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Perfect v Good, Climate Edition

March 31 saw three interesting publications, all of which reflected a slightly different take on the climate issue and which taken together illustrate some of the dialogue of the deaf that hobbles progress.

The first publication was the latest Working Group II report from the IPCC. As we have said before, to get the real message you need to read the full report, rather than media release based on the Summary for Policy Makers.  This one in particular seems  – to us – to stray worryingly from the IPCC’s prior science-based focus, to highly speculative and politically unhelpful (if your objective is to work toward consensus about the seriousness of the issue) messages about possible impacts on income and gender inequality. Despite that, the message was clear: Climate change is a serious problem with many potentially bad, and ultimately some positively catastrophic, impacts.  Anyone reading the report will understand that action is necessary.

The second document was ExxonMobil’s report on how it approaches the business risks of climate change.  (Actually two reports; we write about them here.) ExxonMobil bases its business and investment decisions on an annual Energy Outlook, which, as they often describe it, sets out a picture of the world as they expect it to be, not as they might like it to be.  The two reports argue that the company’s assets are not going to be stranded, given the world’s continuing (and growing) need for energy, the limited time horizon of their reserve base, and the fact that they use proxy prices on carbon to test their investments against the potential impacts of carbon regulation and legislation worldwide.

(It is worth noting that the ExxonMobil proxy carbon price is quite steep by 2040 – $80/ton CO2 in developed countries and even $30/ton in China (all in 2014 dollars). Think about that: if you told a rational environmentalist last year that the world had agreed on a deal of an $80/ton price on carbon in developed countries, and $30/ton in China by 2040 they would regard that as a truly incredible triumph to shout about from the rooftops. Yet many are criticizing the Exxon report as not “sufficiently serious” about the threats described by the IPCC.)

This brings us to the third publication, the White House’s proposed methane action plan – we have written about that separately here.  Many enviros will find the program disappointing, and in EU parlance, “lacking ambition”.  Those close to the White House will no doubt respond that it is the pragmatic route to getting any regulation on the books.  In a sense they are both right, and that’s precisely the problem.  As reflected in the White House’s cautious approach to methane — and in Exxon’s assessment of what is plausible even by 2040 — both are weighing political realities, and that means factors other than the environment.

It’s a truism of energy policy, but sadly not often recognized by climate advocates, that such policy is always a political balance of economic, security (for which read reliability and accessibility, not just nationalism) and environmental factors.  Countries won’t stop using fossil fuels if it means  – as it mostly would for the foreseeable future – expensive and unreliable power or range-limited and prohibitively costly cars.  That doesn’t mean policy makers don’t care, it means that they recognize society has other priorities that they – the politicians – are elected to deal with, and a climate policy approach that ignores everything else simply would not be possible.  As a result, climate policy will move gradually and only by all concerned pragmatically seizing every opportunity for progress. It will be slow, clunky (think of driving a stick shift without using the clutch) and for most, hugely frustrating.  Typically the pace of technical change and the sheer scale of capital involved means that energy transitions take several generations . . . even with plenty of government short cuts, subsidies and permitting help (hello, nuclear).

“But what,” you cry, “about the latest IPCC Working Group 3 report on Mitigation options.  Didn’t I read that it shows it is cheap and easy to achieve the climate goals we all want?”  We refer you to footnote 1 on Page 18 of the Summary for Policy Makers:  “Cost-effective scenarios assume immediate mitigation in all countries and a single global carbon price, and impose no additional limitations on technology relative to the models’ default technology assumptions.”  The first two assumptions are self-explanatory; the technology limitations the Working Group did not include are limits on nuclear, CCS, and any limitations on wind and solar from intermittency or siting, or on the use of biomass in power generation. Enough said.

When asked in the 1970s about a post-oil world, Sheikh Yamani, the former Saudi oil minister, pointed out that “the Stone Age did not end because we ran out of stones” but because “we found something better”.  To date the IPCC’s reports have not succeeded in convincing enough people that “better” means more “climate friendly” when it comes to fossil fuel use in general; and that such friendliness is worth the substantial utility and economic drawbacks posed by today’s technologies.  Advocates can try to wish, or spin, these concerns away, but as the White House plan and the Exxon reports both show in different ways, real world politicians and businesses cannot – and won’t.

 

 

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