A COMMON feature of debates about global warming is that extreme claims often go unchallenged. At best, criticism is impolitic. Worse, critics are portrayed as tools of malign fossil fuel interests. Being impervious to push-back leads to what I describe in my recent book as climate change derangement syndrome, when normally sane people say dumb things. Examples include the claim that global warming is a greater threat than terrorism, shortly before the Tube bombings. Another is that warming could lead to war between the US and Canada (yes, there was one – in 1812).
The latest example is the spectacularly ill-timed claim that global financial markets are dangerously exposed to a giant “carbon bubble”, representing the value of fossil fuels that will have to remain locked in the ground – and here comes the big “if” – if governments around the world stick to their promise to keep the rise in average global temperature below two degrees Celsius.
Produced by the Grantham Institute, the report quoted an HSBC analyst’s claim that up to $2.4 trillion (£1.6 trillion) of stockmarket value was at risk if governments acted to put the world onto a low emissions scenario. The risk could lead to downgrading the debt of oil companies, according to Standard & Poor’s, and an analyst at Moody’s complained that investors weren’t factoring in the true costs of investing in fossil fuels.
In a coordinated PR offensive, the managing director of the IMF Christine Lagarde warned that “financial stability” was at risk from unmitigated climate change. You’d have thought the IMF has enough on its plate than worry about something it can’t do anything about. At the same event, Lord Stern claimed that his 2006 report for the Blair government underestimated the speed of climate change. “Emissions are at the top or above the projections … Some effects are coming through faster,” he said. Stern’s remarks omitted any mention of the fact that average global temperatures have flat-lined for a decade and a half.
Meanwhile Jeremy Grantham, hedge fund manager and supporter of the Grantham Institute, highlighted another feature of warming alarmism – the bad stuff is not right now, but not over the horizon either. “We’re already in a bad place,” Grantham told The Guardian. “The worse accidents we will prevent from happening are 20, 30, 40 years from now.”
Scarcely was the ink dry on the carbon bubble report than reality intruded and the European parliament voted to kill off the EU’s Emissions Trading System (ETS). Riddled with fraud, the ETS was Europe’s poster-child for the rest of the world on how to de-carbonise. The problem was that, other than a few countries (and California), the rest of the world didn’t follow.
Europeans have spent hundreds of billions of euros on renewable energy – ultimately borne by taxpayers, consumers and Europe’s competitiveness – for no gain. Thanks to the coalition’s energy policies, the UK is being forced down the same path. Yet according to the International Energy Agency, “the carbon intensity of the global energy supply has barely changed in 20 years.”
Historically, there have been three ways to cut carbon dioxide emissions – and renewable energy is not one of them: the collapse of Communism in Europe (the biggest single factor); recession; and the dash-for-gas (replacing coal-fired electricity generation with natural gas). The first is unrepeatable, and the second and third are the reasons why the US has been reducing emissions. To avoid the lights going out, the Germans are being forced back onto reliance on carbon-intensive coal.
Grantham rests his hopes on “Chinese cavalry” riding to the rescue. He might find himself waiting. At the December 2009 Copenhagen climate conference – the last occasion there was a real attempt to reach a global agreement to cap emissions – China was the most intransigent. Even Brazil, aligned with China in opposing any international curbs on its emissions, was surprised when China vetoed the inclusion of a target for developed nations to cut their emissions by 80 per cent by 2050.
As the shale gas revolution spreads, it promises to swamp the economics of green energy, leaving it dependent on unaffordable subsidies. Yet in the parallel universe of saving the planet from climate change, fossil fuels are stranded assets and the global financial system is threatened by a carbon bubble. The idea that the governments of the world will agree to cut carbon dioxide emissions was tested at Copenhagen in 2009 – and comprehensively contradicted.
Rupert Darwall is author of The Age of Global Warming – A History (Quartet £25).