The sustainability movement has more influence over company and government climate change actions than any treaty, law, or regulation could possibly have, and results in quicker, measurable actions.
Commercial activity in fossil fuels is increasingly at odds with global actions to reduce the threat of climate change. Burning coal, oil, and natural gas is responsible for two-thirds of humanity's emissions of greenhouse gases, and yet provides more than 20% of GDP in two dozen nation states. By Citicorp's estimate, current commitments to reduce these emissions could mean forgoing $100 trillion in fossil fuel revenues by 2050 -- representing a huge disruption to global affairs, undermining national budgets and corporate balance sheets while exposing stakeholders, including pension holders and ordinary citizens in resource-exporting states, to myriad risks.
Two seminal articles by energy experts in the latest issue of MRS Energy and Sustainability (MRS E&S) examine the climate-related risks facing the fossil fuel industry and conclude that the sustainability train has already well and truly left the station -- and is not coming back.
An in-depth analysis by Jim Krane (Wallace S. Wilson Fellow for Energy Studies at Rice University in Houston) is very timely in the light of last month's announcement from Exxon Mobil that it will invest $20 billion through 2022 to expand its chemical and oil refining plants on the US Gulf Coast.
The former Associated Press Gulf correspondent finds, however, that climate changes risks vary according to different sectors of the energy industry. Demand for oil seems to be insulated from the very immediate risks facing other sectors of the industry, due to its unique role in transportation and the lack of viable alternatives, he writes. Citing a study by McGlade and Ekins, he concludes that oil reserves are the least exposed of the three fuels. Just a third of current conventional crude oil reserves would probably be abandoned to meet current global climate change targets, as opposed to half of gas and 82% of coal reserves.
Krane predicts that some businesses, and perhaps even some governments, may not survive the increasing pressures facing the energy industry as a result of climate change actions.
"Unless a technological breakthrough can restrict carbon releases, the fortunes of the fossil fuel industry and the stability of Earth's climate will be locked in a zero-sum game," he concludes. "Climate's gain is the industry's loss and vice versa."
Read more at Climate Change and Risk to Fossil Fuel Industry: Sustainability Train Has Left the Station