Do we need a Plan B for the fossil fuel industry?

10 February, 2013 Climate chaos, Uncategorized0

Do we need a Plan B for the fossil fuel industry?

Posted: 09 Feb 2013 02:15 PM PST
by Graeme Taylor

Is their any future for the oil and coal industries without doing what they do now: burning the stuff? In Global Warming’s Terrifying New Math, Bill McKibben argues that:

We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn. We’d have to keep 80 percent of those reserves locked away underground to avoid that fate. Before we knew those numbers, our fate had been likely. Now, barring some massive intervention, it seems certain.

Yes, this coal and gas and oil is still technically in the soil. But it’s already economically aboveground – it’s figured into share prices, companies are borrowing money against it, nations are basing their budgets on the presumed returns from their patrimony. It explains why the big fossil-fuel companies have fought so hard to prevent the regulation of carbon dioxide – those reserves are their primary asset, the holding that gives their companies their value. It’s why they’ve worked so hard these past years to figure out how to unlock the oil in Canada’s tar sands, or how to drill miles beneath the sea, or how to frack the Appalachians.
If you told Exxon or Lukoil that, in order to avoid wrecking the climate, they couldn’t pump out their reserves, the value of their companies would plummet. John Fullerton, a former managing director at JP Morgan who now runs the Capital Institute, calculates that at today’s market value, those 2,795 gigatons of carbon emissions are worth about $27 trillion. Which is to say, if you paid attention to the scientists and kept 80 percent of it underground, you’d be writing off $20 trillion in assets. The numbers aren’t exact, of course, but that carbon bubble makes the housing bubble look small by comparison. It won’t necessarily burst – we might well burn all that carbon, in which case investors will do fine. But if we do, the planet will crater. You can have a healthy fossil-fuel balance sheet, or a relatively healthy planet – but now that we know the numbers, it looks like you can’t have both. Do the math: 2,795 is five times 565. That’s how the story ends.

I agree with his logic. Because corporations, governments, investors and pension funds will do everything possible to avoid bankruptcy, efforts by environmentalists to simply shut down fossil fuel production will inevitably meet enormous resistance. For this reason it is hard to imagine any scenario in which preventative action will be taken in time to prevent catastrophic climate change.
McKibben then concludes that because the pollution caused by the oil, gas and coal companies will destroy most life on Earth, they are our enemies. While I understand his frustration, I believe that his analysis is incomplete, with the result that he is making serious theoretical and strategic mistakes.

His theoretical error is to analyse the fossil fuel industry in isolation from the rest of the global industrial political economy: in reality ending the use of fossil fuels will stop most existing industrial processes. We cannot create an environmentally sustainable economic system without completely transforming our wasteful, polluting pyrotechnical system to one based on renewable, recyclable, non-polluting processes. This will require a whole-systems paradigm shift — of not only the energy sector but also transportation, manufacturing and consumption. The political and economic power of the fossil fuel industry comes from its essential role in maintaining the industrial economy: because poverty is not an acceptable option, almost everyone on the planet wants the global industrial system to continue growing and will oppose policies that threaten economic collapse.
His strategic error is to position the environmental movement in opposition to the fossil fuel industry. This win/lose approach fails to give the industry and its investors any alternative other than to directly or indirectly oppose environmental initiatives. This is a particularly inappropriate strategy given the relative strength of the two groups and the (ultimately common) need for a rapid resolution to the problem.

We are likely to be more successful if, instead of trying to force the energy industry to write off $20 trillion, we provide constructive alternative uses for their assets — ones that support the development of an environmentally, economically and socially viable global system.
We need to put “Plan B” — a strategy for creating a sustainable fossil fuel industry — on the global agenda. It will work if:

Technologies are developed to utilise hydrocarbons as feedstocks to manufacture fully recyclable products in non-polluting (e.g. non-aerobic) processes. Carbon based products (e.g. plastics, fibres, carbon nanotubes) could then be used to create much of our built environment and transportation infrastructure.
While these technologies already exist (e.g. steam-methane reforming), they need to be refined and scaled up to commercially competitive levels.
Using fossil fuels to produce manufactured products should add value in three ways:
instead of burning coal, oil and gas, it will be more profitable to use them to produce finished products;
through creating recyclable products, the life of finite resources will be greatly extended; and
the (ultimately catastrophic) environmental, health and social costs of pollution will be avoided.
An emergency approach is taken to developing and scaling up the new technologies (similar to that of war mobilisation).
An international regime of sanctions and rewards is used to encourage industries and consumers to make the transition from polluting to non-polluting products.

Dr Graeme Taylor is the coordinator of BEST Futures ( and the author of Evolution’s Edge: The Coming Collapse and Transformation of Our World, which won the 2009 IPPY Gold Medal for the book “most likely to save the planet”.
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