5.2 Changing the fossil fuel industry

One approach might be to radically change key sectors; for example, fossil fuel industries. Following the publication of two papers in the journal Nature, in May 2009 George Monbiot wrote about how much CO2 we can produce and still be able to avoid more than 2°C of global warming. This approach is radically different from that of the UN and national governments, which set targets for reductions by a certain date but do not act on the total amount of carbon released. This would mean imposing a limit on the use of reserves already discovered and a permanent moratorium on prospecting for new reserves – essentially choosing to leave it in the ground. There is arguably little benefit in seeking to reduce the consumption of fossil fuels unless their production is also reduced; however, no government is currently attempting to do this, as the global economy is so dependent on fossil fuels. As well as professional writers such as Monbiot, this issue has been taken up by a number of campaign groups, generally focusing on coal.

Looking beyond 2012, Kyoto2 is a framework for a new climate agreement under the UNFCCC, intended to replace the Kyoto Protocol. The agreement would be in the form of a climate treaty to limit emissions of greenhouse gases to a level that would prevent dangerous interference with the Earth's climate system, while generating other economic, social and environmental benefits. It is thus a delivery mechanism for the objective and principles of the UNFCCC. Based on the book Kyoto2 by Oliver Tickell (Zed Books 2008), it moves away from the standard political idea of capping emissions towards the need to reduce the global supply of fossil fuels. It sees climate change as a global problem that needs a global solution and is in essence a new green economics of climate change.

Given the global economic reliance on fossil fuels, to remove this requires decoupling economies from these fuels. This has been done to some extent in Japan through energy conservation, with successive governments redesigning cities to encourage public transport. Car companies developed high-mileage engines even when oil prices fell and oil saving was promoted by a variety of public programmes and incentives. Policy was given a legal framework, such as the 1979 ‘Law Concerning Rational Use of Energy’, which accelerated energy conservation overall. However, this is essentially a financial programme, and though it promotes energy diversification it was not designed as a move towards a low-carbon economy.

Peak oil

The need to move beyond a petroleum-based economy is made clearer by considering the concept of peak oil. Peak oil is the point when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. If political and economic systems react only to high prices and shortages rather than planning for the threat of a peak, then the degree of economic damage to importing countries depends on how rapidly oil imports decline post-peak. The Export Land Model shows oil exports dropping much more quickly than production due to increased domestic consumption in exporting countries. This would lead to lack of supply and enormous price inflation, unless demand was mitigated via planned conservation measures and increased use of alternatives. However, despite this clear threat to global and national economies, little if any awareness, let alone action, is shown by governments regarding peak oil. Estimated peak oil years vary, but it is strongly suggested that the global peak may have happened around 2006, possibly with a delay until around 2010 if less conventional oil resources are included. Even the more optimistic estimates (e.g. from the oil industry) suggest a global peak by around 2020. Nationally, most nations have already peaked – the USA in 1970, Russia in 1987 and the UK in 1999. Although measures might be planned primarily to prevent economic problems, moving away from fossil fuels would clearly be of great benefit to large-scale carbon reduction. However, oil production, even if in post-peak decline, would not decline quickly enough to reduce emissions sufficiently to tackle climate change – planned action is required to reduce emissions more quickly.

Activity 15

Consider the evidence for and against peak oil (Wikipedia is a good starting point). Do you agree that global peak oil is here, or at least imminent? Why do you think there is a lack of government action and, in most cases, even acknowledgement?

5 Changing the global economy

5.3 Carbon markets