Almost a year ago, 178 nations agreed to the Paris Climate Accord which recently was ratified as the first world climate agreement designed to eliminate fossil fuel energy, preferably by 2033. How are we doing one year later?
Recent developments The density of carbon dioxide in our atmosphere has now climbed above 400 parts per million and is climbing ever more rapidly. This is well over what many scientists deem to be the safe level of 350 ppm. In January Arctic temperatures were 13 degrees F above normal. Oceans absorb much of the CO2 emissions and consequently are becoming more acid and warmer, causing coral reefs to sicken and die. Over 25 percent of the Great Barrier Reef of Australia bleached in sickness last year. Rapid melting indicates that Arctic summer ice will be gone in a few years. Half of the expanding forest fires in our West are caused by drying from climate warming.
Carbon budget The more carbon we put in the sky, the more our climate will warm. Scientists have developed what they call the Carbon Budget, specifying how many billion tons (bt) of CO2 we can safely put into the sky, namely, 800bt to hold the temperature increase to 2 degrees Celsius. Bill McKibben states in The New Republic that if we extract just the oil and coal in existing fields and mines, we will put 942bt of additional carbon in the sky. This “over budget” of 142bt would likely push our climate well over the +2 degrees limit of 800bt, possibly causing runaway climate change. Yet if we pump the fields at a slower rate than the current flow, by 2033 we would only place 471bt into the atmosphere. This is under the 2 degree target of 800bt and close to the preferred target of 355bt which would hold the increase to 1.5 degrees. Conclusion: most of the oil and coal in the ground must remain in the ground to allow a fast transition to a fossil-free energy system.
Replacement costs However, in addition the world will have to build the replacement green energy infrastructure of solar, wind and possibly nuclear energy. This will require a gargantuan new investment by 2050, equivalent to the total existing investments in the worldwide oil and coal industry today. Our work is cut out for us.
Oil and coal industry Equity stocks have heretofore been valued based on all existing reserves the oil and gas companies have found and on the assumption that oil prices will increase as oil becomes scarce. Now there is an increasing market realization that as the green fuels transition takes place, oil may never become scarce, never rise in price. Already energy groups have canceled nearly $400 billion of planned oil and gas field developments. Recently, a group of 2,000 investors and 400 institutions have pledged to sell their shares in the energy industries. Furthermore, it is increasingly likely that a carbon fee will be instituted to move demand farther away from carbon fuels.
The task ahead Given this immense global challenge, surprisingly, the task ahead can be described quite simply, though it is not so simply executed. The technology gods have granted to us earthlings a boon of inestimable worth: a precipitous decline of 90 percent in the cost of producing non-fossil-fuel energy – solar and wind energy.
This magnificent gift of cost reduction has brought down the cost of green energy close to the cost of the fossil fuels which we must eliminate. We are decades late in switching away from fossil fuels, but at least now we have low-cost substitute fuels which will create jobs. Moreover, this earth-saving fuel transition could be made without government subsidy or involvement if a fee were placed on carbon emissions that increased each year, making green energy production profitable now and more profitable every year in the future as the carbon fee increased. Let the free market save us from indescribable harm in the future as we consumers pay a bit more for energy today. The gods have given us a lifeline to save our earth. Will we grab hold?
Emeritus professor Roy Wehrle teaches economics and environment at UIS.