available to our industry,” observed Paul Reimer, senior vice president in charge of transport at Cenovus Energy, a Canadian oil company planning to increase rail shipments from 7,000 barrels a day to as many as 30,000 barrels a day by the end of 2014. Other Canadian firms have similar expansion plans. All told, the Canadians claim that, over the coming years, they will be able to increase rail-carrying capacity from the current 180,000 barrels per day to as much as 900,000 barrels, or more than would be carried by the pipeline.
If this were to happen, count on one thing: rail transport will turn out to have its own problems -- and its own opposition. Not surprisingly, then, Canada’s oil industry still craves approval for Keystone XL, as it would allow even greater tar sands exports and legitimize the use of this carbon-heavy fuel. But the growing reliance on rail transportation does once again demonstrate the powerful gravitational pull of Planet Carbon. “At the end of the day, there’s a consensus among most energy experts that the oil will get shipped to market no matter what,” says Robert McNally, a former energy adviser to President George W. Bush.
Reducing Carbon’s Pull
These three recent encounters in the historic struggle to avert the most destructive effects of climate change tell us a great deal about the nature and terrain of the battlefield. Climate change is not the product of unfortunate meteorological phenomena; it is the result of burning massive quantities of carbon-based fuels and spewing the resulting gaseous wastes into the atmosphere. As long as governments, corporations, and consumers prefer carbon as an energy source, the war on climate change will be lost and the outcome of that will, in turn, be calamitous.
There is only one way to avert the worst effects of climate change: make the consumption of carbon unattractive. This can be accomplished, in part, by shaming -- portraying the producers of carbon-rich fuels as the enemies of human health and survival. It’s an approach that has already achieved some modest successes, as in the prevention, until now, of Keystone’s construction. Withdrawing funds from fossil fuel firms, or disinvestment, is another useful approach. Many student and religious groups are attempting to hinder oil drilling activities by pushing their colleges and congregations to move their investment funds elsewhere.
But shaming and disinvestment campaigns are insufficient; much tougher sanctions are required. To stop the incineration of our planet, carbon must be made expensive -- so costly, in fact, that renewables become the common fuel of choice.
There are at least two ways to move toward accomplishing this: impose a tax on carbon emissions, raising the cost of fossil fuels above those of renewables; or adopt a universal cap-and-trade system, forcing major carbon emitters to buy permits (at ever-increasing cost) in order to release greenhouse gases into the atmosphere. Both measures have been advocated by environmentalists and some attempts have been made to institute each of them. (Both California and the European Union, for example, are implementing cap-and-trade systems.) There may be other approaches to the problem that could prove even more effective, but the most essential thing is to recognize that genuine progress on climate change will not be possible until carbon fuels lose their financial allure. For this to happen, as BP’s Dudley begrudgingly acknowledged on January 15th, “you need carbon pricing. Universally accepted carbon pricing.”
The gravitational pull of carbon is immensely powerful. It cannot be overcome by symbolic gestures or half measures. The pressures to keep burning fossil fuels are too great to be overcome in piecemeal fashion. Rather, these forces must be met head-on, with the institutionalization of equally powerful counter-forces that make fossil fuels economically unattractive. We humans have a choice: we can succumb to carbon’s gravitational pull and so suffer from increasingly harsh planetary conditions, or resist and avoid the most deadly consequences of climate change.
© 2014 Michael T. Klare