Does opening the Northern Sea Route give Russia a vested interest in not tackling climate change?

Icebreaker Kapitan Khlebnikov in Arctic Waters along the NSR. Photograph by: TheBrockenInaGlory, distributed under CC-BY 3.0. 

The Russian Federation is driving the development of the Northern Sea Route through Arctic waters – becoming more and more ice free due to global warming – in order to exploit fossil fuel extraction, which it sees as a major economic opportunity. Could it be that Russia has a clear vested interest in not helping to tackle climate change?

By 2022, the volume of traffic on the Northern Sea Route (NSR) is projected by consultants Frost and Sullivan (see below) to reach 40 million tons. In 2016, the volume was already a record breaking 7.3 million tons, representing an annual 35% increase.

Russia is commissioning new facilities for the production of fossil fuel liquefied natural gas (LNG) and the development of infrastructure in the Arctic. This is planned to help significantly increase traffic through the NSR – therefore increasing global warming – and therefore improving the ability of shipping to use this route as the ice melts faster.

 The dashed arrow shows the Northern Sea Route (NSR) along the Siberian Coast from Murmansk (Russia) to Cape Dezhnev in Bering Strait.

In his speech to the Eastern Economic Forum, which was held in Vladivostok September 6–7, 2017, President Vladimir Putin talked of the "rich natural resources – coal, oil, gas and metals, as well as low energy prices, which are lower in Blagoveshchensk, Vladivostok and Khabarovsk than in Busan, Seoul, Osaka, Tokyo or Beijing" as being chief among the advantages of opening up the region and developing the Forum.

Putin with President of the Republic of Korea Moon Jae-in at the Forum.

Putin spoke of how the Russian long term plan to make NSR attractive is being developed: "New transportation corridors are being built and ports capacities are being increased to give companies an opportunity to deliver their goods from Asia Pacific to Europe and back, as well as to other regions, as quickly and as cheaply as possible. We are scrutinising the opportunity of building a railway bridge to Sakhalin.

"Taken together with the development of the Northern Sea Route, modernisation of BAM and Trans-Siberian Railway and implementation of other projects, this will help us make the Russian Far East a major global logistics hub."

Industrial output in the Russian Far East has, at 8.6 percent, been more than double the average growth rates in the Russian Federation – the gross regional product grew by 4.2 percent indicating its value to the Russian economy.

Shrinking ice

The Northern Sea Route is the shortest sea route from Asia to Europe. According to experts, because of global warming, after 2050 it will be available for year-round passage of conventional vessels with no ice reinforcement.

The sea ice is shrining fast. At the end of the northern summer this year, the ice surface is down to 4.7 million square kilometers. In the 1970s and 1980s it was roughly seven million square kilometers.

This is why Russia is driving development of the route – not only for pure export of natural resources from the Arctic zone or for the "Northern Supply", but also for container transportation.

According to Dmitry Purim, CEO of PJSC Sovfracht, "the main driver of the Arctic development, the undisputed mainstream, is the realization of hydrocarbon projects".

As the ice retreats, the Arctic routes will become shorter and faster. With the current trend, by 2030 the Arctic will completely get rid of ice in the warm season. So, cargo ships will be less likely to require the help of icebreakers, and navigation will be open at least 6 months a year.

Russian plans

The container traffic on routes where the use of the NSR can potentially give a significant payoff to carriers, is about 455 thousand TEU.

The commercial operation of the NSR is in full swing now, especially in the western part (from Murmansk to the port of Sabetta). The traffic volume can already be compared to the European numbers, say Frost and Sullivan (report sent by email, not yet online).

Evgeny Ambrosov, the First Deputy General Director of PJSC Sovcomflot and Vice-President of the Arctic Economic Council, said at the Forum: "The further growth in freight turnover will be due to the commissioning of new LNG production capacities (Arctic-LNG, Pechora-LNG) and the development of oil and gas fields. By 2025, the NSR will transport about 65 million tons of hydrocarbons."

Commenting on the results of the panel, Leonid Petukhov, the General Director of the ANO "Far East Investment and Export Agency", stressed that: "The development of the NSR is moving in all major directions—the icebreaker fleet is gradually growing, the infrastructure is being upgraded, work is being done to remove administrative and trade barriers; on the whole, conditions are being formed for increasing the volumes of container transportations in the medium term, private (including foreign) investors are involved in the projects."

LNG-powered ships

The fleet of Russia's largest shipping company, Sovcomflot, has recently been supplemented by three new MR vessels (6 in total), and in August 2017, Christophe de Margerie (reinforced ice class Arc-7) gas carrier made its first commercial flight delivering LNG from Norway to the South Korea.

The vessel went through the NSR for a record 6.5 days without the help of an icebreaker. "Christophe de Margerie" is the first gas carrier in a series of 15 vessels of this type planned for construction.

There are some climate benefits for the construction of new vessels using LNG as fuel. According to E. Ambrosov, it will reduce the volume of carbon dioxide emissions by 15%, nitrogen emissions by 80%, and sulfur emissions by 90%. The construction will start in 2019 at the Zvezda plant, and the first ship will leave the shipyard in 2022.

Foreign companies are demonstrating high interest in using the Northern Sea Route. "Japan has two main interests related to the NSR. The first one is the diversification of transport routes between Asia and Europe and the second is the development of the energy base,"  said Shinichi Ishii, senior consultant at Nomura Research Institute, Ltd. "The Hokkaido government has a program to participate in the NSR, and in the future, Hokkaido intends to become a gateway to the NSR."

Reduction in the ice area in summer and autumn makes the NSR more attractive for sea container transport. "On the average, over a decade the ice thickness is reduced by 13%" said Riccardo Valentini, professor at the Tuscia University (Italy) and head of the European Mediterranean Climate Change Center. "We need to improve the accuracy of sea forecasts, ice conditions and seasonal risks."

Note: 
The thematic panel "Development of the Northern Sea Route. From words to action" was held September 6, 2017 within the framework of the 3rd Eastern Economic Forum with the assistance and support of ANO "Far East Investment and Export Agency".

The discussion gathered a number of industry professionals—representatives of Russian and international scientific organizations, as well as functional and top managers of oil and gas, shipbuilding and transport companies from Russia, Japan, South Korea, China, the Netherlands, etc. Among them was Evgeny Ambrosov, First Deputy General Director of PJSC Sovcomflot, Tero Vauraste, Chairman of the Arctic Economic Council, Vladimir Korchanov, First Vice-President of FESCO, Rene Berkvens, CEO of Damen Shipyards Group NV, Riccardo Valentini, Nobel Peace Prize Laureate and Head of European Center for the Mediterranean Climate Change, and others. Alexander Dyukov, Chairman of the Board and General Director of PJSC Gazprom Neft, also visited the session.

After the discussion, the session moderator, Managing Director of the Russian Frost & Sullivan office Alexey Volostnov and the Director General of the ANO "Far East Investment and Export Agency" Leonid Petukhov signed an agreement on coordination of activities to improve the conditions for the implementation of the socio-economic development strategy of the Far East until 2020, and on the effective assistance to the development of the Northern Sea Route.

The source for many of the quotes above is the Russian Frost & Sullivan office.

Investment funds divested from fossil fuels "will perform better"

The author of the influential Stern Review on the Economics of Climate Change is also calling for Europe to decarbonise the power sector by the 2030s.

Research by leading investment and asset management firm has shown that fund managers divesting fossil fuels from their portfolios, and replacing them with an actively managed portfolio of renewable energy and energy efficiency stocks, will reduce risk and achieve positive financial benefits.

The conclusion will support a call issued last Friday by Lord Nicholas Stern for Europe to "re-ignite growth by investing in the transition to a low carbon economy".

The author of the influential Stern Review on the Economics of Climate Change, said in his statement that "low-carbon growth is the only credible medium-term growth strategy" and called for a European goal of decarbonising the power sector by the 2030s.

Pressure is building on institutional investors to assess their exposure to companies that extract fossil fuels, as concerns rise about the likely effects on the climate from greenhouse gas emissions.

In parallel, financial analysts are increasingly warning investors of the risks that tighter regulations on carbon dioxide emissions and falling demand for fossil fuels could make fossil fuel reserves substantially less valuable, or even ‘stranded’, and ultimately rendered worthless.

Impax Asset Management, which won the Sustainable Investor of the Year accolade at the FT/IFC Sustainable Finance Awards last month, has assessed the relative performance over the last seven years, in terms of returns and volatility, of four alternative portfolio structures.

Its analysis of the historical data found that, over the past seven years, eliminating the fossil fuel sector from a global benchmark index would actually have had a small positive return effect.

Furthermore, much of the economic effect of excluding fossil fuel stocks could have been replicated with ‘fossil free’ energy portfolios consisting of energy efficiency and renewable energy stocks, with limited additional tracking error and improved returns.

The four alternative scenarios were:

a completely fossil free portfolio: based on the MSCI (formerly Morgan Stanley Capital International) World Index without the fossil fuel energy sector;

fossil free plus alternative energy 'passive' portfolio: replacing the fossil fuel stocks of the MSCI World Index with a passive allocation to renewable energy and energy efficiency stocks;

fossil free plus alternative energy 'active' portfolio: as [2] but actively managing the portfolio;

fossil free plus environmental opportunities 'active' portfolio: as [2] but actively managing a portfolio of stocks selected from a wider range of resource optimisation and environmental investment opportunities.

The best performing alternative was [3]. As a result, the company believes that investors should consider reorienting their portfolios towards low carbon energy by replacing fossil fuel stocks with energy efficiency and renewable energy investments.

The announcement follows news last week of two more financial institutions, Storebrand and Rabobank, divesting from fossil fuels.

Awarding the Sustainable Investor of the Year to Impax in June, Martin Dickson, US Managing Editor of the Financial Times and co-chair of the Sustainable Finance Awards judging panel, said: “The world faces not only persistent economic uncertainty but also unparalleled resource constraints that are putting pressure on social systems across both developed and emerging markets. This situation makes sustainable investment, and these awards, even more relevant.”

Managers of college endowments and municipal and state pension funds are increasingly finding themselves the target of fossil fuel divestment campaigns from within US universities, similar to the calls for divestment of stocks of companies that supported apartheid in the 1980s.

The Fossil Free campaign maintains that it is “morally wrong to profit by investing in companies that are causing the climate crisis”.

Independently, mainstream analysts are now building on research from the Carbon Tracker Initiative, which has warned that regulations to limit carbon emissions could significantly impact the market value of fossil energy companies as it becomes uneconomic to extract their reserves.

It calculates that 80% of the world’s proven fossil fuel reserves cannot be consumed without exceeding the international target to keep global warming to within 2°C above pre-industrial levels, implying that the world’s listed fossil fuel companies, whose share prices are partly based on their proven reserves, are grossly overvalued.

These mainstream analysts include:

HSBC, whose oil and gas analysts warned that European energy companies could see their market capitalisation fall 40-60% if oil prices drop to $50/barrel, as a consequence of climate policies commensurate with the 2°C goal;

Citi, which examined the value at risk from climate policies among Australian extractive companies within the ASX200 index;

Standard & Poor’s, which predicted that smaller oil companies, especially those heavily exposed to high-cost unconventional oil production, could face credit downgrades within a few years under its ‘stressed’ carbon reduction scenario;

and Aviva Investors, Bunge, Climate Change Capital and HSBC, which are funding research at Oxford University’s Smith School of Enterprise & Environment into risks posed to investors by high-carbon stranded assets.

The Impax report concludes: "Given the growing consensus around climate change science, it is rational for investors to expect much tighter carbon regulation, with profound economic effects, in many regions of the world. These regulations ... are only moving in one direction: towards a lower carbon world."

Picture from Wikimedia
caption: The author of the influential Stern Review on the Economics of Climate Change is also calling for Europe to decarbonise the power sector by the 2030s.

Two more finance institutions divest from fossil fuels

Christine Tørklep Meisingset, Storebrand's Head of Sustainable Investments, said she believes the stocks will be “financially worthless” in the future.

Storebrand, a Norwegian financial services group, and Dutch bank Rabobank have become the latest companies to announce they will pull out of the investments in the fossil fuel industry, citing the stability of long-term investments as the major factor.

Storebrand has investments in 13 coal and six tar sands enterprises which it will let go. It said in a statement that it believes these stocks will be “financially worthless” in the future.

“If global ambitions to limit global warming to less than 2 degrees Celsius become a reality, many fossil fuel resources will become unburnable and their financial value will be dramatically reduced,” said Christine Tørklep Meisingset, Head of Sustainable Investments.

“Exposure to fossil fuels is one of the main sustainability challenges facing business, so for us it is a logical and necessary step to adjust our investments accordingly,” she said.

The decision was made public a day after a similar announcement from Rabobank, an ethical Dutch bank with a partnership with WWF. This institution, which specialises in financing agriculture and food businesses, has said it will no longer invest in shale gas or tar sands.

It said it believes that the risks of water and soil contamination from fracking, and the risks to biodiversity, ecosystems and local residents, are too high.

It will also refuse loans to farmers who decide to lease their land for such purposes.

The company cited a recent Duke University study, published in the Proceedings of the National Academy of Sciences, of 414 one drinking water boreholes in Pennsylvania, a location where natural gas production increased by 69% in 2012, which found methane in 82% of samples. The claim is that nearby drilling has caused the gas to migrate into water.

The notion of the future worthlessness of present investments in fossil fuel extraction has been termed a 'carbon bubble'. The term comes from a March 2012 Carbon Tracker report, 'Unburnable Carbon'.

This found that the fossil fuel reserves owned by the top 100 listed coal and top 100 listed oil and gas companies would, if unleashed, emit a total of 745GtCO2, which represents five times the amount that can be burnt unabated, without catastrophic risk to the planet.

In other words, 80% of these assets are, according to current technology, unburnable.

Meisingset added: "We do not offer 'ethical funds' at Storebrand. The same high sustainability standards apply to each and every company and sector. This offers an unprecedented level of security for our clients. No matter which fund or portfolio their assets are invested in, the same high standards apply".

As a direct result of these higher standards for fossil fuels, all 13 coal producers in the Energy sector (MSCI All Countries index) are excluded from Storebrand’s portfolio. In addition, the exclusion covers the six oil companies that have the highest exposure to oil sands, measured by both actual production and reserves.

In total, Storebrand has excluded 177 companies and 32 countries for breaches of the company's minimum standard for sustainable investments.

Everyone on the planet helps subsidise fossil fuels by £45 per year

NASA's James Hansen

Fossil fuel companies get between $400 and $500 billion in subsidies per year. This must end.

The first major scientist to alert the world to the dangers of climate change, NASA's James Hansen, has issued a new challenge to the world based on the latest science surrounding the issue.

In a new paper published on the NASA website, Scientific Case for Avoiding Dangerous Climate Change to Protect Young People and Nature, he calls for governments around the world to stop using public funds to subsidise fossil fuels.

If anything is holding back investment in clean tech to save the planet, this is.

Fossil fuel subsidies

The paper uses scientific analysis to calculate the world’s total subsidies to oil, coal and gas companies at between $400 and $500 billion per year.

That's about £45 for each man woman and child on the planet.

This hardly seems possible, but this is a peer-reviewed paper.

Moreover, these companies are not required to pay their costs to society.

The paper notes that air and water pollution from the extraction and burning of fossil fuels kills over one million people a year and affects the health of many more.

But its greatest costs are likely to be the impact of climate change.

The greenhouse gas emissions from our use of fossil fuels up to now are only a fraction of the potential emissions from known reserves and potentially recoverable resources.

With shale gas, tar sands and other technologies we are seeing more and more of these reserves become economically recoverable.

Without legislation from governments to the contrary, and with these subsidies, there is no doubt that they will be recovered.

Hanson and his co-writers place the blame for the lack of action by the world's political leaders on the “undue sway of special financial interests on government policies aided by pervasive public relations efforts by organisations that profit from the public's addiction to fossil fuels".

In other words by overt and covert lobbying of politicians and political parties by the fossil fuel industry and those that benefit from it.

It is understandable, if not scientifically acceptable, that the UK government wants to continue to exploit the fossil fuel reserves within its waters and under its soil, such as shale gas. After all, other countries are doing.

But it must, morally, resist the temptation.

The scientific imperative is undeniable, and the longer we wait, the harder it will be.

If emission reductions began this year the required rate of decline is 6% to restore the energy balance of the Earth and stabilise the climate by the end of the century.

If reductions are delayed until 2020 the required level of reduction is 15% per year.

If we had begun in 2005 it would have been just 3% per year.

That is the rate of acceleration of the problem.

This transition to a post-fossil fuel world of clean energy will not occur as long as fossil fuels remain so cheap and the market does not incorporate their full cost.

After discussing the current consensus level of scientific understanding of the issues, and outlining all of the possible implications for humanity and the planet, Hanson argues that the initiation of the phase-out of fossil fuel emissions is urgent and that it is necessary to garner public support to fight such influence.

This depends upon persuading the majority that a prompt, orderly transition to a post-fossil fuel world is technically feasible and economically beneficial, aside from its benefits to the climate.

A matter of morality

The costs of climate change, loss of biodiversity, acidification of the ocean, loss of food supply, international conflict, refugee problems and so on will all be borne by young people and future generations.

This makes the issue “a matter of morality; a matter of intergenerational justice".

Hansen and his co-writers conclude their paper by comparing the moral challenge of climate change to that of slavery, “an injustice done by one race of humans to another", so “the injustice of one generation to all those to come must stir the public's conscience to the point of action".

Hanson expresses surprise that more young people are not shouting for change. Perhaps they are disillusioned with politics or unaware of the threats and possibilities.

But he does put his faith in the judicial system. He says that in some nations it may be possible to apply legal pressure to governments to develop realistic plans to protect the rights of young people and those yet to be born.

“Such a legal case the young people should demand plans for emission reductions", the paper argues.

Carbon tax

It then discusses what economic levers might be employed to engage the transition to a post-carbon future, plumping for a carbon tax.

It quotes economic analysis that indicates that a tax beginning at $15 per tonne of carbon dioxide per year and rising by $10 per ton each year would reduce U.S. emissions by 30% within 10 years.

He is not a supporter of-and-trade because politically it has not found favour.

But a rising price for carbon emissions would not be sufficient on its own. The writers advocate considerably more investments in clean energy and carbon efficiency standards for buildings, vehicles and other products; global climate monitoring systems including and climate mitigation and adaptation in undeveloped countries the planting of forests.

I will let James Hansen and his co-writers finish this piece in their own, eloquent, words:

"The era of doubts, delays and denial, of ineffectual half-measures, must end. The period of consequences is beginning.

"If we fail to stand up now and demand a change of course, the blame will fall on us, the current generation of adults.

"Our parents did not know that their actions could harm future generations.

"We will only be able to pretend that we did not know. And that is unforgiveable."

IEA chief says scrap fossil fuel subsidies or face catastrophe

As academics warn the world could exceed "safe" temperature levels in our lifetimes, the chief economist of the International Energy Agency (IEA) has urged the world to slash hundreds of billions of dollars of fossil fuel subsidies or face catastrophe.

Fatih Birol, speaking in an interview with EurActiv, says that the "$409 billion equivalent of fossil fuels subsidies in place around the world "encourage developing countries - where the bulk of the energy demand and CO2 emissions come from – [towards a] wasteful use of energy” and calls for their abolition.

He says that cutting these subsidies in major non-OECD countries is “the one single policy item” which could help decrease the rate of increase of global warming, so that it stays within "safe" limits.

These limits are estimated to be around 2 degrees Celsius above pre-industrial levels.

The likelihood of dangerous warming

Two papers, to be published in the latest edition of the journal Nature are warning that emissions could reach much higher temperatures during the lifetimes of many people alive today.

This could mean that "large parts of Eurasia, North Africa and Canada could potentially experience individual five-year average temperatures that exceed the 2 degree Celsius threshold by 2030 -- a timescale that is not so distant," one paper says.

Two degrees was the maximum limit set at the Copenhagen COP15 UNFCCC summit in 2009, and was reckoned to equate to a concentration of greenhouse gases in the atmosphere of 450 parts per million (ppm).

It is considered just about bearable, but with considerable costs.

Many consider this level itself to be dangerously risky and would prefer the limit to be 1.5 degrees Celsius, which equates to 350ppm.

The papers find that "most of the world's land surface is very likely to experience five-year average temperatures that exceed 2 degrees above pre-industrial levels by 2060" at the current rate of increase.

A 3.5 degree increase would cause “irreversible impacts”, such as the mass extinction of an estimated 40%-70% of the world’s species and rendering the equatorial belt largely uninhabitable, according to the Inter-governmental Panel on Climate Change.

The New Zealand scientists say that only if emissions are "substantially lowered", will the two degree threshold possibly be delayed by "up to several decades".

The second paper, by Zurich's Institute for Atmospheric and Climate Science, the Potsdam Institute for Climate Impact Research and the Hadley Centre of the Meteorological Office, calculates that to achieve a greater than 66% chance of limiting temperature rise by this amount, global emissions will probably need to peak before 2020 and fall to about 44 gigatonnes of carbon dioxide equivalent by 2020.

Reducing fossil fuel subsidies

This puts Birol's call into perspective.

Speaking in advance of the release of the IEA's World Energy Outlook 2011 report on 9 November, he said that it will say that cutting fossil fuel subsidies would "help renewable energies such as solar and wind power to get a bigger market share".

The IEA's analysis finds that “the door for a 2 degrees trajectory may be closing if we do not act urgently and boldly,” Birol said.

The report examines seven scenarios. "“In our central scenario, seven countries introduce some form of carbon pricing which brings us to a 3.5 degree trajectory,” he explained.

“But if we want to keep the temperature increase to 2 degrees, many more countries need to do so. The most important condition is that there’s coordinated international action in place.”

The world in 2008-10 was subsidising fossil fuels by almost 13 times more than renewable energy sources such as wind and solar power and biofuels, according to Bloomberg New Energy Finance.

Fossil fuels received $557 billion compared to $43-46 billion for renewables.

Rather than going down, fossil fuel subsidies are increasing. The IEA expects them to reach $660 billion, or 0.7% of global GDP by 2020.

Reducing the subsidy would cut energy demand by 4.1% and CO2 emissions by 1.7 gigatonnes, with consequent increases in energy efficiency and more investment available for renewables.

Most of the subsidies are actually in the less developed countries, trying to compete with the developed ones.

Green Climate Fund

The United Nation's committee responsible for designing the £100bn fund which developing countries will use to help them tackle climate change before 2020, has produced its draft proposals, but not to unanimous agreement.

This fund was agreed at the COP15 and COP16 summits in Copenhagen (2009) and Cancun, Mexico (2010) and discussion of the draft will be a highlight of this year's summit in Durban, South Africa, beginning in six weeks.

However, the United States and Saudi Arabia have reduced their support for the overall design of the fund.

The draft was welcomed by Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change.

"The Committee ended its work by submitting for consideration and approval in Durban both a draft instrument for the Green Climate Fund and recommendations on transitional arrangements to get it launched quickly," she said.

Developing countries are generally satisfied with most of the wording, especially that the fund should have its own legal status and independent secretariat, but disagreement remains over access to the funds, including the need to minimise the involvement of the Global Environment Facility and the World Bank.

Pa Ousman Jarju, chair of the Least Developed Countries negotiating block at the UN climate change talks says: “Enhanced direct access would allow more devolved decision-making to reflect local and national concerns and it would enable countries to integrate the funding into their national plans and strategies for dealing with climate change.”

For these reasons, Trevor Manuel the former finance minister of South Africa, who co-chaired the meeting on administering the fund with Kjetil Lund of Norway, called the outcome "sub-optimal".

Germany said that the committee’s failure to formally agree a design “will likely result in not having the Green Climate Fund this year or the next”.

Former chief of the UN climate change convention Yves de Boer has also criticised the fund.

He told the UN Environment Programme Finance Initiative event in Washington, DC last Wednesday, that the GCF “is going to be governed by a bunch of climate change negotiators, rather than by a lot of people that understand economics.

“The whole debate is around grant-based finance, instead of about how you catalyse significant funding, and basically the approach is to keep the private sector out - to the extent that you can - rather than to make this a consortia of public and private financing.”

The U.S. negotiators agree with him. They want developing countries as well as developed countries to contribute to the fund and for the private sector to be able to engage more. They also questioned the section on the fund having its own juridical personality.

But developing countries are suspicious. They believe the engagement of the private sector would open the potential for funds to be diverted away from developing countries towards developed countries’ companies and financial institutions, bypassing their governments.

If finally agreed, the fund will be used only for mitigation and adaptation initially, while many developing countries also want to use it for technology and capacity building, the very tactic which the IEA's Birol is calling for.

IEA chief says scrap fossil fuel subsidies or face catastrophe

As academics warn the world could exceed "safe" levels in our lifetimes, the chief economist of the International Energy Agency (IEA) has urged the world to slash hundreds of billions of dollars of fossil fuel subsidies or face catastrophe.

Fatih Birol, speaking in an interview with EurActiv, says that the "$409 billion equivalent of fossil fuels subsidies in place around the world "encourage developing countries - where the bulk of the energy demand and CO2 emissions come from – [towards a] wasteful use of energy” and calls for the abolition.

He says that cutting these subsidies in major non-OECD countries is “the one single policy item” which could help decrease the rate of increase of global warming, so that it stays within "safe" limits.

These limits are estimated to be around 2 degrees Celsius above pre-industrial levels.

The likelihood of dangerous warming

But two papers, to be published in the latest edition of the journal Nature are warning that emissions could reach much higher temperatures during the lifetimes of many people alive today.

This could mean that "large parts of Eurasia, North Africa and Canada could potentially experience individual five-year average temperatures that exceed the 2 degree Celsius threshold by 2030 -- a timescale that is not so distant," one paper says.

Two degrees was the maximum limit set at the Copenhagen COP15 UNFCCC summit in 2009, and was reckoned to equate to a concentration of greenhouse gases in the atmosphere of 450 parts per million (ppm).

It is considered just about bearable, but with considerable costs.

Many consider this level itself to be dangerously risky and would prefer the limit to be 1.5 degrees Celsius, which equates to 350ppm.

The papers find that "most of the world's land surface is very likely to experience five-year average temperatures that exceed 2 degrees above pre-industrial levels by 2060" at the current rate of increase.

A 3.5 degree increase would cause “irreversible impacts”, such as the mass extinction of an estimated 40%-70% of the world’s species and rendering the equatorial belt largely uninhabitable, according to the Inter-governmental Panel on Climate Change.

The New Zealand scientists say that only if emissions are "substantially lowered", will the two degree threshold possibly be delayed by "up to several decades".

The second paper, by Zurich's Institute for Atmospheric and Climate Science, the Potsdam Institute for Climate Impact Research and the Hadley Centre of the Meteorological Office, calculates that to achieve a greater than 66% chance of limiting temperature rise by this amount, global emissions will probably need to peak before 2020 and fall to about 44 gigatonnes of carbon dioxide equivalent by 2020.

Reducing fossil fuel subsidies

This puts Birol's call into perspective.

Speaking in advance of the release of the IEA's World Energy Outlook 2011 report on 9 November, he said that it will say that cutting fossil fuel subsidies would "help renewable energies such as solar and wind power to get a bigger market share".

The IEA's analysis finds that “the door for a 2 degrees trajectory may be closing if we do not act urgently and boldly,” Birol said.

The report examines seven scenarios. "“In our central scenario, seven countries introduce some form of carbon pricing which brings us to a 3.5 degree trajectory,” he explained.

“But if we want to keep the temperature increase to 2 degrees, many more countries need to do so. The most important condition is that there’s coordinated international action in place.”

The world in 2008-10 was subsidising fossil fuels by almost 13 times more than renewable energy sources such as wind and solar power and biofuels, according to Bloomberg New Energy Finance.

Fossil fuels received $557 billion compared to $43-46 billion for renewables.

Rather than going down, fossil fuel subsidies are increasing. The IEA expects them to reach $660 billion, or 0.7% of global GDP by 2020.

Reducing the subsidy would cut energy demand by 4.1% and CO2 emissions by 1.7 gigatonnes, with consequent increases in energy efficiency and more investment available for renewables.

Most of the subsidies are actually in the less developed countries, trying to compete with the developed ones.

Green Climate Fund

The United Nation's committee responsible for designing the £100bn fund which developing countries will use to help them tackle climate change before 2020 has produced its draft proposals, but not to unanimous agreement.

This fund was agreed at the COP15 and COP16 summits in Copenhagen (2009) and Cancun, Mexico (2010) and the draft will be discussed at this year's summit in Durban, South Africa, beginning in six weeks.

However, the United States and Saudi Arabia have reduced their support for the overall design of the fund.

The committee tasked with the design work has met four times, and completed its work last week.

Examination of the draft will be a highlight of the Durban talks.

The draft was welcomed by Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change.

"The Committee ended its work by submitting for consideration and approval in Durban both a draft instrument for the Green Climate Fund and recommendations on transitional arrangements to get it launched quickly," she said.

Developing countries are generally satisfied with most of the wording, especially that the fund should have its own legal status and independent secretariat, but disagreement remains over access to the funds, including the need to minimise the involvement of the Global Environment Facility and the World Bank.

Pa Ousman Jarju, chair of the Least Developed Countries negotiating block at the UN climate change talks says: “Enhanced direct access would allow more devolved decision-making to reflect local and national concerns and it would enable countries to integrate the funding into their national plans and strategies for dealing with climate change.”

For these reasons, Trevor Manuel the former finance minister of South Africa, who co-chaired the meeting on administering the fund with Kjetil Lund of Norway, called the outcome "sub-optimal".

Germany said that the committee’s failure to formally agree a design “will likely result in not having the Green Climate Fund this year or the next”.

Former chief of the UN climate change convention Yves de Boer has also criticised the fund.

He told the UN Environment Programme Finance Initiative event in Washington, DC last Wednesday, that the GCF “is going to be governed by a bunch of climate change negotiators, rather than by a lot of people that understand economics.

“The whole debate is around grant-based finance, instead of about how you catalyse significant funding, and basically the approach is to keep the private sector out - to the extent that you can - rather than to make this a consortia of public and private financing.”

The U.S. negotiators agree with him. They want developing countries as well as developed countries to contribute to the fund and for the private sector to be able to engage more. They also questioned the section on the fund having its own juridical personality.

But developing countries are suspicious. They believe the engagement of the private sector would open the potential for funds to be diverted away from developing countries towards developed countries’ companies and financial institutions, bypassing their governments.

If finally agreed, the fund will be used only for mitigation and adaptation initially, while many developing countries also want to use it for technology and capacity building, the very tactic which the IEA's Birol is calling for.

David Cameron, you must go to Durban this December & end subsidies for fossil fuels

This week David Cameron appeared to play down his party's commitment to tackling climate change by not even mentioning the topic in his keynote speech to the Tory Party conference.

It is unlikely that the shift in rhetorical emphasis will impact on the many commitments and measures in the legislative pipeline, but it may have an impact in two important areas: on investment decisions and on the vital UNFCCC Durban Climate Summit which is fast approaching.

The need for international action has never been more paramount, and it is tremendously important that Cameron is unwavering on the international stage for drastic measures to curb emissions.

The evidence for this is overwhelming. I will discuss some of it, and the single most simple policy that could be implemented to achieve the level of cuts required.

It was announced this week that global carbon dioxide emissions have increased by a staggering 45% since 1990, according to the Emissions Database for Global Atmospheric Research (EDGAR) and other sources.

This puts the world in the region of the high emissions scenarios discussed in the last IPCC report (see below).

At the same time, the International Energy Agency (IEA) and Organization for Economic Co-operation and Development (OECD) said on Tuesday that subsidies for fossil fuel consumption are actually rising - they totalled $409 billion in 2010, compared to $312 billion in 2009, with oil products having the largest share at $193 billion in 2010 with natural gas getting $91 billion.

Iran and Saudi Arabia were the countries with the biggest subsidies.

The IEA's Chief Economist Fatih Birol said that "without further reform, spending on fossil fuel consumption subsidies is set to reach $660 billion in 2020, or 0.7 percent of global gross domestic product".

Yet leaders of the Group of 20 (G20) countries committed in Pittsburgh in 2009 to phase out these subsidies.

OECD Secretary General Angel Gurria said doing so is an obvious way to save money. "As they (nations) look for policy responses to the worst economic crisis of our lifetimes, phasing out subsidies is an obvious way to help governments meet their economic, environmental and social goals".

It would also cut global energy demand by 4% and considerably reduce carbon emissions growth, the IEA said.

If David Cameron can't find it easy to support a call to phase out the subsidies, and do so himself, then he should tell us why.

(By the way, if you think renewables get too much in the way of subsidies, research published this week in the States shows that nuclear subsidies there at least accounted for more than one percent of the federal budget over the first 15 years of each subsidies’ life; oil and gas subsidies made up half a percent of the total budget, but renewables have amounted to only about a tenth of a percent.)

Using market measures alone is not working as a way of limiting emissions. The 3.5 million EU carbon emissions permits which the UK sold on the market last Thursday went for a price of 10.38 euros each.

This is the lowest price since it started auctions in November 2008, and will not encourage anything like the level of investment needed in greenhouse gas emission abatement technology.

It does strengthen the case for the introduction of a robust carbon price floor, but it also shows other types of action are required.

In a sign of its desperation that the message is not getting through to politicians, the Tyndall Centre this week attempted once more to draw attention to a paper it had first published in a Royal Society journal in 2009, saying that the world could very possibly reach an average global temperature of 4oC higher than pre-industrial levels as early as 2060, with catastrophic consequences for all life on earth.

The paper is peer-reviewed and written by Richard Betts at the Hadley Centre of the Met Office and uses the most accurate and authoritative climate modelling systems currently available.

The Tyndall Centre is based at the University of East Anglia, now famous for the hacked emails scandal, yet exonerated of any bias in its scientific reports by three separate investigations.

(The centre is named after John Tyndall, the man who first discovered the global warming effect 150 years ago - this year marks that anniversary.)

What the paper says

The paper looks at a particular set of scenarios that were considered in the (last) Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4), published in 2007. (The 5th is due in 2014.)

AR4's projections suggested that in the absence of mitigation high levels of warming were possible and the median of these was approximately 4?C.

The modelling used at the time did not include certain climate-warming carbon-cycle feedback features, plus more recent measurements that since became available; and the high-emissions scenario - which we now are confident we are within - was not examined with complex general circulation models (GCMs).

Betts' paper looks at this range of scenarios of future greenhouse-gas emissions without policies, including this information.

In other words, looking as best as we can at the world we live in now, in which, year after year, UNFCCC summits come and go and no legally binding agreements are reached.

The paper concludes: "Our best estimate is that a temperature rise of 4?C would be reached in the 2070s, and if carbon-cycle feedbacks are strong, then 4?C could be reached in the early 2060s."

When originally published, the journal did trigger an alarmist headline in the Daily Telegraph with graphic descriptions of how the world would change. It gave fuel to Ed Miliband's efforts to secure a legally bunding deal at Copenhagen. But it did not achieve sufficient global recognition.

I spoke to Asher Minns at the Tyndall Centre and he said he tweeted the paper in an attempt to give it more recognition.

I then spoke to its author, Richard Betts. I asked him whether he could put a figure on the probability of the world reaching this level of warming by that date, and he said "That entirely depends on the policies adopted by politicians".

I asked him about the current state of climate research, and he said that the Hadley Centre "is now working on a huge project coupled climate models with all modelling across the world being run through a commonly agreed protocol, so we know we are comparing like with like, which ones are more or less sensitive to emissions.

"It is mostly work in progress, and will be ready in next year. The deadline is July, and the papers will be accepted by March 2013 for publication in the 2014 report."

The slowness of this work is frustrating for everyone, but science cannot be hurried. I asked Richard if this frustrates him. "No, we have to get it right," he said.

DECC commissions reports from the Hadley Centre, including a paper for the Durban talks that is "more about drawing together information that is already out there into a tight context".

He said the global carbon project will release its annual update in a month, however.

Richard is typical of climate scientists in refusing to be drawn on policy or urgency, saying it is beyond his remit.

"I have no role in saying this is urgent or anything. We have no political objective whatsoever. We are just trying to find the science."

He says all they can do is lay this before politicians. It is up to them to decide how to act.

Does he think that journalists like myself convey the science well?

"In some cases the messages are too simple," he replied. "But our research can be misused either way. It depends on peoples' attitude to risk - people must be informed. But I do think that journalists should convey the science better."

If climate scientists are clear that it is up to politicians to show leadership on the basis of the science, and the science is as clear as it is, then it is incumbent on the consciences of politicians to give these humble toilers on the frontlines of understanding due weight in their deliberations, in comparison to the clamouring of vested interests or focus groups.

In simple language, Mr Cameron: go to Durban. Demonstrate leadership. Cut subsidies to fossil fuels.

OECD says cut fossil fuel subsidies to create 20 million jobs

The “Green Growth Strategy” report from the Organisation for Economic Co-operation and Development (OECD) argues, amongst other things, for a decrease in the carbon dioxide emission intensity of production, and a decrease in subsidies for fossil fuels.

It says that investing in green activities will create many jobs – up to 20 million worldwide by 2030 - in renewable energy generation and distribution alone.

There will be job losses associated with the more polluting energy sources, but these are “likely to be concentrated on a small portion of the total workforce".

The OECD makes the interesting observation that although “the most intensely polluting industries account for a large share of total dioxide emissions, they account for only a small share of total employment" - 80% of emissions but only 8% of the workforce in 2004, the most recent year for which data are available.

It says, possibly with a nod to the most recalcitrant nations in climate change negotiations, that “there is a widespread perception that some people will be worse off because of green growth policies. While this is not the case, unless these concerns are addressed, some key policies may be called into question."

The dilemma for governments is that the damage caused by higher fuel prices will be immediately felt by some people, but the economic and environmental gains of switching to the low carbon economy take longer to materialise and are more diffuse.

Therefore “targeted compensatory measures need to be introduced, particularly in emerging markets".

Consequently, the report concludes that “if governments wish to green the growth paths of their economies they need to treat the challenges as ones that go to the core of their economic strategies."

Complementary to this report for policymakers is a diagnostic framework and a toolkit, Tools for Delivering on Green Growth, and the OECD will follow up the report with a long-term agenda to support national and international efforts to achieve greener growth, and an ongoing discussion forum.

Permit to pollute sales should benefit households, not taxman

The new proposal from the Treasury to tax companies that introduce fossil fuels into the UK economy, which is at the heart of the current consultation on UK energy policy, has come under attack – by a group proposing that fuel supplier sales are controlled – but by a permit scheme that benefits the public, not the Treasury.

Under the Treasury's proposals, a single pensioner's fuel bill could rise by between 16% and 35% in 2020. Critics say that to compensate people for such bill increases, the cash should instead go to households.

The criticism comes from a group advocating Cap and Share, a policy measure which the Irish Government was giving consideration to trialling before that country's fiscal crisis. They call Cap and Share "a simple solution to climate change that is easy and relatively cheap to implement and puts cash in the hands of every citizen".

Just as with the Treasury's new proposal, Cap and Share argues that it's easier to cut down on the fossil fuels entering the economy than for each citizen to cut their individual use, and they think the 255 companies responsible should therefore pay for the right to pollute.

If they can be made to buy permits, as under the EU Emissions Trading Scheme, and the government issues only sufficient permits to match the country’s target CO2 emissions, reducing them year on year, this provides the cap.

The 'Share' part of 'Cap and Share' entails that all households would each receive an equal share of the permits which they may then sell to the fossil fuel companies. This would put cash in their pockets to compensate them for higher energy prices.

In other words the proceeds of the Fossil Fuel Levy - at a projected average £30/tCO2 - would come to households, not the Treasury.

Richard Douthwaite (author of The Growth Illu$ion: How Economic Growth Has Enriched the Few, Impoverished the Many and Endangered the Planet) says that Cap and Share is based on the Commons principle, and assumes that everyone has an equal share in the atmosphere.

As the Carbon Trust knows from experience, the most popular and successful climate-friendly policies are those which also save or give businesses and householders money.

By contrast, explains Cap and Share spokesperson Brian Davey, the EU Emissions Trading Scheme has seen allowances to pollute - carbon credits - given away to the big greenhouse gas-emitting companies, which they have been able to sell on and generate profits for themselves. In the case of the energy companies, they have also posted huge profits.

Davey and Douthwaite believe that on the other hand, if this benefit were split between every adult in the country, it would be both fair and popular.

Davey said, "With the perception that most climate change legislation is punitive and restricting freedom fuelling wider public scepticism of climate change, such a move by the Government could help swing public opinion back to favour the green economy."

Davey argues that the Treasury's proposal has not been thought through in its relationship to the EU ETS. "It is being made due to the failure of the ETS to provide sufficient stable incentives for the development of renewables. It's not just the low price of carbon but its volatility and unpredictability.

"However the criticism of the EU-ETS is muted and fudged. The result is that the proposal is to impose the scheme in addition to the ETS, but the interaction effects on an unreformed ETS are likely to be counterproductive.

"It is admitted in the Treasury document that the new scheme would likely lead to a fall in the demand for ETS permits and thus a fall in the ETS price but the implications of this are glossed over (in paragraph 5.24)," he continued. "Put bluntly, wWithout tackling the ETS, a rise in the UK carbon price may be matched by an offsetting fall in the European carbon price. What is needed is a revisit of the whole EU-ETS, which has been a complete disaster".

The death toll of fossil fuels - and my new book

Who said this, and when?

"Eventually industry will no longer find in Europe the resources to satisfy its prodigious expansion... Coal will undoubtedly be used up. What will industry do then?"

It was solar pioneer, Augustin Bernard Mouchot, after demonstrating an early industrial application of solar thermal energy as long ago as 1880.

Four years earlier he had demonstrated the use of solar power for cooking, by making a block of ice using a parabolic dish collector.

The solar age is undoubtedly coming - and it's been waiting to arrive for a long time, continually frustrated by the aggressive marketing of cheap energy.

I have just finished writing my latest book, The Earthscan Expert Guide to Solar Power for Power, Heating, and Cooling.

In writing it I have discovered some astonishing facts about just how long the technologies have been around... and how different the twentieth century would have been if we had been forced to rely on solar and other renewable sources of power instead of fossil fuels...

...if we hadn't been cursed - as well as blessed - with nature's bequest of such huge quantities of oil, gas and coal.

Because from the first world war - partly fought over access to the newly discovered oilfields of Iraq, which was created as a result of that war - through the Six Day War and the recent Iraq wars, not to mention hundreds of other conflicts, access to fossil fuels has been the cause of millions of deaths.

With growing awareness of the impact of climate change, their aspect as a curse on the global scale has become increasingly apparent.

In 1913, Frank Schuman, who designed the world's first solar power station, dreamt of a completely solar powered world. It was theoretically possible then, as indeed it is now.

Nowadays, the phrase “energy security" is being used by those who want to see local, sustainable sources of clean energy replace dirty fossil fuels.

This is because the sun, wind and other renewable sources of energy are available abundantly, everywhere on the planet, with no need for conflict over their use. Looking at the history of solar power it is clear how its development has suffered as a result of the abundance of fossil fuels.

Humanity - or its leaders - are now faced with a clear choice: whether to stick with the status quo and vested interests that aggressively promote as inevitable, a continued dependence on fossil fuels; or whether to accelerate the deployment, research and development into solar and other renewable, sustainable technologies and practices.

My new book makes the case for the latter, looking at all the available technologies, and the sunrise ones:

• passive solar architecture


• solar water heating


• solar thermal electricity generation.

Here is a not-exhaustive list of the technologies it looks at from the point of view of their end use:

• Heating and cooling space: passive solar design, urban planning, passive stack ventilation, phase change materials, unglazed transpired collectors, solar-powered chillers and coolers
  Lighting: glazing, special glass coatings; sun pipes


• Heating water: solar water heating systems; evacuated tubes; swimming pool heating; active solar cooling; applications for large buildings and districts
  Cooking, food drying, desalination and water treatment


• Electricity: thermoelectric devices, photovoltaic modules, system design, process heat, concentrating solar power


• Transport: solar vehicles, hydrogen production.

The potential of these technologies is completely clear and proven. The scientific case for the likelihood with business-as-usual of a runaway greenhouse effect, has been conclusively established.

The stakes could not be higher and the choice more stark.

The Earthscan Expert Guide to Solar Power for Power, Heating, and Cooling will be out next year.