2012 Investor Summit on Climate Risk and Energy Solutions
We have much to thank the oil industry for – that source of energy has enabled humans to achieve all sorts of things that people living 100 years ago would never have dreamed about. I love the fact that I can take my family on holiday to Tauranga and complete the trip in four hours instead of the week or two it would take by horse (if the weather was fine!), I love the medicines, food, clothing and technology that uses cheap oil and gas in their production and distribution processes.
I also know that future generations are going to look back on us in disbelief that we burnt good oil so quickly and carelessly. In light of the overwhelming evidence (well canvased in The Gisborne Herald letters page!) on human caused climate change and peak oil, ‘responsible extraction of fossil fuels’ is quickly becoming an oxymoron.
This is a conscience issue for me, based on the current scientific consensus about the causes of accelerating climate change, I feel I must have some tangible commitment to an urgent transition away from our reliance on fossil fuel toward renewable energy sources.
I currently own a hybrid car that alternates between petrol and electric propulsion. Recently I looked at buying a fully electric car but I could not afford it without adding 40% to our mortgage! I couldn’t help but think that the cost of that electric vehicle, which had been converted from petrol, would be much cheaper if it was more expensive to produce and consume fossil fuels here and overseas. Economies of scale mean that when more people do more of something we usually find cheaper ways to do it.
A recent OECD report estimates New Zealand taxpayers give fossil fuel users around $70 million each year from the public purse. If that is not bad enough, the same report suggests Norway – the country our government suggests we emulate – subsidises fossil fuels to the tune of over $1.8billion per annum. Recent editorials in this newspaper have claimed supporters of investment in renewable energy are proposing subsidies that would be an exercise in ‘government directed disaster’ – I imagine $1.8 billion could be considered a fair amount of government direction.
While the government says it is committed to reductions in carbon emissions, it has made fossil fuel production a key part of the national economic development plan. The 2011 Energy Strategy says the goal is to make this country a “highly attractive” global destination for petroleum exploration and production companies.
The Listener’s latest editorial claims “The current infatuation with the oil and gas sector runs the risk that the necessary investment in and support for new forms of renewable energy will be diminished. Of particular concern is that although the Government is rolling out the red carpet to international exploration companies, the enormous potential gains to be made from greater energy efficiency are going begging.”
Last week over 450 global investors controlling tens of trillions of dollars from four continents gathered at the UN for the biannual Investor Summit on Climate Risk & Energy Solutions.
“Climate change is certain to be a major factor in investments for the foreseeable future—perhaps the biggest investment factor of our lifetimes,” said Kevin Parker, global head of Deutsche Asset Management – this bank alone is worth US$4 trillion dollars.
The NYC summit presented a number of notable achievements including a record $260 billion invested in clean energy in 2011 and over one trillion dollars in the past six years. There was a 36% increase in solar power investments alone (reaching US$136.6 billion) in 2011. The highly successful but recently scrapped US Treasury Grant Program paid out around $9.6b over 30 months and leveraged nearly $23 billion in private sector investment for 22,000 projects in every state across a dozen clean energy industries. Investors signed onto an action plan calling for greater private investment in low-carbon technologies and tougher scrutiny of climate risks across their portfolios.
The world is moving towards renewables driven by the inescapable logic of clean energy. Gisborne may have an opportunity to tie ourselves to an outdated, dirty and what many believe irrational industry in its twilight years, or we could, with the support of central government and private investors, be a region that was bold enough to not only recognise the need for sustainable change but actually lead and prosper from it.
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NOTE: The original post suggested Norway subsidised the fossil fuel industry to the tune of $100b, this was a miscalculation using an online currency conversion tool. The figures are from this OECD report: www.oecd.org/dataoecd/55/5/48786631.pdf
The lower tax rate on diesel provides a benefit of 3,510 million Krone = NZ$664m, the rest of the 2010 figures seem to come out at about 2,053 million Krone = NZ$426m – so close to $1.8b. Thanks to Wayne for pointing out the error, I obviously wasn’t using my currency calculator correctly when I did the original sum. I guess my argument still stands even if it is not quite as compelling! The taxpayer subsidies in Norway do not seem to be decreasing overall, are five times the state subsidies for renewables and most are either static or increasing annually, the only subsidies that decreased in 2010 appear to be the government assistance for seismic testing in the exploration for fossil fuels.