The problem is not that governments are not doing enough to fight global warming. It’s that governments, particularly the Harper administration, are actually in the way.
The starting point in discussing the enormous opportunity of the green economy is to appreciate that the future of a fossil fuel-dependent economy will be short and painful. As the International Energy Agency has warned, of all known reserves of fossil fuels on the planet, two-thirds must remain in the ground until at least 2050. Expressed another way, until mid-century, human societies must be restricted to only one third of known reserves. The valuation of energy companies is based on their control of reserves. The fact that these corporations may, thus, be over-valued is now described as the problem of the “carbon bubble.”
A new report, authored by researchers at the Carbon Tracker Initiative, Grantham Foundation and the London School of Economics and Politics, “Unburnable Carbon 2013: Wasted Capital and Stranded Assets” warns of the economic peril of overvaluation of carbon assets.
As Professor Lord Nicholas Stern, Chair of the Grantham Research Institute on Climate Change and the Environment, and former advisor to the Chancellor of the Exchequer, said: “Smart investors can already see that most fossil fuel reserves are essentially unburnable because of the need to reduce emissions in line with the global agreement by governments to avoid global warming of more than two degrees Celsius. They can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision. But I hope this report will mean that regulators also take note, because much of the embedded risk from these potentially toxic carbon assets is not openly recognized through current reporting requirements.”
Most global observers, whether conservative elements within the International Financial Institutions such as the IMF or the World Bank, or scientific assessments, such as the Intergovernmental Panel on Climate Change, or the International Energy Agency, are all pressing forward for some form of climate pricing. As the pressure to eliminate fossil fuel subsidies also ramps up, and Stephen Harper’s promise to do so, a pledge he made at the 2009 G20 Summit in Pittsburgh, the fossil fuel industry will find itself less able to withstand the growing competitive force coming from increasingly attractive renewable energy sources.
The one significant glitch in moving from the theoretical possibility that our modern and growing economy, globally, can rely on clean energy to the reality of such reliance is that renewables (wind, solar in particular, clearly not the case for tidal or geothermal) are not reliable at all times. Converting peak load from renewable to base load to meet energy needs requires one technological gap-filler—storage of renewables. The Nordic countries have figured it out. Denmark’s wind-generated electricity is shared across the grid to Norway, where when the wind is blowing, its energy pumps water into reservoirs in Norway. When the wind isn’t blowing, Norway opens the sluices to drive hydropower: peak to base in one elegant solution.
There are many other examples of technology that move peak load to base load. Using green energy to produce fuel—whether hydrogen or methanol— provides alternatives that can be distributed through the same infrastructure in place for natural gas.
There is basically no limit to the potential of wind, solar, geothermal, cogeneration, tidal, as well as new applications for (non-food crop) bio-fuels.
The green economy also includes smarter use of fossil fuels over the decades it will take to move fossil fuel use to zero. Reducing waste of all kinds—whether of water, energy, toxic chemicals, solid waste, will contribute directly to higher profits. Waste and pollution are essentially symptoms of market failure. Correcting for them is a sensible step for anyone who understands the basics of a healthy stable economy.
If we were serious about innovation in Canada, if we wanted to ensure our economy stayed vibrant over the next two decades, the last thing we would do is to focus on the oilsands and fracking natural gas. We would be diversifying; encouraging innovators, ensuring policies aided the commercialization of smart new technology. We would be building supply chains and a flourishing intersection of supply chains for local consumption and export. We would, in other words, be developing policies most favourable to small and medium-sized enterprises. We would, as the Pembina Institute research demonstrates as possible, build the Canadian cleantech sector from its current $9-billion market share to $60-billion by 2020.
The problem is not that governments are not doing enough to fight global warming. It’s that governments, particularly the Harper administration, are actually in the way.
If we were serious about acting to reduce greenhouse gases, we would have a national strategy developed through consultation and negotiations with all other jurisdictions. We would set ambitious targets. And we would ensure a healthier economic future as we secure a healthy environment.
Originally published in the Hill Times.