Oil Change International

Exposing the true costs of fossil fuels

The Price of Oil: Global Warming

Global warming poses a major threat both to the environment and to global development. Caused by the excessive build-up of heat trapping “greenhouse” gases in the Earth’s atmosphere – in particular carbon dioxide emissions from the burning of oil, gas and coal – climate change threatens virtually every segment of the biosphere and human society.

Polar ice and mountain glaciers are already melting, leading to rising sea levels, while at the same time climate fluctuations are bringing increasingly severe droughts, floods and storms around the world.

Oil provides 40 to 43 percent of all energy used by the world. Oil and coal each account for 40 percent of global warming emissions from fossil fuels worldwide.  In the United States, energy use accounts for 82 percent of our global warming emissions, with oil counting for 42 percent of those emissions.

Global Warming and Inequality

While the vast majority of global warming emissions happen in the global North (in rich countries like the United States, Canada and in Europe), it is the poorest countries, those can least afford to adapt to a changing climate, who are suffering first and worst. Countries in the tropics and the small island states will likely bear the largest part of the consequences. Developing country economies are harmed when oil is extracted from them, or when they are dependent on volatile oil imports. And when the oil is finally burned, and the carbon contained in it released into the atmosphere, oil contributes heavily to decreased agricultural production, increased droughts, human health impacts, environmentally related refugees and other already observed and predicted impacts of climate change.

The effects of climate change are already being felt all over the planet as weather systems are becoming less predictable and everything from agriculture and fisheries to the insurance industry are being affected.

 

Reducing Greenhouse Gases

If the world is going to prevent dangerous human interference with the climate system, world leaders must agree to limit emissions as quickly as possible, with the goal of peaking these emissions within this decade. In order to avoid the most dangerous impacts of climate change, the latest science tells us that carbon emissions in industrialized countries will need to drop by at least 90 percent by 2050.

Internationally, climate policy is currently being negotiated under the United Nations Framework Convention on Climate Change (UNFCCC). The United Nations aims to get countries to reduce their emissions of climate changing gases via this conventions and its Kyoto Protocol. The Kyoto Protocol only sets emission reductions for industrialized countries, at 5.2 per cent below 1990 levels by 2012, and negotiations for the way forward after 2012 have not reached an agreement.

Oil Companies and Climate Change

If we hope to maintain a stable climate, the world cannot afford to burn more than one quarter of the carbon contained in already identified fossil fuel reserves – so why on earth is the oil and gas industry spending in excess of $150 billion each year looking for new reserves?

Current reserves of oil alone are more than enough to take us into full-blown climate chaos. Natural gas, often touted for its supposed ecological benefits, is not much better. A glance at the total global coal reserves is enough to induce despair. Any strategy to address climate change must by definition involve the phase out of these fossil fuels, and ‘just transition’ strategies need to be negotiated for the labor forces and communities that currently produce them.

The oil companies with the highest profile on the climate change issue are BP, Shell and ExxonMobil. While all three companies now publicly admit that climate change exists (a marked change for ExxonMobil in recent years), their level of commitment to pursuing alternatives remains extremely low.

To be clear, these are oil companies. And BP and Shell are among the most ambitious companies in the world in their targets for increasing their rate of extraction of oil and gas, Shell by 5 per cent a year, and BP by between 5.5 and 7 per cent.

In 2009, Oil Change International released a report with Friends of the Earth (International, Europe, U.S. and The Netherlands), PLATFORM, and Greenpeace UK that rates the carbon intensity of the top international oil companies, revealing that Shell is now the most carbon intensive oil company in the world based on its total resources. Investments in tar sands and oil shale, reliance on liquefied natural gas (LNG) and continued gas flaring in Nigeria all contribute to high carbon emissions – just to produce oil that will release more carbon dioxide when it is consumed!

Ending Money for the Problem

Our recent estimates put global fossil fuel subsidies at at least $775 billion USD per year, and perhaps as much as one trillion dollars. Ending fossil fuel subsidies could be a big a first step towards solving the climate problem. Estimates of the impact of ending fossil fuel subsides on greenhouse gas emissions vary, but it certainly would help. The International Energy Agency in its World Energy Outlook suggests that cutting just developing country fossil fuel subsides that global warming emissions could be cut 5.7 percent. Just imagine how much could be cut if we ended subsidies to oil and gas companies in the global North first.

The same report says that cutting fossil fuel subsidies does not mean that the poor would need to live without energy services – to ensure everyone has access to modern energy by 2030, the IEA calculates it would cost $36 billion per year and global carbon emissions would go up by just 0.8 percent. Besides, the IEA suggests that less than 10% of current fossil fuel subsidies actually reach the poorest that they are intended to support in the first place.

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