Saturday, September 22, 2012

Buying climate stability

In the August issue of Rolling Stone ("Global Warming's Terrifying New Math"), Bill McKibben provides clarity about the amount of carbon dioxide in the coal, oil, and gas reserves currently owned by companies and countries worldwide.

The key number is the 2,795 gigatons of carbon dioxide that will be emitted by burning these existing reserves over the next decades. That number is five times higher than the 565 gigatons of carbon dioxide that would increase the Earth's temperature by 2 degrees Celsius, and five times higher than what is required to prevent climate catastrophe, preserve our habitat, and sustain our way of life.

In fact, all 2,795 gigatons of carbon dioxide now scheduled for release into the atmosphere would likely warm the Earth to an astonishing 11 degrees Celsius higher than is considered safe for human societies as we currently know them. These numbers, while only estimates, do help focus the mind on the essential problem: The world's fossil fuel industry has five times as much coal, gas, and oil on their books as climate scientists think is safe to burn.

These known reserves are considered to be current assets by the companies that own them and, at today's market value, are estimated to be worth about $27 trillion. No wonder the industry is so keen to prevent any interference in the fossil fuel energy business -- they have a lot to lose if they're not permitted to turn these reserves into profits. If the industry left 80 percent of reserves underground to meet carbon-emission goals for a healthy planet, companies would have to write off some $20 trillion in assets.

But there is something compelling about knowing the value of an asset -- even one as vast as the world's known fossil fuel reserves. It places a price on the harm-producing substances and leads to a simple question: If the known reserves of climate-damaging fossil fuels are valued at $27 trillion, why not just buy them from the oil and coal companies and keep them underground? Yes, 27 trillion of anything is a large number, but, when compared with the value of the lives lost, the biodiversity and other ecosystem services damaged, the agricultural business failures, and the island countries that will drown, $27 trillion may not be that much.

For example, the 2006 Stern report PDF estimated that the harm from climate change to the environment, property, industrial production, and human health PDF would likely cost about 5 percent of world gross domestic product per year forever, or a bit over $3 trillion per year in 2010 dollars. Currently, energy inefficiencies and energy-subsidy distortions cost governments at least $250 billion (and perhaps as much as $500 billion) per year. As McKibben writes, it would cost about $20 to $30 billion per year to stop deforestation around the world, and at least $5 billion per year to create and sustain an effective system for capturing and sequestering carbon dioxide once it has been released into the atmosphere. More