Category: Economics

Matters of money

Climate and the second Obama administration

From Barack Obama’s second inaugural address:

We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity. We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms. The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries — we must claim its promise. That is how we will maintain our economic vitality and our national treasure — our forests and waterways; our croplands and snowcapped peaks. That is how we will preserve our planet, commanded to our care by God. That’s what will lend meaning to the creed our fathers once declared.

We will see what kind of action the second term brings.

Previously:

Lisa Jackson and Keystone XL

U.S Environmental Protection Agency (EPA) administrator Lisa Jackson is leaving the Obama cabinet, apparently at least partly because of her opposition to the Keystone XL pipeline.

It’s worrisome that this one effort at controlling the growing North American fossil fuel industry – by blocking Keystone XL – has produced so much opposition. Meanwhile, there has been huge expansion in unconventional oil and gas production, including both fracking and the continued growth of the oil sands.

What we are doing now, continuing to invest the lion’s share in fossil fuel energy, is both environmentally destructive and economically wasteful. This infrastructure just isn’t compatible with what we are going to need in the future, once we finally start taking climate change seriously. Once we eventually find ourselves shutting down coal, oil, and gas infrastructure only partway into its economic lifetime we won’t be asking why Keystone XL was not approved, but why so many other misguided projects got built during these years.

Climate change and democratic legitimacy

I have finished my final assignment for the term, the essay for my Global Environmental Politics course. It is about climate change and democratic legitimacy:

Many of these ideas are likely to find their way into my PhD thesis, so I would definitely appreciate feedback.

American unconventional oil and the economic viability of the oil sands

Hydraulic fracturing (“fracking”) of tight and shale oil in the United States may be the biggest economic force determining the future of Canada’s bitumen sands. The Globe and Mail recently printed an interesting article on how the development of unconventional oil in the United States could undermine the business model of the oil sands: “a belief in unfettered access to an insatiably oil-hungry U.S. market has been a central underlying assumption of the great energy expansion under way in Alberta.” If the U.S. can satisfy domestic oil demand with their own unconventional sources, the huge investment that has been made in Canada’s oil sands may never produce a reasonable economic return.

This is one more risk that should be borne in mind when making energy investment decisions. Unfortunately, the climate system doesn’t care about the source of greenhouse gas emissions. America’s newfound bounty of unconventional oil and gas will probably make it even harder to avoid catastrophic climate change.

Related:

IEA: We can only burn 1/3 of the remaining fossil fuel

The International Energy Agency is now mirroring the claim made by Bill McKibben, James Hansen, and others: we cannot burn all the world’s fossil fuels. In their World Energy Outlook 2012, they claim:

“No more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 °C goal, unless carbon capture and storage (CCS) technology is widely deployed”

Carbon capture and storage is arguably more of a rhetorical device which allows companies and governments to assume fossil fuel use than a real technology capable of reducing emissions. As such, it seems fair to say that we face a stark choice between dangerous climate change and abandoning fossil fuels.

Given that the value of fossil fuel companies is based on the assumption that they will be able to dig up and sell all the reserves they own, now might be an especially appropriate time to start divesting from fossil fuels.

Obama and Romney on fossil fuels

President Barack Obama and Mitt Romney both think their best odds of winning the election arise from a full-throated endorsement of fossil fuels, with no mention of climate change:

Mr Obama’s energy policy goes beyond a new-found enthusiasm for oil and gas. He has even borrowed a phrase from the McCain-Palin campaign—“All of the above” (rather than “Drill, baby, drill”). “Most of the above” is more accurate. And it may hurt him. Clean Air Act rules administered by the Environmental Protection Agency (EPA) are accelerating the retirement of coal-fired power stations while cheap gas eats away at coal’s share of electricity generation. This is the main reason that Kentucky and West Virginia, once states where the Democrats were competitive, have swung firmly to the Republicans. Mr Romney is far friendlier to coal mining, an industry he praises for employing 200,000 people. He wants to develop coal aggressively and roll back the environmental regulations that have battered it.

Hopefully both candidates are lying. That is fairly plausible when it comes to coal, which Mr. Romney also sought to restrict as governor of Massachusetts. The perceived need to pander to the coal industry is revealing. The immediate benefits of coal production – in the form of profits and jobs – completely overpower the reality that coal kills vast numbers of people through air pollution and threatens the entire world through climate change.

Defend Our Coast protest, Victoria, B.C.

Today, thousands of British Columbians and allies will be outside the provincial legislature to protest the egregious Northern Gateway pipeline.

The pipeline is a bad idea for so many reasons: because it will fuel the destructive growth of the bitumen sands, because of the forests that will be affected by the spills that are certain to happen, because of the dangerous and biologically important waters where hundreds of oil tankers will need to run, and because this is the wrong time to be making giant new investments in fossil fuels.

The time has come for us to behave smarter. Hopefully, these protests will help more people see that.

On divestment and the 350.org Do The Math tour

I really encourage everyone to have a look at this grist.org piece: Cue the math: McKibben’s roadshow takes aim at Big Oil.

It discusses the strategy 350.org is planning to employ in the months ahead, with an emphasis on encouraging universities to divest from fossil fuels. Humanity’s future depends on us rapidly phasing out fossil fuels and moving to zero-carbon alternatives. As institutions that are meant to serve the public good, universities should be investing in a way that is compatible with that imperative.