By Bridget Stuart
It is a fact that we need to limit the increase in global temperatures to below 1.5 degrees Celsius above pre-industrial levels as soon as possible, but certainly before 2050. When I say ‘we’, I mean the governments of the world, and in particular the governments of wealthy countries in the Global North, who have particular responsibility for both causing the problem, and therefore for solving it. Unfortunately, it is already too late to prevent dangerous climate change, and it is unlikely the 1.5 degrees target will be achieved. Therefore, the more pertinent question asked by the climate scientist Kevin Anderson is how long we have between dangerous climate change and extremely dangerous climate change .
COVID-19 has created a mean 7% decline in CO2 emissions, as well as a decline in other toxic air pollutants from the transport and industrial sectors . Unfortunately, it appears that this decline will only be temporary, and that emissions will rebound as the economy does. For example, China’s emissions have already rebounded past their 2019 levels . However, this need not be the case if countries work to ‘build back better’ and create a just transition to a low-carbon, green economy.
This is where the ‘green recovery’ comes in. In their recovery packages responding to the pandemic-induced economic crisis, many governments have included ‘green recovery’ measures. Such measures include investments, grants and loans for projects directed at improving green transport, clean energy, the circular economy, and research & development. Other initiatives focus on creating green jobs, and the conservation of ecosystems. The OECD estimates the overall funds directed towards 'green recovery' programmes currently total USD312 billion, with the focus being predominantly directed towards the energy and transport sectors. For example, Boris Johnson has promised a £12billion government investment, with a potential private sector of three times that amount, projected to create 250,000 green jobs .
However, the announced green recovery packages remain insufficient. It has been estimated that an investment of USD6.3 trillion will be needed annually until 2030, a figure far beyond what has currently been promised . This, coupled with widespread lack of ambition in implementation and the active rolling back of existing environmental regulations to bolster the failing fossil-fuel industry in some countries, the outlook is far from promising. Therefore, it is important that countries’ progress is monitored to ensure accountability and that they actually implement the pledges they have made.
It is important that countries who are able to do so set strong examples and show a concerted effort to tackle climate change. The USA re-joining the Paris Agreement under the Biden administration and its renewed presence at COP26 next year could be a real symbol of change. If the USA invest enough money in R&D innovation projects, this could herald a new suite of green technology advances.
To leverage real sustained green change in the long-term, we need to invest in a workable Green New Deal (GND) within G20 economies. As individuals, we must be sure to use our electoral power to vote in the governments and policies which have a sincere focus on a GND. Fortunately, Biden’s election in the US does shine out as a beacon of hope in this respect.
It is also important to highlight that the green recovery will look very different depending on the country. For countries in the Global South, the focus will be primarily on alleviating poverty and suffering through sustainable methods. However, international economic assistance may be necessary for green initiatives to be feasible. In light of the inequality of historical emissions’ and colonial legacies, international acts of climate justice must be woven into the cloth of the green recovery. For example, Biden’s proposed ‘Green Marshall Plan’ or the UK’s £64 million package to support Colombia to combat deforestation and build back a cleaner economy in the wake of the pandemic, could be good places to start.
Overall, we need to speed-up a rapid, yet just transition to a low-emissions, green economy. COVID-19 has been and continues to be a great threat to humankind and has required unprecedented collective action to fight it. Miraculously, through a period of extreme suffering, it seems as if the world may have overcome it. However, climate change represents a threat on an incomparable order of magnitude. It is here, and we can no longer discount or ignore it. In this immediate post-COVID era, there is a unique opportunity not just for a recovery but for a transformation towards a green, inclusive and socially just future.
Event summary by Nayah Thu
Dr. Ellen Quigley and Dr. Jonathan Porritt spoke at this week’s discussion about divestment.
As effective legislation often comes from a place of moral indignation, Dr. Quigley asserted that we need to stigmatise the fossil-fuel industry in order to make abstract climate-change dangers seem more concrete. She mentioned the symbolic effects of divestment, which popularises ideas about fossil-fuel free societies.
Divestment must apply to all asset classes, and Dr. Quigley criticised the Environmental and Social Governance (ESG) initiative, for misleading people with “ethical” funds. Selling stocks in the secondary market has no substantial effect on firms’ capital costs or actions, as their operations are mostly financed by debt. A very small minority of banks finance most fossil-fuel production, with Barclays Bank being the worst offender in Europe. To be effective, ESG would need to expand beyond public equity and into venture capital, private equity, and bonds. Otherwise, one is effectively “rearranging deck chairs on the Titanic”.
Drawing a parallel with the anti-apartheid movement, Dr. Quigley confirmed that we need a broad mix of techniques to enact change, including civil society pressure and shareholder aggression.
Dr. Porritt seconded this, calling universities’ failure to act on the existential risk of climate change “one of the most disgraceful failings of moral leadership I have ever seen”. He challenged the hypocrisy of commitments with no time constraints, and advocated leading by example.
Porritt introduced the “inevitable policy response initiative”, which posits that politicians will eventually be forced to go into “climate emergency mode”, facing an increasingly binary choice between crashing the economy and ending life on earth – neither of which they want. He emphasised the importance of short-term plans: actions by 2025 are needed to reach 2050 goals. Both agreed that insurance markets are instrumental in achieving divestment, by increasingly pricing assets as 'too risky'.
How does the global pandemic affect the case for divestment?
How best can we accelerate political change to build the legislation needed?
To hear more of this fascinating conversation, please head to the OCS YouTube channel, where you can watch the recording in full.
By Alli Devlin
Fossil fuel divestment and ‘net zero carbon by 2050’ targets are now commonplace across the globe in the race to reduce greenhouse gas emissions. Leading actors within the private, public, and civil sectors have realised that without a substantial commitment to climate change mitigation, their social licence to operate is jeopardised. Since the 2015 Paris Agreement, 33 global banks have divested a value of $1.9 trillion from coal, oil and gas. The European Union has committed to reducing its greenhouse gas emissions to zero by 2050, and more than half of UK’s universities have started transitioning to low carbon futures.
Loudly proclaimed and widely hailed moves by states and organisations to divest or shift away from fossil fuels are often hiding significant shortcomings—when you examine the small print. False promises and insufficient consideration of the socioeconomic consequences of transitioning are both deeply flawed approaches.
Case A: BlackRock
Earlier this year, BlackRock set a new bar for financiers in announcing that they were divesting from fossil fuels and prioritising sustainability. In Chairman Larry Fink’s letter to the CEO, it was stated that “greater transparency on questions of sustainability will be a persistently important component of every company’s ability to attract capital.” The irony of this statement was fully exposed soon after, with the release of information indicating that the divestment excluded all passive assets—that is, an incredible 73% of total assets. In addition, BlackRock excluded all assets that generated less than 25% of their revenue from thermal coal. These crucial details, completely omitted during the initial divestment announcement, undermine the validity of the claim by the world’s largest asset manager to be a sustainability leader. It also tarnishes the reputation of the divestment movement itself.
Case B: Ecuador
Ecuador never claimed to be slashing fossil fuel subsidies in the name of climate change, however the price hikes and civil unrest that followed were a clear demonstration of the importance of energy security and fair pricing. In October 2019, thousands took to the streets to protest against the government’s austerity measures, which increased the price of petrol by 25% and diesel by 100% almost overnight. Without simultaneous subsidies in renewable fuel alternatives, 11 days of nation-wide violent protests ensued, killing at least 7 people and injuring thousands. Under intense pressure, President Lenín Moreno was forced to withdraw from Decree 883, the $4.2 billion arrangement with the International Monetary Fund, that raised the fuel prices. Continual supply of affordable energy is imperative in the transition to low carbon economies. Divestments from fossil fuels cannot be supported without complementary investment in renewables.
The divestment movement is working, holding individuals, communities, organisations, and governments responsible for their actions. Mining companies are threatened by cleaner alternatives, and debt levels are building in the capital-intensive industry. In fact, eight US mining companies have filed for bankruptcy in the past year.
We need to push for divestment strategies with greater transparency, and we need strategic, future-proof planning, supported by simultaneous investments in renewable alternatives and green jobs. Equitable transitions should be at the heart of the divestment movement, seeking not only divestment from fossil fuels, but also a shift from an extractive to a regenerative economy, in which a high quality of life is accessible to all.
The Climate Justice Alliance emphasises the social aspect of change, saying that, "the transition itself must be just and equitable; redressing past harms and creating new relationships of power for the future through reparations." The European Union’s Just Transition Mechanism, through which it will invest €150 billion in supportive programmes is a means of ensuring no one is left behind. The Mechanism will provide regional funding to industries and workforces which will face the greatest challenges during the transition, directly addressing the social and economic challenges of combatting the climate crisis.
Due to humanity’s deep dependence on energy, we cannot remove a power source without replacing it. For some countries and regions, early investments have led to 100% renewable electricity generation and offer a model for the world. Costa Rica and Iceland run predominantly on hydro and geothermal whilst Tasmania, Australia’s most southern state, just reached the 100% target mainly on hydro and wind, and Scotland is very close to doing the same. A country’s geography, geology, consumption patterns and political leadership are key factors influencing the divestment landscape. Countries like India and China, in contrast to the above, are still highly dependent on coal-powered electricity due to their large natural reserves, enormous populations and economic dependence on fossil fuels. The challenge is immense in these regions, and the decarbonisation pathway for each will be unique.
Divestment from fossil fuels is an inevitable component of reducing greenhouse gas emissions and securing a net zero carbon future. Phasing out coal, oil and gas, and the unsustainable systems that define these industries, requires scaling up renewable alternatives and empowering the community to lead the needed change. The process of transitioning is complex. We must ensure that humanity and clarity are the foundations of decision making.
Image under Creative Commons license by user CoCreatr on Flickr.
OCS Media Team
The latest in climate science and policy from the OCS team.