Why It Will Take More Than Just Words To Prevent Climate Disaster
In 2017, the world’s governments came together in Paris and finally agreed on a treaty to curb global carbon emissions, in order to avoid climate breakdown and the societal collapse that would inevitably follow. Finally, after decades of negotiating and arguing, countries had agreed to seriously address climate change. So why then do fossil fuel emissions keep rising, are countries missing their targets, and are we headed for over 3 degrees of warming by the end of the century, the sheer catastrophe of which cannot be adequately conveyed by human language?
Update: As of 14 November, the European Investment Bank announced it will “end financing for fossil fuel energy projects from the end of 2021”.
A big part of the answer lies in the government subsidies the fossil fuel sector receives each year, despite it being one of the most profitable industries on the planet. The International Monetary Fund (IMF) estimated worldwide fossil fuel subsidies at 5.3 trillion dollars a year (in 2015), which amounts to a staggering 10 million dollars per minute (or 6.5% of global GDP). It should be noted that this estimate not only includes direct subsidies in the forms of tax breaks or investments, but also the hidden costs of fossil fuels, like environmental destruction. Economists call these hidden costs ‘externalities’, and they make up the gross part of fossil fuel subsidies, giving the impression that fossil fuels are cheaper than they actually are. In other words, governments make all kinds of exceptions for the fossil fuel industry, even though they clearly do not need them to survive, which would normally be the purpose of making such exceptions. These kinds of exceptions can result in artificially low prices for products that cause pollution or other detrimental health and environmental effects, as is also the case with other polluting industries, like agriculture. But those costs have to be paid somehow, and usually that’s not in the supermarket, but indirectly, with public money. Think about government clean-ups of oil spills, or new diseases that are brought about by industrial livestock production, or health care costs because of the air pollution of a coal power plant or use of pesticides.
Although the discussion around which of these costs can be attributed to the fossil fuel sector specifically is a valid one, it’s undeniably clear that fossil fuels are not competing fairly with renewables, which have much less of these externalities, thereby possibly hampering their widespread adoption and the meeting of CO2-emission targets.
Why simply subsidising renewable energy isn’t enough
This is not a problem that an increase in renewable energy subsidies appears to solve. Take the European Union for example. According to a 2019 EU Commission report, fossil fuel subsidies in the European Union are estimated to be 55 billion Euros (~60.7B USD). This number has remained relatively unchanged this decade despite renewable energy subsidies increasing by around 20 billion (2008–2016), to about 74 billion (~81.7B USD). The EU budget still allocates over 2 billion to gas infrastructure from 2014-2020, and European public banks invested over 8 billion in fossil fuel projects from 2014 to 2016. Additionally, the European Fund for Strategic Investments spent 1.2bn on gas infrastructure in 2015 and 2016. And then we haven’t even talked about the EU Emissions Trading Scheme, externalities, and the private sector.
This is not just a European problem. In the United States, federal and state governments subsidised fossil fuel industries with 20.5 billion Dollars (~18.6B Euros) a year in 2015 and 2016, according to a report by non-profit Oil Change International, 2.5 billion of which went toward exploration of new fossil fuel sources. This last statistic is especially worrying, considering the fact that current infrastructure and proven reserves would already push the world well over any threshold that can reasonably be considered safe. U.S. fossil fuel subsidies are a factor of 7 higher than those awarded to the renewable energy sector. And perhaps most worrying considering the current political situation is the fact that the latter subsidies are set to expire after 5 years, whereas fossil fuel subsidies have been in place for over a hundred years. The report also concludes that in the same period U.S. taxpayers paid around 3.5 billion per year for “lasting harm to the environment, workers, and local communities caused by oil, gas, and coal operations.” Similar statistics can be found for most industrialised nations. To some, the continued financing of fossil fuel companies and infrastructure is seen as a violation of the promises made by countries to reduce their use of fossil fuels, but others, like the oil company Chevron, claim that “You can increase your fossil-fuel production, deliver superior returns for your shareholders, and still be compliant with Paris.”
This situation does appear to be changing, however, as more and more fossil fuel projects are cancelled or postponed in the face of growing divestment movements and fierce public resistance. Just last week, the Swedish government decided to reject a major gas terminal at the last moment on climate grounds. This happened a mere month after activists blocked all entrances to the entire energy harbour for twelve hours. Earlier this year, a proposed and already partially built gas pipeline between France and Spain was cancelled due to high costs and lack of market interest. Both projects were funded under the EU’s Projects of Common Interest, which is “intended to help the EU achieve its energy policy and climate objectives”, according to the European Commission’s website. In the U.S. and Canada, the construction of several pipelines, which are supposed to transport gas from the Canadian tar sands to the U.S. and beyond, has apparently come under such a threat that counter-terrorism laws and tactics are employed against protesters to “defeat pipeline insurgencies” and confront them with life sentences for what the industry perceives as “domestic terrorism”.
The struggle to end fossil fuel subsidies
This increasingly aggressive attitude towards protesters on the part of governments and corporations is clearly not a coincidence. According to Nick Bryer, European Fossil Free Campaigns Manager at 350.org, a global grassroots movement demanding an end to fossil fuels, the divestment movement poses a serious threat to fossil fuel companies and their ability to continue with ‘business as usual’. “There is no doubt that the fossil fuel industry is on its way out. The big question is whether it happens fast enough.” he states.
For decades governments around the world have pledged to cut greenhouse gas emissions, all the while continuing to fund and protect those most responsible for them. When asked how this is possible, Nick replies:“It’s possible because politicians have always been capable of saying one thing and doing another. But things like the recent global climate strikes show that they’re not going to get away with that for much longer. The voices of the fossil fuel industry’s lobbyists are going to be drowned out by the voices of the majority, including the voices of those who are least responsible for causing climate change but are most affected by its impacts.. If governments stopped subsidising the industry, and made them pay for the damage that they cause (e.g. through carbon emissions; air and water pollution; damage to ecosystems and biodiversity etc.), then it would immediately become an unprofitable business.”
One of the ways in which the global divestment movement tries to achieve an end to fossil fuel subsidies is through local divestment campaigns, in which groups of activists demand that their municipalities, universities, pension funds and so on divest from fossil fuels companies and cut all ties with them. “The fossil fuel industry survives only because of the financial support that it receives, directly and indirectly, from governments and financial institutions.” Nick explains. “When enough institutions divest, it becomes harder for the companies to sell their shares, because no-one wants to be associated with them. That’s certainly what’s happened to the coal industry, and it will increasingly happen to oil and gas too.”
One example that this may already be happening, is the announcement by the European Investment Bank that it is planning to end financing for fossil fuel projects starting in 2021. The fight for a ban on fossil fuel investments is still far from over, though, as the European Commission and several member states continue to oppose these plans. Just this week, the decision on the policy was postponed until November. But if these plans become a reality, that would be a real game-changer, says Nick, as it would set a great example for other public and private banks to follow. “Especially in richer countries, we need to very rapidly move away from an economy based around fossil fuels, and transition to sustainable, clean energy. We need to implement transformative policies which address the root causes of the climate crisis - tackling economic inequality and social injustice at the same time as carbon emissions, and making sure that those least responsible for causing the climate crisis are not also the ones who are expected to do the most to address it.”
Note: This post was first published on www.criticalconsent.com.