At the start of this month the G7 leading industrial nations agreed to cut greenhouse gases by phasing out the use of fossil fuels before the end of the century. Photo / Getty Images
At the start of this month the G7 leading industrial nations agreed to cut greenhouse gases by phasing out the use of fossil fuels before the end of the century. Photo / Getty Images
Momentum is building towards a decarbonised society – with clean energy at its heart.
These past couple of weeks will go down in history as the time Pope Francis rocked the world with his 180 page papal encyclical, calling on global citizens everywhere to stop pillaging the planet. And it was climate change that stole the headlines.
"With regard to climate change, the advanceshave been regrettably few," he said. "Reducing greenhouse gases requires honesty, courage and responsibility, above all on the part of those countries which are more powerful and pollute the most. The Conference of the United Nations on Sustainable Development, Rio+20 (Rio de Janeiro 2012), issued a wide-ranging but ineffectual outcome document. International negotiations cannot make significant progress due to positions taken by countries which place their national interests above the global common good."
The earth is on the brink of the sixth mass extinction and the pontiff with a scientific background didn't hold back when he waded into sociology, ecology and globalisation. He blamed the relentless exploitation of the environment on selfishness and political quick-win mentality, and called for an ethical and economic revolution to prevent growing inequality and catastrophic climate change.
Collectively, governments currently spend around $1t a year subsidising fossil fuels, but the irony is that if they do as they say, and limit climate change to below two degrees by reducing CO2 emissions, around 80% of current reserves will need to stay in the ground. According to a report by the International Energy Agency, this $1t a year in subsidies is equivalent to the investment needed in clean energy in order to mitigate climate change.
At the start of this month the G7 leading industrial nations agreed to cut greenhouse gases by phasing out the use of fossil fuels before the end of the century, a breakthrough on the road to total decarbonisation of the global economy.
Governments are currently developing domestic climate change plans in preparation for the United Nations summit meeting in Paris in December. The blue sky dream is that every nation will commit to meaningful policies to limit greenhouse gas emissions.
Ultimately it is the poor that will suffer the most from climate change, because they won't have the resilience to fight back against extreme weather. But current trends are pointing to a new climate change hero - the money men. Oil, coal and gas are starting to look like a risky investment, and smart business is selling out. Could the Holy Grail can be found in economics?
Many in the financial world view the climate change economy through research and analysis being conducted by Carbon Tracker, and its contention that the value of the companies that own these fossil fuel reserves is largely inflated.
Turning a blind eye to climate change has been compared to the appeasement of Nazism in the 1930s. Had governments stood up to Hitler earlier, morally it would have been the right thing to do, but also much less costly.
The big risk is that the market doesn't wake up in time, and if action is taken at the last possible moment, the balloon will pop very suddenly and there will be a massive financial crisis.
Lord Stern, author of the Stern Review on the economics of climate change, a landmark report published in 2006, believes markets will drive the new climate economy - but markets in which the failures have been overcome by government policy - because "climate change is the result of the greatest market failure the world has ever seen."
Jim Yong Kim, President of the World Bank, did not mince his words when he told The Guardian a few weeks back that he thought it was "crazy that governments increased the use of coal, oil and gas by providing subsidies for consumers."
He said that in low and middle-income countries, the richest 20% received six times as much from fossil fuel subsidies as the poorest 20%. In addition to scrapping fossil fuel subsidies and introducing a carbon tax which they believe will spur on clean tech innovation, the World Bank's vision involves spending more on energy efficiency, measures to make agriculture greener, and changes to help cities become less polluted and more livable.
The general thinking is that if public policy is put in place, and if it's credible, then the power of the market forces will be so strong that this will drive transformation. What is lacking is a powerful statement about the trajectory of the new climate change economy, which is why climate change legislation is so important; people need to have a reason to believe that there really is a long term commitment.
Even with so many roadblocks, in the last decade innovation has stepped up to policies which are only sort of believable, and the potential is still largely untapped. Data from Bloomberg New Energy Finance suggests clean tech investment soared 16% in 2014 to $310bn. Increased investment in solar PV and offshore wind projects drove total funding towards record levels.
Since 2010, the call for fossil fuel divestment, started by 350.org and supported by the United Nations, has persuaded at least 180 institutions, worth collectively over $50bn, to divest, with Stanford University in the US, Glasgow University in the UK, and the Rockefeller Brothers Fund leading the pack.
So far 2015 has been a stellar year for the divestment movement. In April this year The Guardian Media Group (GMG) announced they would sell all the fossil fuel assets in its investment fund of over £800m, in a move chair Neil Berkett called a 'hard-nosed business decision' justified on ethical and financial grounds.
Last month French insurance giant Axa announced it would remove around €500m of coal investments from its portfolio, a response that reflects long-term concerns in the insurance industry over climate change. The company has set a target of tripling its investments in green technologies and services, to exceed €3bn by 2020, and will communicate to investors any risks related to climate change.
Even entire countries are now stepping up. Formally passed by a parliamentary vote on June 5, Norway has endorsed the move to sell off coal investments from its $900b sovereign wealth fund. It is the largest fossil fuel divestment yet, affecting 122 companies globally, and a significant win for the divestment movement. A new analysis said the fund would sell off over $8b of coal-related investments as a result.
Ultimately, what will end the fossil fuel industry is better and cheaper ways of getting the energy out. Right now a multitude of entrepreneurs around the world are supplying clean energy to the most impoverished people on the planet, and it's costing a lot less than what they had been paying for diesel or other fuels. A global shift to renewable is inevitable.
The climate change narrative is stepping out of the environment ghetto and into the economic hallways where money really does look like it's starting to grow on trees.
This global issues series is made possible with support from Lincoln University.
Check out this talk from Element's Gavin Healy, speaking at TEDxAuckland about the power of the media to achieve positive social change in situations such as this.
