Last month, a blockbuster report from the independent financial think tank Carbon Tracker effectively wrote an obituary for non-renewable resource development. Not surprisingly, it made huge waves.
“We are entering a new epoch, comparable to the industrial revolution,” said Kingsmill Bond, Carbon Tracker’s energy strategist and lead author of the report. “Energy will tumble in price and become available to millions more, particularly in low-income countries. Geopolitics will be transformed as nations are freed from expensive imports of coal, oil and gas. Clean renewables will fight catastrophic climate change and free the planet from deadly pollution.”
Carbon Tracker, an independent financial think tank that analyzes how the energy transition will affect capital markets and investment in high-cost, carbon-intensive fossil fuels, has made these kind of waves before. A simple 31-page report it wrote in 2011 inspired Bill McKibben to pen a dramatic article published by Rolling Stone, and effectively launched the movement for divestment from fossil fuels.
The analysis was not complicated, but no one had ever done it before. What the report made clear that only a tiny part of the world’s fossil fuel reserves could be used if the world was going to meet the goal set by the 2010 UN climate summit in Cancun – to limit warming of the climate to 2C above pre-industrial levels. That would leave much of the fossil fuel companies’ assets ‘stranded’ by climate change legislation.
“The Potsdam Climate Institute calculated that for a 20% chance of avoiding this ceiling, a maximum of 886 billion tonnes (GT) of carbon dioxide could be released by 2050,” Ed King explained in Climate Home News in 2015. “That meant little to the general public, but the ‘Unburnable Carbon’ report spelt out its consequences for fossil fuel companies. It said only a fraction of the carbon in the world’s fossil fuel reserves – 2860 GT CO2 – could be used if countries were serious about meeting the 2C goal. In a stroke, the CTI rendered the majority of reserves held by the likes BP, Shell, Exxon, Chevron and Peabody unburnable, posing a direct challenge to their business models.”
The full impact of that 2011 report hadn’t dawned on the small Carbon Tracker team – not until they began to get serious pushback from legal and accountancy firms in London.
But then McKibben, who had been sent the report by fellow campaigner Naomi Klein, used their numbers in a powerful climate essay published in Rolling Stone in July 2012: Global Warming’s Terrifying New Math.
“Those numbers have helped the world understand the contours of the greatest problem we’ve ever faced,” he said. “Without their math we wouldn’t understand the momentum we must somehow stop to have a chance with climate change.”
By the end of 2013, 400 campaigns underway around the world were demanding that institutions divest from fossil fuel stocks, companies began to reassure their shareholders, and reports attacking the idea of a carbon bubble began to appear. But, as Climate Home News noted, “it was too late – the genie had been unleashed.”
As of August 2015, when King was writing the article, 349 institutions including the Norwegian Sovereign Wealth Fund, Stanford University and the Church of England had announced plans to ditch some or all of their fossil fuel holdings. And it is a trend that has continued.
US coal companies going bankrupt, even as oil prices began to drop, underlined the validity of the 2011 Carbon Tracker analysis. Then the Bank of England and the Basel-based Financial Stability Board (FSB) weighed in, Climate Home News noted.
“Climate change was one of the “top risks” facing the financial services industry, according to Bank of England governor Mark Carney, who commissioned the One Bank Research Agenda in February and faced down criticism from leading UK climate sceptics for doing so.” The G20 group of nations asked the FSB to present its findings at a summit that took place two weeks before the 2015 climate change conference at which Paris Accord was signed.
“The divest movement has mobilised thousands of little endowments and charities to challenge fund managers who have to go back and ask questions of companies,” Mark Campanale, Carbon Tracker’s founder, told Climate Home News back in 2015. “They have never come into the climate debate before but now they’re coming in on the side of the right outcome… that being an orderly [low carbon] transition because it’s the right thing for policyholders.”
“There is no fiduciary duty to make the planet uninhabitable,” he concluded.
What the current report says is a much more hopeful than the 2011 message. In summary, it says:
- Solar and wind potential is far higher than that of fossil fuels and can meet global energy demand many times over, unlocking huge benefits for society.
- With current technology and in a subset of available locations we can capture at least 6,700 PWh p.a. from solar and wind, which is more than 100 times global energy demand.
- The collapse in renewable costs in the last three years means that half of this solar and wind technical potential now has economic potential, and by the end of the decade it will be over 90%.
- The land required for solar panels alone to provide all global energy is 450,000 km2, 0.3% of the global land area of 149 million km2 – less than the current land footprint of fossil fuel infrastructure.
- The fossil fuel industry cannot compete with the technology learning curves of renewables, so demand will inevitably fall as wind and solar continue to grow. At the current 15-20% growth rates of solar and wind, fossil fuels will be pushed out of the electricity sector by the mid-2030s and out of total energy supply by 2050.
- The unlocking of energy reserves 100 times our current demand creates new possibilities for cheaper energy and more local jobs in a more equitable world with far less environmental stress.
- Poor countries are the greatest beneficiaries. They have the largest ratio of solar and wind potential to energy demand and stand to unlock huge domestic benefits.”
Terrifying math: How Carbon Tracker changed the climate debate. Climate Home News, Aug. 18, 2015
Solar and wind can meet world energy demand 100 times over. Carbon Tracker, Apr 23, 2021