Mark Carney, Governor of the Bank of England, who becomes Special Envoy to the UN on climate action ... [+]
When the governor of the Bank of England speaks, markets listen. Yesterday, Mark Carney, the outgoing governor, said on BBC Radio 4’s Today program that companies and investors need to step up planning for climate change. He said, “The concern is whether we will spend another decade doing worthy things but not enough.....As a consequence, the climate will stabilize at the much higher level.”
Carney, who takes on the role of United Nations special envoy for climate action and finance in 2020, reiterated his warning that unless firms woke up to what he called the climate crisis, many of their assets would become worthless because of the effects of climate change.
“We are not on a path to stabilize temperatures,” he said, quoting from pension fund analysis which shows that company policies at present were “consistent with global warming of something in the order of between 3.7 degrees to 3.8 degrees Celsius” - considerably higher than the 1.5 degrees that many governments have signed up to.
How will this manifest itself? According to Climate Central, if carbon emissions cause 4 degrees Celsius of warming (7.2 degrees Fahrenheit) — a business-as-usual scenario — this could lead to an eventual rise in the sea level to submerge land currently home to 470 to 760 million people across the world.
Carbon cuts resulting in the proposed international target of 2 °C warming (3.6 °F) would reduce the rise, and limit the threat - although still substantial - to areas now occupied by as few as 130 million people.
Asked whether pension funds should disinvest from oil and gas companies, Carney said that investment managers would need to make the case for investment if it was going to turn out that “a substantial proportion of those assets are going to be worthless.”
It’s Complicated
BP’s retiring chief executive, Bob Dudley has previously said that politicians and climate change campaigners have oversimplified the climate change debate and warned that the world is unlikely to come close to replacing fossil fuels with renewable alternatives over the next couple of decades.
BP’s forecasts suggest that if the world fails to step up its efforts to tackle climate change, oil, gas and coal will account for as much of 73% of energy consumed in 2040.
Bob Dudley BP Group Chief Executive
Dudley believes that natural gas should provide a bridge between fossil fuels and renewable energy. Although natural gases are cleaner than coal and other fossil fuels, they still produce some carbon emissions.
Moving Beyond Oil
Norway is Europe’s largest oil producer and here the picture for green tech is encouraging as the country looks to a future beyond oil. Earlier this year, Norway’s finance minister said that its $1 trillion sovereign wealth fund should begin to divest from $8 billion of investments in oil and gas stocks, although earlier this month, the outgoing oil minister said that Norway would continue to pump oil for as long as there was the demand for it.
“We are seeing a big trend in Norway, that young people don’t want to work for the big oil companies,” says Kjetil Bøhn, CEO of Quantafuel, which refines clean energy from plastics.
“If you look at the North Sea, that has created the toughest conditions you could imagine for extracting oil, which has been a spur for innovation. Our technology company is a large number of people from the oil and gas industries.”
Time to move on? Oil rigs in Ølensvåg, Norway.
Although Europe recycles more plastic waste than anywhere in the world, it still can’t deal with all the plastic used. Bøhn says that around 70% of plastic in Europe is either being burnt or going to landfill. Quantafuel could also apply its technology to other hydrocarbon waste materials.
The Norwegian oil giant Equinor, formerly Statoil, is a leader in cutting methane emissions and has begun to move into offshore wind projects as well as oil and natural gas.
Mr Carney said capitalism had a vital role in raising funding for clean technologies. He added a proviso, however, and an important one at that. Investing in green tech, he said, must be tempered by government-imposed incentives, rules, and prohibitions of the most damaging activities.
Note: this article suggested that natural gas was not a fossil fuel and has been updated to reflect that the most widely used form of natural gas is from fossil fuels.
