Oil Change International

Exposing the true costs of fossil fuels


In a month in a year already filled with alarming levels of overt racism, fascism, sexism, and climate denial, it is admittedly hard to find, much less focus on, hope. No matter how many of us are #StillIn, there is a lot to worry about now from accelerating climate impacts to the state of democracy and the rise of the right globally – to name just a few of our demons.

But there is one fixed point you can stare at in order to avoid the political and emotional equivalent of seasickness. We know where we’re going. We know what success has to look like, or at least what key elements of success must be. In our struggle to claim our collective rights to clean energy and climate justice, we can now see the endgame for the first time. And we can keep our sights fixed there to create this future together.

We know that in 30 years, if we envision success in reaching the Paris goals, our world will be renewably powered, and hardly anyone anywhere will be digging or drilling for more fossil fuels. We know that success will mean that governments everywhere have – historically – worked together to design and implement energy policy that is consistent with climate science and the Paris goals. We know too that governments will have had to align with, harness, and amplify political support to confront the fossil fuel industry.

In fact, if we look at the scale of the challenge in managing the global decline of one of the world’s largest and most powerful industries, we know that the critical course corrections will almost all have to happen in the next decade. 10 years.

The good news is that where clean energy and electric vehicles and coal are concerned, the trend lines are mostly beginning to run faster and more sharply in our direction. But time is short, and in the critical and determinative factor of the carbon being pumped into the atmosphere, we are still falling deeper and deeper into a hole.

Markets aren’t going to do this alone, because in fact they are being deeply distorted by ongoing subsidies to the fossil fuel industry, which the International Monetary Fund estimates in excess of $5 trillion with a ‘T’ annually. In the U.S., as a report we will release next week demonstrates, the annual value of permanent tax breaks for fossil fuels is seven times higher than what clean energy receives.

Fossil fuel subsidies are not just a deep market distortion, however: they are in fact a chilling reflection of the political power of the fossil fuel industry. That power is currently so great that they literally lie with impunity. The truth is that the oil, gas, and coal industries are so dependent on subsidies and on climate denial that they have taken the extraordinary, demonstrably false position that neither subsidies to their industry nor climate change actually exist. Despite this, the industry has long insisted that government manipulate the market to their benefit. And they have demanded fealty to this view as the price for their considerable political support. It’s not #fakenews, it’s #fakegovernment.

It is quite clear that to succeed in achieving the Paris goals, governments around the world are going to have to do something few have wanted to do so far – they’re going to have to stand up to the fossil fuel industry, and they’re going to have to say ‘no.’

Do you think this is just a few bad apples in the otherwise fruitful and prosperous oil industry? Please. The already substantial evidence continues to mount that the oil industry was engaged in a sweeping decades-long effort to obscure the truth about their climate changing product for the simple and odious reason of protecting their profits. And it’s long been established by academics that contrary to the promises and advertising that the oil industry invests so heavily in, living with oil reliably means more poverty, more violence, and more death.

In order to clearly tell the oil industry ‘no,’ we’re going to have to demand that of our governments. Civil society has to be clear that the bar for climate leadership has been raised. In fact, as the global movement against new fossil fuel infrastructure shows, many NGOs and communities are already doing just that. In the United States, a growing coalition of organizations is demanding that their government representatives must no longer accept any support from the fossil fuel industry. Close to 100 candidates have already pledged their support.

Earlier this month, more than 400 organizations globally declared in the Lofoten Declaration that climate leadership is now best measured by a willingness to confront the power of the fossil fuel industry – to stop the expansion of that industry and to manage the transition to clean energy in a fundamentally just way that protects communities, the climate, and workers.

This approach to climate policy, which is radically different than the prevailing fashion of measuring projected emissions reductions from proposed policies against hypothetical models of future baselines, is well grounded in both common sense and economic theory. Hans-Werner Sinn, the German economist, has written about what he calls the “Green Paradox” in which “policies aimed at reducing future demand for fossil fuels could backfire by inducing resource owners to bring forward their extraction plans, thus accelerating global warming.” Indeed, Sinn makes a compelling case that this is merely rational market behavior by producers, and that there is already extensive evidence of this behavior.

Sinn cites the Hotelling Rule to note that resource owners “base their behavior on expectations of future prices.” Rex Tillerson agrees, as he once said that the oil price of the day, whether high or low, “is almost entirely irrelevant” to investment decisions.

The oil and gas industry has understood for years that the market’s perception of future price is much more important than what the price is on any given day. Because of this, they have made it a core part of their public relations and lobbying business to influence government and market expectations by producing a “tsunami of color-coded pie charts, bar graphs and global maps, read out unemotionally by executives wearing dark suits.”

Environmentalists, however, also understand now that it is the perception of future price that really helps to guide investors and companies. Infrastructure campaigns have been an important factor influencing the perception of price, as evidenced by the current flight of investment away from the tar sands, and the fact that no new growth is currently planned in Alberta after 2020.

Intense local and cross border opposition by communities and campaigners has succeeded in stopping or delaying many new tar sands pipeline projects, which has in turn amplified the price signal and forced investors and companies alike to evaluate the cost effectiveness of their plans without the construction of any new pipelines. As the Wall Street Journal put it, the new problem for Keystone XL is that oil companies don’t want it.

This perception of price – and the brutal math of the global carbon budget – is also the key to understanding whether or not governments and investors are lining their energy policies up with climate science. And it’s the key to holding them to account.

For example, how much of the global carbon budget that remains is Norway planning to take? What assumptions about oil demand, and thus price, and thus climate success, is Norway making? Is Norway planning for success in reaching the Paris goals? Are they #StillIn?

Norway, which has by universal acclaim done an exemplary job managing its oil wealth, and which is also globally seen as a leader on climate policy, is the latest successful example of how domestic pressure supported by international expertise can change the frame of the debate around the oil industry.

France, which for obvious reasons is deeply invested in the success of the Paris Agreement, has begun to recognize that climate leadership means an end to the expansion of the oil industry, and will pass legislation to that effect this year. And Colombians, who have endured a civil war often fueled by oil, are now voting against oil at the local level.

This is now the endgame, although of course we are only at the very beginning of the end. The simple but difficult step of acknowledging the obvious fact that our future cannot be fossil fueled begins the game that will only be truly won when our public policies, our laws, our governments, and our social norms fully incorporate this truth.

We know where we’re going. Storms of political, economic, and inevitably atmospheric power are already breaking over us though. Hold the line, lash yourself to the mast, do whatever you and yours need to do, but keep an eye fixed on that point on the horizon. It’s closer than it appears.


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