We’re here to divvy up billions of slices to be taken in the Death of Carbon by a Billion Cuts—what you can do at home, or locally, or by national or global activism. Today: Cutting subsidies and investments in fossil fuels, environmental destruction, and wholesale slaughter. In future episodes, we can cover each of the essential technologies, and each of the major forms and locations of investments needed.
I have started writing Renewable Friday posts, to continue covering current news that doesn’t fit into these Tuesday strategic overviews and policy discussions.
The Problem
- A teraton of CO2 in the atmosphere and oceans.
- 427 ppm CO2 in the air.
- Temperature increases of +1.3℃ since the Industrial Revolution.
- 38 Gigatonnes of CO2 equivalent being added annually.
- Trillions of dollars still going into Fossil Foolishness.
- Wrong-Wing economics and politics.
We are at Peak Carbon, a notable tipping point, but the warming will continue even after we get to Net Zero. We have to go strongly Carbon Negative in order to start Global Cooling.
Subsidies vs. Carbon Taxes
IMF: Climate Change | Fossil Fuel Subsidies
Globally, fossil fuel subsidies were $7 trillion or 7.1 percent of GDP in 2022, reflecting a $2 trillion increase since 2020 due to government support from surging energy prices. Subsidies are expected to decline in the near-term as energy price support policies is unwound and international prices fall, but then rise to $8.2 trillion by 2030 as the share of fuel consumption in emerging markets (where price gaps are generally larger) continues to climb. 18 percent of the 2022 subsidy reflects undercharging for supply costs (explicit subsidies) and 82 percent for undercharging for environmental costs and forgone consumption taxes (implicit subsidies), with the share of explicit falling to 8 percent by 2030.
This includes direct financial subsidies, plus the cost of externalities that should be offset by a Pigovian carbon tax. Economist Arthur Pigou created the theory of countering externalities with taxes.
Economics Books: Arthur Pigou on Carbon Taxes
Underpricing for local air pollution costs and climate damages are the largest contributor to global fossil fuel subsidies, accounting for about 30 percent each, followed by explicit subsidies (18 percent), broader road transport externalities such as congestion and road accidents (17 percent), and forgone consumption tax revenue (5 percent). Explicit subsidies are broadly found in the Middle East and North Africa (MENA), Europe, Commonwealth of Independent States (CIS) [Russia], and East Asia and Pacific (EAP) while total (explicit plus implicit) subsidies are predominately in the EAP. Relative to regional GDP however, total subsidies for Europe and North American are smallest at about 3 percent, while subsidies are 23 percent of regional GDP in CIS and 19, 10, and 10 percent respectively in MENA, South Asia and EAP. From 2020 to 2022, subsidies increased substantially in all regions except North America.
Raising fuel prices to their fully efficient levels reduces projected global fossil fuel CO2 emissions 43 percent below baseline levels in 2030—or 34 percent below 2019 emissions. This reduction is in line with the 25-50 percent reduction in global GHGs below 2019 levels needed by 2030 to be on track with containing global warming to the Paris goal of 1.5-2℃.
Enough to get started with.
World Bank: Carbon Pricing
Carbon pricing is critical to scaling up climate action.
Some 40 countries and more than 20 cities, states and provinces already use carbon pricing mechanisms, with more planning to implement them in the future. Together the carbon pricing schemes now in place cover about half their emissions, which translates to about 13 percent of annual global greenhouse gas emissions.
The article links to data sources and organizations working on the issue.
Baby steps, it turns out. Many of these measures are the easily evaded Cap and Trade kind (where companies can buy all sorts of bogus carbon credits), not actual emissions taxes.
We also need a variety of other regulations on vehicle and industrial emissions and much more. They are also coming along in various countries.
Good and Bad Investments
Forbes: Dumping Oil And Gas Stocks Improves Investment Returns: New Report
Investments in oil, gas and coal underperformed the broader stock market over the last 10 years, while portfolios that avoided investments in fossil fuels altogether saw superior returns, a new report from an independent economics non-profit has revealed.
Looking at a range of major stock market indices, researchers at the Institute for Energy Economics and Financial Analysis (IEEFA) in Ohio found that, across the board, an investment of $10,000 saw both markedly weaker growth and higher risk in passive funds that included fossil fuels, over five- and 10-year periods.
Recent decades have seen a rapid decline in fortunes for the fossil fuel sector, which in 1980 comprised some 30% of the weight of the S&P 500, but now stands at just 3.9%.
We need to talk to S&P about replacing the fossil fuel companies in their index with the leading renewables companies.
IEA: Investment in clean energy this year is set to be twice the amount going to fossil fuels
Global spending [sic] on clean energy technologies and infrastructure on track to hit $2 trillion in 2024 even as higher financing costs hinder new projects, notably in emerging and developing economies.
The new report warns, however, that there are still major imbalances and shortfalls in energy investment flows in many parts of the world. It highlights the low level of clean energy spending in emerging and developing economies (outside China), which is set to exceed $300 billion for the first time – led by India and Brazil. Yet, this accounts for only about 15% of global clean energy investment, far below what is required to meet growing energy demand in many of these countries, where the high cost of capital is holding back the development of new projects.
We are starting to see real movement there, enough for one of these posts fairly soon.
So where is the resistance to divestment coming from?
Short form: Perverse financial incentives that can be reversed with sane regulation.
U.S. banks remain the world’s largest funders of fossil fuels
Especially JPMorgan Chase.
Some of the other top investors: Citibank, Wells Fargo, Bank of America. Have we mentioned your bank yet?
Banks have collectively invested almost $7 trillion in fossil fuels since the Paris Climate Agreement went into effect.
Banks are under pressure to keep funding the fossil fuel industry.
For example, “Texas banned banks from participating in their public finance market that is underwriting municipal bonds, or advising on state pension funds, that sort of thing. If they had, the word is ‘discriminated against’ oil and gas companies,” Garrett said.
Nearly half of the money banks invested this year went toward expansionary projects, the report says. But there’s good news in it too. Banks loaned less to fossil fuel projects than they did last year, and last year they loaned less than the year before.
These Colleges Have Divested From Fossil Fuels
More than 100 U.S. schools have committed in some way to divest from fossil fuels.
The Global Fossil Fuel Divestment Commitments Database keeps record of institutions' commitments around the world to divest from fossil fuels. The database is managed by climate activism organization Stand.earth in partnership with 350.org.
However,
Many colleges and universities have direct relationships with fossil fuels either through their endowments or research funding.
Fossil fuel divestment in U.S. higher education: Endowment dependence and temporal dynamics
by
Since 2011, students and others have pushed U.S. higher education institutions (HEIs) to divest their endowments from fossil fuel producing industries. In the past decade, fossil fuel divestment (FFD) has become the fastest growing divestment movement in history, with over 140 U.S. HEIs announcing divestment commitments.
Schools that have divested from fossil fuels now represent roughly 3% of 4-year U.S. HEIs and 39% of HEI endowment value in our data. Roughly 133% more endowment value is now associated with U.S. schools that have publicly divested from fossil fuels than with those that have explicitly rejected it.
For schools that rejected divestment (Figure 5), a fiduciary responsibility to provide adequate growth in the endowment was by far the most common reason given—in over 60% of divestment rejections. A concern that divestment is ineffective at reducing emissions was the next most common reason, with a significant minority of schools planning to implement or highlighting existing alternative sustainability measures.
Bo-o-o-o-ogus.
So we’re getting there, with a good deal of teeth-pulling.
Next up: Companies that use huge amounts of electricity, but don’t have their own suppliers. Google is investing in solar and wind to supply their huge computer facilities. Phone companies aren’t.
Clean and Just Energy is Calling: The Communications Industry Needs to Listen
Green America investigated the clean energy use of major communications companies and whether the energy they use advances energy justice.
Corporations can play a unique leadership role in the transition to clean energy in a way that promotes energy justice. Large corporate actors often use as much energy as entire cities or even small nations. If these market leaders contract for renewable energy that benefits Black, Latine [sic], Indigenous and other communities facing environmental injustice, and work to improve the supply chains for clean energy, they can create strong benefits for communities and workers while meaningfully addressing climate change
Any Questions?