High-stakes climate poker

James Byrne is a climate scientist and Professor at the University of Lethbridge, Canada. He has published extensively on the impacts of climate change on water, ecosystems and society; served as an expert reviewer of many oil sands environmental impacts reports; was Program Committee Education Co-Representative, American Geophysical Union (AGU) Fall Meeting 2010-12; and co-convened the AGU Chapman Conference on Climate Communication and Education in June 2013.

My friends and I get together once a month to play Texas HoldEm poker - great conversation, a few drinks, snacks and laughs. But I don't like high-stakes poker. Gambling with high-value is not a wise choice, particularly if the pain of the loss translates beyond oneself.

The fossil fuel industry is bluffing society in a multi-trillion dollar high-stakes poker game. Current reserves of fossil fuels are five times more than we can afford to burn if we want to keep global warming to less than 2°C; and we have to keep global warming below 2°C. The net worth of fossil fuel corporations, the value of their chip stack, is based on fully exploiting these reserves. Financial leaders are expressing great concerns about betting on fossil fuels. Forbes magazine says,

"Groups as diverse as Shell, Mercer, HSBC, prominent insurance companies and re-issuers, Standard & Poor's and the International Energy Agency (IEA) have been giving clear warning signs about continuing to invest in fossil fuels."

But fossil fuel-based corporations are still bluffing. They want expanded fossil fuel use; making massive investments in oil exploration, hydraulic fracturing for oil and natural gas, and the Canadian tar sands. The latter two are particularly bad bets given their large greenhouse gas footprints, water, soil and air pollution problems; and tar sands need 40 years to recover the costs of multi-billion dollar plants.

Why are fossil fuels a bad bet? (1) Continued use threatens our basic societal foundations through pollution, environmental disruption and growing health costs and infrastructure losses (fires, floods, droughts, heat waves, sea level rise, more violent weather, urban pollution and health); (2) the International Monetary Fund (IMF) says current fossil fuel subsidies are $1.9 trillion per year – these must be eliminated – that will make fossil fuels more expensive; (3) greater external costs of carbon taxes and emissions trading will be assigned to fossil fuels, make them more expensive; (4) renewable energy sources are competitive now and will be more so given fewer external costs than fossil fuels; and, (5) there is a growing fossil fuel divestment movement that major financial managers fear.

Who really has the big chip stacks? The 2006 Stern Report on the Economics of Climate Change put the annual costs of transitioning to a renewable energy economy at about 1% of global GDP; about $850 billion. Is that a big bet? Well, current annual global subsidies to fossil fuels are about $1.9 trillion. The Climate Vulnerable Forum Report in 2012 estimated that humanity is now incurring about $1.2 trillion in losses every year due to climate change, and rising. That is 1.6% of global GDP. Oil consuming nations would spend a record $2 trillion on oil in 2012, $500 billion on natural gas, and $500 billion on coal. So the annual costs to continue using fossil fuels is over $6 trillion, whereas we need to spend only $850 billion to switch to renewable energy and fix climate change.

The fossil fuel industry's bluff takes balls: they are betting humanity will continue to pay over $6 trillion annually to burn fossil fuels rather than $850 billion to convert to renewable energy. Worse, they are betting humanity will pay trillions for increasing climate change adaptation costs while we pay trillions for fossil fuels. The fossil fuel industry is demanding humanity go on buying and burning unneeded fossil fuel reserves as the climate radically warms … all so these carbon kings can stay flush. Fossil fuel magnates and plutocrats are betting many billions more in a frenzied, massive exploration push to add to unneeded fossil fuel reserves.

There are other big chip stacks in the pot.

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Posted by Guest Author on Thursday, 16 January, 2014

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