Friday Climate Focus: John Kerry is Nick Fury, $6 trillion in fossil fuel subsidies, and more
FCF#1
Welcome to the first-ever edition of Friday Climate Focus, where I break down climate developments of significance from the week that was.
In Today’s Edition:
#1/ John Kerry, the first-ever special Presidential envoy for Climate appointed by the United States, is rallying the biggest polluters into a coalition. And it’s the big guns.
#2/ The Guardian reported that a new study found that the fossil fuel industry received nearly $6 trillion in subsidies last year, and very kindly did the per minute calculation for its readers ($11 million a minute). It’s true and has to change, but is also not what it reads.
#3/ CO2 outnumbers Methane 200:1 in the atmosphere, but Methane is responsible for half as much heating as CO2 during the last 250 years of observed human history. It is primo-priority on the agenda list during next month’s Global Climate Summit in Glasgow.
#4/ Bonus: A Tale of Two Americas, and a ‘Whodunnit?’ (hint: it wasn’t the butler)
John Kerry and the Climate Avengers
Aviation, Shipping, Steel, and Trucking - the biggest companies from these sectors are joining a coalition led by John Kerry, called the First Movers Coalition, to develop greener supply chains and meet voluntary climate goals.
Why is it significant?
— Production processes in these sectors warrant high levels of heat that is typically generated from fossil fuels
— Low-carbon alternatives exist, such as sustainable jet fuel, ships running on methanol, electric vehicles, and steel made from green hydrogen, but have been historically difficult and highly expensive to retrofit into existing plant and product design
— Government policies are critical for financially supporting early development of green technologies until it is commercially scalable (like renewables and electric vehicles), but governments do not have enough love to give
— Large companies already operate at a scale where ‘going green’ is only a marginal cost increase. (The next stat blew my mind!)
For example, using green steel would add only about $180, or about 1%, to a car’s sticker price, according to the Energy Transitions Commission. Using a zero-carbon ship to carry a $60 pair of jeans would cost an extra 30 cents.
Why are companies doing it now?
— It is getting expensive to emit, especially in regions where systematically implemented and functioning carbon markets mandate companies to buy permits for every tonne of CO2 their manufacturing emits
— By committing to low-carbon purchases, the companies can signal strong intent towards decarbonisation, and simultaneously reduce operating costs
What comes next?
— Few companies including A/P Moller Maersk, Holcim, among others have made initial pledges to be a part of the coalition. The full list will be published during the COP26 in Glasgow next month
— The Coalition is slated to expand its coverage in 2022 and will include more big guns - aluminium, cement, chemicals, and direct air-capture
Surely, there is a but…?
— The purchase commitments can amount to billions of dollars for low-carbon alternatives, but aren’t binding on the companies. Best to exercise optimism of the cautious sort, and squint when you read about more such voluntary commitments.
— Government incentives are absolutely crucial for this to work. It can be directed towards supporting research and development of such technologies or towards subsidies to large polluters and fast track technology adoption.
But… for now, we’ll take this small win. And well done, Special-Presidential-Climate-Envoy.
Reasons to subsidise fossil fuels: A. Inertia, B. The End.
Talking about government subsidies to make things tick in the world of climate change, this article from The Guardian sent the fraternity running into walls!
There’s a lot to unpack about the trillions in subsidies that were awarded to the fossil fuel industry just this past year. I will stick to a simple breakdown of the premise of the original IMF report. Here’s a link to the report cited.
What does the $5.9 trillion in ‘subsidies’ include?
— 8% in (explicit) government subsidies, by undercharging for fossil fuels (oil, coal, gas, electricity)
— 92% in (implicit) social and environmental costs and foregone consumption taxes
Is the premise valid?
— Easy answer. Absolutely. For the longest, the effective price of fossil fuels has not reflected its true costs. It only includes the usual suspects - labor, capital, and raw materials.
— Emissions arising from burning these fossil fuels and the subsequent social and environmental costs are left out. In the words of economists, the negative externalities aren’t priced into the product.
Efficient fuel pricing by 2025 would reduce global carbon dioxide (CO2) emissions 36 percent below baseline levels, equivalent to a 32 percent cut below 2018 levels. This is in line with keeping global warming to ‘well below’ 2 degrees and towards 1.5 degrees
How does pricing fossil fuels right help?
— Prices are currently at 50% of its true price for nearly half of all diesel and natural gas, and for nearly all the coal we consume.
— It helps to think this way. If fossil fuels were priced closer to its true price, it will result in -
a) higher tax revenues for the government to spend towards improving climate response;
b) a level playing field for renewables and low-carbon alternatives to compete, thereby accelerating its adoption
The onus is on governments to break this inertia. The money for decarbonisation has to come from somewhere and cutting back on things that add more carbon into the atmosphere seems like a good place to start.
Very soon, it might even pay (explicitly or implicitly) to be a part of the climate dream-team that John Kerry aka Nick Fury is trying to assemble. Circle of life, and all that.
Oh, and here’s a little piece of trivia for you -
More than 600 global companies in the We Mean Business coalition, including Unilever, Ikea, Aviva, Siemens and Volvo Cars, recently urged G20 leaders to end fossil fuel subsidies by 2025.
Go figure.
Who’s the hottest of them all?
Easy, it’s Methane.
Methane is responsible for a quarter of the world’s observed heating over the past two and a half centuries, despite having 1/200th the atmospheric presence of CO2.
Scientists use a metric called Global Warming Potential to judge the potency of greenhouse gases. The measure shows that over the first two decades, methane traps 84 times as much heat as the same amount of CO2. Over a century, its warming power is still 28x.
There is upside to this sobering statistic. Methane burns hot, but fizzles fast.
The same molecular structure that allows Methane to trap heat more effectively, also allows it to break down faster through its easy interaction with other gases.
Why are you telling me this?
Fair question. Because, something major happened in the exciting world of Methane-cutting.
The US and the European Union signed a pledge to reduce their respective methane emissions by at least 30% from current levels by 2030.
Should you ask me (you did not, but I will still tell you), that’s significant, especially ahead of the COP26. If enough countries sign on to this pledge, it could rapidly reduce the rate of future warming.
Why is Methane suddenly the flavour-of-the-month?
Because, that IPCC report that came out a couple of months ago recommended it. Although they suggested a 45% cut which has the potential to reduce global warming by 0.3°C by 2040.
For now, we will take 30%. You can dive into insights (through some excellent data visualisations) about the countries that emit the most methane, human actions that cause the most emissions, maturity of technologies to tackle them, and more, here.
Bonus
— A Tale of Two Americas
— Whodunnit?
