January 31, 2017    19 minute read

Why There’s A Long Road Ahead On Climate Change

An Economic Threat    January 31, 2017    19 minute read

Why There’s A Long Road Ahead On Climate Change

The history of our planet shows global climate change to be a recurring natural phenomenon. But it is important to examine what is happening to the Earth’s climate now, and how it will affect the world’s economy.

A Warming World

From a geological point of view, we are currently living in a period of the Earth’s life known as the Quaternary Period, one which began roughly 2.58 million years ago. The fact that a single permanent ice sheet (Antarctica) has existed continuously throughout this period implies that we are all today technically living in the middle of an ice age.

Such ice ages are characterised by two distinct cyclical periods. The first, known as glacial periods, are episodes of extreme cold during which large sheets of ice of a thickness of at least 4km advance deep into areas of Siberia, Europe and North America. Glacial periods are always followed by periods of warmer weather conditions or ‘interglacial periods’.

During the past 740,000 years, there have been eight glacial advances, the last of which had ended somewhere between 10,000 and 15,000 years ago. Its retreat heralded the beginning of the Holocene epoch and human civilisation. Global climate change as such is undoubtedly an inherent feature of Earth’s existence.

The variations occurring in today’s global climate are, however, not part of any natural cycle. We are witnessing a situation which is on many different levels completely unprecedented. The world is warming up and it has been gradually doing so for the past 130 years.

A report released by NASA’s Goddard Institute for Space Studies (GISS) on January 18th this year shows that globally averaged temperatures have increased by 0.99°C (1.78°F) from the mid-19th century mean. This implies that, with a certainty greater than 95%, 2016 has set a new record in global average surface temperatures.

An Unsustainable Surge

Although a seemingly small increase, the amount of energy required to cause this alteration is staggering. In the past, it only took a global temperature drop of one to two degrees for the earth to be plunged into one of the aforementioned glacial periods. The world is unlikely to turn into an inferno in the forthcoming decade or two, but drastic changes should be expected if global temperature levels keep on rising at their current rate.

The UN’s Intergovernmental Panel on Climate Change (IPCC) had released in 2014 an extremely comprehensive report which, amongst other things, provides estimates of when and what kind of changes to expect given what is done to curb emissions and other contributing factors. Global Weirding, an interactive website based on the report, helps summarise some of the main points.

If we do not intervene, the website paints a picture of an Earth 30 years older, distorted by prolonged periods of drought and wildfires which are set to occur at more frequent rates throughout the globe. Some species will be brought to the brink of extinction as they are forced to change migration and behavioural patterns.

Others won’t be able to adapt and will perish. In less developed areas, malnutrition and disease are set to thrive as food shortages cause prices to soar.  People in particular parts of the globe will witness the availability of drinkable water decrease, whereas others will be forced to flee from densely populated coastal areas or risk being submerged by rising ocean levels.

Pacific Most Affected

We need not wait thirty, twenty or even as little as ten years to be able to see such adverse effects. The South Pacific atoll island nation Kiribati, which is home to almost 100,000 people, might be forced to evacuate its entire population as early as 2020 due to rising sea levels which have rendered life on the islands increasingly difficult.

Located where it is, Kiribati is in general susceptible to fluctuations in surrounding sea levels. Certain areas of the Pacific are perpetually gripped by changes in the ocean itself and its overlying atmosphere. Events characterised by the warming of the central and eastern tropical Pacific are referred to as El Nino events, while La Nina events are the reverse, with a sustained cooling.

These changes occur in a cycle which is called the El Nino-Southern Oscillations or ENSO. Global warming only compounds the effects of ENSO, specifically El Nino events which generally in the Pacific are associated with irregular rainfall, increased tropical cyclone frequency and abnormal sea level conditions.

52is the number of small islands which will be impacted

A foresight report by the United Nations Environmental Programme finds that rising sea levels will negatively impact not only Kiribati but around 52 Small Island Developing States (SIDS) across the globe. Some of the most important issues faced by SIDS today relate to land capacity, threats from chemicals and wastes, coastal squeeze, flooding and invasive alien species.

These all are exacerbated by consistent increases in global temperatures and global sea levels. The degree to which these nations will be impacted is reflected in a lacklustre way within the economic costs they are bound to face. In general, those industries least resistant to changes in weather conditions happen to be the most prominent.

Consider as an example subsistence farming, which constitutes a major component of GDP for countries such as Papua New Guinea, Fiji, Vanuatu, Cook Islands and Solomon Islands. Crop yields depend greatly on adequate and consistent rainfall and the soil upon which they grow is easily tarnished when irrigated by flooding sea water which has the potential to render the land barren for prolonged periods of time.

The fishing industry is another prominent example given that in certain countries, fisheries are estimated to account for up to 12% of GDP. The coastal ecosystems upon which the industry is so dependent are some of the most susceptible to the adverse effects of global warming.

$187bn is the capital cost of sea level rise by 2080 in the Caribbean

Not only will certain areas of the economy come under stress, but significant costs directly related to the process of adapting these nations to a more sustainable economic framework will be incurred. In a business-as-usual scenario, the capital cost of sea level rise alone in the Caribbean Community Countries is estimated to be up to $187bn by 2080.

It is when observing the foreseeable future of such nations that one comes face to face with one of modern society’s biggest failures. Together, these 52 countries, with a total population of around 62 million people, emit less than 1% of global greenhouse gases. Yet, it is they who are bound to suffer most in the near future.

GMSL as a Measure

When analysing and commenting the impact of global warming, rising global sea levels are one of the most observed consequences. To a certain degree, the focus upon this particular effect of climate change is a result of the fact that the three main components which determine the global mean sea level (GMSL) metric are well understood.

What is most important is that, quite simply, heat makes the volume of the ocean increase via a process known as the thermal expansion of water. If you are able to measure this increase whilst simultaneously removing the impact of tides and other meteorological residues as components of GMSL, the change which you note will be quite representative of the amount of heat pumped into the atmosphere.

The melting of ice occurring at the poles is a process which only exacerbates the effects of thermal expansion, causing the GMSL to increase further.

It might seem important to determine how the two processes compare by attempting to discern which has played a greater role in increasing GMSL, but given that it is scientifically agreed upon that climate change is the product of human activity, it really does not matter.

SeaLevel

(Source: NASA)

If greenhouse gas emissions are reduced, the impact of both processes is impaired and the GMSL will subsequently decrease. Properly measured variations of the metric adequately depict our progress in the fight against anthropogenic global warming.

Understanding GMSL and how it will change is why initiatives such as the Jason-3 satellite project, launched last year on January 17, are so important. A truly international collaboration, Jason-3 is led by the National Oceanic and Atmospheric Administration (NOAA) in partnership with the European Organisation for the Exploitation of Meteorological Satellites, NASA and the French space agency CNES.

Planning for the mission started as far back as 2009/10 and its primary purpose is to collect data on a daily basis to assist in measuring variations in GMSL. It will also provide information which will serve to improve weather forecasts and assist in the prediction of El Nino, La Nina, hurricane and similar meteorological events.Jason-3 is

Jason-3 is explanatory of what can be achieved when different countries provide various contributions and resources in the form of scientific knowledge, government/private funding, personnel and equipment. Even the private sector played a major role – the satellite itself had been launched into orbit on a SpaceX rocket.

It is such projects with the ultimate goal of improving life for all humankind by assisting with one of the greatest problems of our era that globalists should flaunt and be most proud of. Yet, it is one which they, or anyone else, rarely mention.

A study published by the Proceedings of the National Academy of Science (PNAS) in 2016 was the first to attempt to estimate variations in GMSL over the past 3000 years. One of the studies’ main conclusions is that “it is very likely (P ≥ 93%) that GMSL has risen over every 40-y interval since 1860 CE.”

50%
of all coal production is from China

Unsurprisingly, this corresponds to the rapid industrialisation which had gripped most of the developed world during the mid-19th to early 20th century period. The book ‘Energy in the American Economy, 1850-1975: An Economic Study of Its History and Prospects’ explains the rapid increase in total coal output of the US at the time: from 8.4mil short tonnes in 1850 to 680mil short tonnes in 1918.

Meanwhile, the UK, which had been one of the largest coal producing countries at the beginning of the 19th century with a total output of over 33.6mil short tonnes in 1830, witnessed peak coal production equal to 316mil short tonnes in 1913. More recent figures, as found in the ‘Statistical Review of World Energy 2016’ published by BP, include a total global output of coal equal to roughly 7861.1mil metric tonnes (or 8660mil short tonnes).

China accounts for almost 50% of this production, with total production equal to 3747mil metric tonnes. It is followed by the US (812.8mil tonnes), India (677.5mil tonnes), the EU (528.1mil tonnes) and Australia (484.5mil tonnes). Together these five territories constituted almost 80% of the total world output of coal in 2015. It is useful to keep in perspective that coal accounted for roughly 30% of global primary energy consumption in 2015.

Fossil Fuels’ Future

The prevalence of this energy source was second only to oil, which accounted for 32.9%. However, 40% of globally generated electricity comes from coal-fired generation. If anything else, these numbers perfectly depict the extent to which modern society depends on fossil fuels. Coal may not be the most prevalent source of energy in today’s world, but it’s definitely one of the dirtiest.

The burning of coal releases into the atmosphere toxic chemicals such as carbon dioxide (CO2), sulphur dioxide (SO2), nitrogen oxides (NOx), mercury (HG) and particulate matter (PM). Statistics from the IPCC 2014 report based on global emissions from 2010 suggest that CO2 accounts for 76% of all emitted greenhouse gases. The US Energy Information Administration (EIA) notes that 37% of total U.S. energy-related emission of CO2 in 2015 was generated by the electric power sector.

Within this sector, 71% of all emissions, or 1364 million metric tonnes of CO2, had been the product of coal-fired generation. However, as can be seen from the chart below, CO2 emissions from petroleum and other liquids exceed coal emissions in the US throughout the entirety of the observed 24 year period.

It is worth mentioning, as does the EIA, that the increase in natural gas emissions which begin in 2008 primarily reflects “growth in the natural gas share of electricity generation largely through displacement of coal-fired generation.” At least in the US then, progress in reducing greenhouse gas emissions within the energy sector is being achieved by replacing one fossil fuel with another.

chart (1)

(Source: US Energy Information Administration)

Yet, overall progress has been made within the sector – from 2005 through 2015, emissions of carbon dioxide, sulphur dioxide and nitrogen oxides have been reduced.

COP 21 and 22

Despite the difficulty reversible damages already inflicted upon certain local environments, not all is lost. When considering climate change and our plans to combat it, 2015 represents a significant turning point. Its conclusion brought the adoption of a completed version of the Climate Change Agreement which was subsequently signed by 194 nations in 2016.

Drafted at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) held in Paris, the accord was deemed as being both “ambitious and balanced” by Laurent Fabius, France’s foreign minister and head of the Paris Conference. Article 2 of the agreement lays out its main aims.

These include maintaining global average temperature increases to well below 2°C above pre-industrial levels and increasing adaptability to the adverse impacts of climate change in “a manner which does not threaten food production”. It also calls for the formation of adequate finance flows to help fund the reduction of greenhouse gas emissions as well as overall “climate-resilient development”.

Passed into force on the 4th of November 2016, the agreement essentially became international law. Many who had followed the developments of COP21 had expected next years’ meeting, or COP22, held in November 2016 in Marrakesh, Morocco, to be full of decisive action.

Agreeing on Solutions

Despite providing a far-reaching framework to address issues related to climate change, the Paris Agreement lacked specific details – they were to be hammered out during future negotiations. Instead of doing just that, the parties present at COP22 had only managed to map out a future plan for the implementation itself via the adoption of thirty-five decisions.

What stands out is the decision that all preparatory work in the implementation of the agreement is to be completed by 2018. With almost all of the other decisions being procedural at best, COP22 ended as one big agreement to further continue work, not the “COP of Action” environmentalists across the globe had hoped for.

It is quite understandable, given the enormity of the projects’ scale, that progress within the international community is being achieved at such a rate. The Kyoto Protocol stands out as an endeavour most similar to the Paris Agreement and it had taken four years for the work regarding its implementation to be completed.

53 developed countries are committed to reduction targets

Unlike the Paris Agreement which includes the firm commitment of both developing and developed countries, the Kyoto Protocol had only required 53 developed countries to commit to specific reduction targets. One of the main accomplishments achieved during those particular negotiations was the adoption of the Adaptation Fund.

In fact, one point of discussion during COP22 had been whether or not to continue the use of the fund for adaptation purposes required by the Paris Agreement. Given that it was resisted by a number of developed countries, it was decided that consensus on the topic would be reached at a future point.

Putting the formalities of international politics aside, it is paramount to observe the most recent figures related to global greenhouse gas (GHG) emissions as well as the policies top emitters are currently pursuing to be able to fully understand what the future holds.

Some of the main trends in global CO2 emissions have been published in a report by PBL Netherlands Environmental Assessment Agency which notes that overall in 2015, global CO2 emissions related to fossil fuel combustion, cement production and other processes have stalled. This does not mean emissions hadn’t increased, they had but at a constant rate relative to the previous year.

The report explains this as a consequence of the fact that the impact of countries which saw a reduction in emissions had been effectively counterbalanced by others which witnessed an increase. Top-emitters US and China had set the example by decreasing CO2 emissions by 0.7% and 2.6%, respectively.

Notable examples which failed to follow suit are India and the EU, the former which witnessed an increase of 5.1%, the latter of 1.3%. One of the report’s main conclusions is that the slowdown in emissions growth is not random, but a direct result of “structural changes in the economy, global energy efficiency improvements and in the energy mix of key world players.” Interestingly enough, they also note that in 2015 global GDP became ‘decoupled’ with global CO2 emissions. In other words, they suggest that growth can be achieved even under a ‘cleaner’ regime.

China’s Role

During the World Economic Forum’s annual meeting held this year, Chinese President Xi Jinping recognised in his speech the importance of the “hard-won” Paris Agreement.

Indeed, China had played a leading role in pushing the agreement into place back in 2015 and its leaders are now striving to fill in a role no country is currently willing to take. With a share of 29% in the 2015 global total, China is the world’s largest emitter of carbon dioxide. To many, Mr Jinping’s words are reassuring. Recent actions undertaken by his government suggest that such optimism is not unwarranted.

On the 16th of January, China’s National Energy Administration had announced the suspension of 104 planned and under-construction coal power projects. A measure introduced to tackle a coal overcapacity crisis, it will be followed by similar policies such as the launch of a nationwide carbon trading market later this year.

The cost of cancelling the 47 already under-construction plants is estimated to be around USD30bn. The economic costs of continuing construction have apparently been deemed more than this figure. Ultimately, any rise in demand is most likely to be met adequately by energy generated from renewables.

The fact that the government is capable of facilitating such a large scale cancellation displays the effectiveness of its clean energy expansion program. In fact, as two researchers at the Institute for Energy Economics and Financial Analysis have noted in a study published this month, China is “the world leader in domestic investment in renewable energy and associated low-emissions-energy sectors.”

40% of worldwide wind energy is produced by China

In 2015, new investments in such sectors equalled USD102.9bn, a figure roughly 2.5 times of that undertaken by the US during the same period. The International Energy Agency (IEA) predicts that by 2021, China will have installed 36% of all global hydroelectricity generation capacity as well as 40% of all worldwide wind energy and 36% of all solar.

Considering that, in 2016, five of the world’s six largest solar module manufacturing firms, five of the top ten wind-turbine manufacturing firms and the largest lithium-ion manufacturer in 2016 are all Chinese, such estimates seem completely reasonable.

With the introduction of government policies under the “Going Global” initiative such as the “China-Pakistan Economic Corridor”, the “Silk Road Fund”, the “Bangladesh-China-India-Myanmar Economic Corridor” and “One Belt, One Road”, it is obvious officials are attaching a great deal of importance to maintaining and taking full advantage of the country’s current global position as the leader in alternative energy production.

In a world hungry for clean energy, China is set to thrive. China’s unique position implies that if effectively done over time, countries shift into cleaner sources of energy don’t have to hurt its economy. According to the IEA, the country has effectively managed to secure 3.5mil of the 8.1mil renewable energy jobs available globally.

Sending a Message

It is a clear message to those politicians such as Mr Trump who has used his first days in office to sign executive orders to allow construction of the Dakota Access and Keystone XL oil pipelines. Other alternatives do exist and should be forced wherever possible, for the better of everyone. There is a large global market that will only keep on growing.

If the US decides to minimise its role in this shift towards it, a possibility which now seems likely given the high number climate sceptics prevalent in the new administration, others will step in to fill the gap. We have reached a point in time in which it has become paramount that long-term sustainable strategies become the focus of an everyday business.

Adam Smith had stated long ago that “the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.” This should hold true for all industries, even energy-related ones. It is important to understand that fossil fuel industries will not destroy this planet, little is capable of truly doing so. They will, however, severely cripple its ability to sustain life and keep us all alive.

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