An array of solar panels in Spain, photographed on May 13, 2009. Major banking institutions are beginning to encourage investment in the growing alternative energy market, while discouraging investment in fossil fuels. (Flickr / Alex Lang)
We’ve slogged through many years of daily news about the oil industry globally, nationally and locally. We’ve read of myriad deals among corporations and nations eager to acquire wealth by supplying us with the oozy remains of long-dead dinosaurs. We’ve cringed at every “spill” (you gotta hand it to whomever co-opted that relatively benign word so it’s used irrespective of the volume of oil released), and we’ve been horrified at the huge blowouts such as BP’s famed 3-month gusher in the Gulf of Mexico.
Lately, we’ve experienced fracking, that lightly regulated practice of dumping exotic mixes of toxic chemicals (usually vaguely identified) and millions of gallons of precious water deep underground in an effort to force out oil and gas. We’ve also learned to fear the long-time object of America’s affection, the trains, as they began hauling volatile crude in tanker cars prone to rupturing when derailed, threatening horrendous conflagrations such as the one at Lac-Mégantic in Quebec.
And there are fracking-associated health concerns which came to the attention of public health experts only relatively recently. And the wars, oh lord, the wars that have obliterated, permanently maimed and displaced unknown numbers of human (and other) beings as one group or nation confronted the other in fierce struggles for oil.
Subsidies we provide for oil have cost us, too. It’s estimated a whopping $470 billion was bestowed on the oil and gas industry by the US over the last century. Those subsidies have become entrenched in the national budget and governmental and industry expectations. Current US oil subsidies are reportedly around $4.8 billion a year, about half going to ExxonMobil, Shell, Chevron, BP, and ConocoPhillips. Holy cows indeed!
Lately, however, things have not seemed so rosy. An oil glut on the international scene, which began early fall of last year, and recognition that a lot of oil is languishing in storage, led to a major retraction in oil prices globally—from a high of $109 (Brent) in May, 2014 to $60.48 (Brent) yesterday. Break-even charts (here, here, here, here) illustrate which oil producers are in greater danger from the recent plunge in price and there is the steady drip, drip, drip of negative news.
But, cheer up, folks! In the midst of all this negativity comes what just might be the first rays of a brighter (in more ways than one) and better future for a world burning itself up by flagrant production of carbon and on the verge of extinguishing its most imperfect species, us.
Three impressive publications on this subject were just released by three impressive institutions in the first three days of this month. Brief summaries, appetite-whetters, follow:
Solar wins
Deutsche Bank is predicting unprecedented demand for solar in the future—the very near future! They estimate an additional 100,000,000 solar installations worldwide by 2030, providing 10% of all electricity compared to 1% today. And there’s something sure to excite policy-makers (excepting the Senator Snowballs) and the financial sector—by 2030 revenues generated by solar will be somewhere around a very enticing $5 trillion.
There is also relief for those consumers who may not have roof-top solar but whose energy bills will be reduced because electricity from solar retails at some 40% less than traditional electricity.
Coal is being replaced rapidly now, as the sharp change in ratio of coal-based to solar energy shows. In only four years the ratio shifted from 7:1 to 2:1 and could reach 1:1 very quickly worldwide. It’s already reached that ratio in India.
Even in the US, where natural gas is touted as cheaper and relatively cleaner, solar is cheaper to produce and is already “displacing planned gas-fired generators.”
The one problem with solar energy currently is the lack of ability to store the energy produced. Deutsche Bank, however, is predicting that storage capacity at competitive prices is on the horizon and should be achieved quickly.
The future envisioned by Deutsche Bank: “We believe utility-scale solar demand is set to accelerate in both the US and emerging markets due to a combination of supportive policies and ongoing solar electricity cost reduction. We remain particularly optimistic over growth prospects in China, India, Middle East, South Africa and South America.”
This Wednesday, Nov. 26, 2008, file photo, shows solar panels on the roof of the Paul VI Hall, at the Vatican. Increasing opposition to the destructive effects of fossil fuels, combined with increasing profitability in solar energy has made banking institutions sing a new tune about sustainability. (AP Photo/Alessandra Tarantino)
Don’t invest in fossil fuel
The Bank of England, too, has been studying the situation and just warned insurance companies that they’re at risk of taking a ‘“huge hit’” if interest in reversing global warming takes off in earnest, gathering steam as it goes. The Bank cautions that those insuring fossil fuel enterprises could be “left ‘stranded’ by policy changes which limit the use of fossil fuels” and encourage so-called renewables. Although no names were dropped, it seems the Bank might know of a few instances where this has or is already happening.
Insurers of fossil fuel enterprises face a double-challenge in this situation, both in terms of the policies they’ve guaranteed their clients and the amount of the investments they’ve made over the years in the fossil fuel sector.
And here’s the nitty-gritty: “most existing reserves of fossil fuels cannot be burned without blowing the safe budget for carbon emissions” which means that “80% of coal reserves, half of gas and a third of oil would have to stay in the ground.” [emphasis added]
Hank Paulson, who presided as US Treasury Secretary during the Too Big To Fail crisis of 2008 recognizes the potential impact, the danger, of the “climate bubble … to both our environment and economy.”
Mark Carney, Governor of the Bank of England, had the last word: The “vast majority of [fossil fuel] reserves are unburnable,” and were made so by the pledges of the world’s governments to limit global warming to 2C.
Financing energy’s future
Report for the National Bank of Abu Dhabi by the University of Cambridge and PwC. This 75-page report begins with a Foreword by the National Bank of Abu Dhabi’s Chief Executive. He underscores a major theme of the report: the necessity of the Gulf Region, long associated almost exclusively with oil, to recognize that renewables are the future, to participate in that growth by “decarbonising their economies” and diversifying to meet the huge demand for energy rising from the Middle East, Africa and Asia.
There’s a strong role for the Gulf Region in this new scenario: it can “move towards greater prominence as a global home of sustainable energy.” Cost of solar and wind is in rapid decline, while opportunities accelerate “to make savings, reduce fuel costs, achieve climate ambition” and bring energy to vast populations in the Middle East, Africa and Asia. (Perhaps to soften resistance among members of the owning class who have reaped vast riches from their oil-based economy, the report notes that a shift to investment and development of renewables by the Gulf Region will “keep more oil and gas available for export.”)
“Figure 5. Projected marginal abatement costs (MACs) to 2030” (p.15) provides estimates of the costs of a variety of efforts aimed at reducing carbon generation (e.g., improving appliances and motor systems) and restoring some of the damage done (e.g., tillage, residue and cropland nutrient management, waste recycling). Energy efficient projects “all show negative MAC … meaning they more than pay back their [initial capital expenditure]” when projected only 15 years, to 2030. Even the higher costs of reducing harmful agricultural practices, improving management and restoration are much less than the costs of new build or retrofitting in coal, iron and steel, and gas.
The National Bank of Abu Dhabi report, though focused on the Gulf Region, provides insight into strategies some of the Big Players on the world’s stage are considering to ensure their continued economic survival while simultaneously pulling the planet back from the brink of unsustainability of life for humans (and other creatures at risk of being extinguished along with us). Data used and arguments made are impressive, covering a wide array of subjects—from squiggly light bulbs to large-scale systems and global financial possibilities. While the report was produced for a specific client, it is a treasure trove of information which has been thoughtfully compiled and now publicly available.
Where do we go from here?
There is much earth-protectors can learn from the three documents just released by Deutsche Bank, the Bank of England and the University of Cambridge and PwC. Publication of these documents seems to signal the entry of the corporate world into an area recently scorned as the domain of the “tree-huggers” and Al Gore followers. Make no mistake about it: part of the attraction is the potential of big profits to be made and much promise can be derailed if that attitude predominates. This is a key moment in hammering home the need to make sustainability, and not profit, the first and foremost goal; to ensure not just a retreat from the brink of species-annihilation, but a new approach that elevates and ensures respect and dignity for the planet and all life upon it.
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