Category: Economics

Matters of money

Toronto considering a net zero target for 2040

Next week, the Toronto city council is considering a proposal to adopt a net zero target by 2040. I have written to my city councillor and the mayor supporting the idea as better than nothing, but also explaining why net zero promises risk prolonging rather than curtailing fossil fuel use:

Councillor Mike Colle and Mayor John Tory,

I am writing to you in support of the effort to establish a net zero CO2 target for Toronto by 2040, but also to warn you about the risks of the net zero concept and to advocate fossil fuel abolition as a preferable policy. Please do not be mistaken about my intent: a net zero target is better than inaction, and ought to be passed. Addressing climate change, however, will require much more.

There is a major risk that “net zero” is a delay and distraction tactic which aligns with the interests of fossil fuel producing states and corporations. It’s a way of distracting from the cause of climate change — fossil fuels — and to conjure a misleading sense that the problem can be solved without getting rid of them. By endorsing net zero targets, advocates of climate action risk playing the role of doctors advocating low-tar or filtered cigarettes: extending the life and profits of a noxious industry through the false suggestion that we can get the benefits while avoiding the consequences.

One of the clearest signals that net zero is being used to extend rather than constrain the history of the fossil fuel industry has been the enthusiasm with which such targets have been adopted by fossil fuel producers. For example, Saudi Arabia has made a net zero promise for 2060 while Saudi Energy Minister Prince Abdulaziz bin Salman has said: “We are still going to be the last man standing, and every molecule of hydrocarbon will come out.” This ought to be a warning sign that net zero is a Trojan horse designed to delay policies and regulations to abolish fossil fuels before we catastrophically destabilize the climate.

An examination of scale also calls into question the plausibility of achieving net zero by any means other than ending fossil fuel use. Global oil production was about 88.4 million barrels per day in 2020. That’s about 32.3 billion barrels, each with about 136 kg of oil. That adds up to about 4.3 billion metric tonnes (gigatonnes) of oil taken from the ground every year. Even with COVID-related reductions, global CO2 output in 2020 was about 34.81 gigatonnes. That means to bury all the CO2 from our fossil fuel use, we would need to replicate the global oil industry more than eight times over, except with equipment to extract, compress, and bury CO2. All of this would cost energy and money to run and would produce no profit. It has also taken a century to build that level of oil infrastructure. The idea that we can solve our CO2 problem by burying it simply doesn’t make sense physically, even before you start comparing the cost of avoiding the emissions in the first place to the cost of separating and burying them.

In addition, there are enormous non-climate co-benefits from fossil fuel abolition. A 2021 journal article estimated that just the fine particulate pollution from global fossil fuel combustion causes 10.2 million premature deaths annually. This is another demonstration of how the apparent profitability of the fossil fuel industry arises only because we do not deduct the amount of harm arising from their products. Fossil fuel abolition has the promise of saving ten million lives per year, and more when pollution beyond just particulate matter is factored in.

The other risk of a net zero as opposed to a fossil fuel abolition approach is that it will fail to incentivize the right investments. If families and businesses in Toronto knew that fossil fuel use was going to be coming to an end before mid-century, it would no longer make sense to construct new buildings heated with gas, or countless other pieces of infrastructure that reinforce and prolong our fossil fuel dependence. If we let that investment continue and only get serious about fossil fuel abolition later, it will raise the total cost because we will have wasted money on inappropriate infrastructure which we will need to scrap and because we have delayed the deployment of appropriate infrastructure compatible with a stable climate.

To repeat my main point: adopting a net zero target by 2040 would likely have some benefits and is better than inaction. At the same time, the city council must be mindful of the risk that net zero targets are a concealed fossil fuel promotion strategy, not a strategy to stabilize the climate. It is always tempting to be told that you can get the benefits of a damaging activity while avoiding the harms, but with net zero there are strong reasons to fear that it is a marketing strategy designed to keep letting fossil fuel producers profit while others absorb the costs.

Thank you for your attention,

Milan

We’re not going to bury our way out of the fossil fuel catastrophe. What needs burying is the fossil fuel industry itself.

The Economist on fossil fuel abolition

I have written before about The Economist‘s inconsistent positions on climate change and fossil fuels. When writing about science or climate change specifically — and in most of their leading editorials — they stress the potential severity of the crisis and the need to take action. In their broader coverage, however, they tend to prioritize economic growth and to celebrate fossil fuel discoveries as potential boons.

In a recent issue, they included some strong and convincing language on how fossil fuel abolition is ultimately a means to protect human prosperity:

The UNFCCC and its COPs, for all their flaws, play a crucial part in a process that is historic and vital: the removal of the fundamental limit on human flourishing imposed by dependence on fossil fuels.

…

The main reason the UNFCCC and COP process matters is that the science, diplomacy, activism and public opinion that support it make up the best mechanism the world currently has to help it come to terms with a fundamental truth. The dream of a planet of almost 8bn people all living in material comfort will be unachievable if it is based on an economy powered by coal, oil and natural gas. The harms from the cumulative emissions of carbon dioxide would eventually pile up so rapidly that fossil-fuel-fired development would stall.

…

In the long run, therefore, the only way to keep growing is by leaving fossil fuels behind. That requires Asian countries, in most of which emissions are still surging, to forgo much more by way of future emissions than the countries of the developed world, where emissions are already declining.

…

Anyone who dreams of a reprieve for fossil fuels must be disabused. It suits Narendra Modi, prime minister of India, Scott Morrison, prime minister of Australia, and Joe Manchin, a senator from West Virginia, never to speak of an end to the fossil-fuels age. But for them to duck the responsibility of planning a transition is rank cowardice. True, oil and gas cannot vanish overnight, but their day is closing. And coal’s day must be done.

This strikes at at least three crucial points: it is acting on climate change and not ignoring it which provides the best guarantee of long-term prosperity; states will need to find a contraction and convergence solution where pollution falls rapidly in rich states which poor states find a development path where their per capita pollution never gets nearly so high; and that for the sake of equity we will need much more energy at the global level, highlighting the need to actually build climate-safe options at an unprecedented rate.

Trudeau’s 2021 SFT

The Trudeau government has released the Speech From the Throne to open the 44th Parliament.

There’s a section on climate action, but it goes on an on about “growing the economy” and doesn’t even mention fossil fuels, much less the need to abolish them.

It’s not super encouraging that the speech is called “Building a Resilient Economy: A Cleaner & Healthier Future for our Kids,” while an infamous 2002 memo on how to cultivate climate change denial was called “The Environment: A Cleaner, Safer, Healthier America.”

This kind of constant prioritization of economic growth over planetary security demonstrates the government’s unwillingness to talk about the implications of what climate change mitigation requires. Arguably, it also feeds a sense in the public that the problem ought to be solvable without major societal or lifestyle changes. It doesn’t apply anything like the standard which I suggested to recent environment minister Wilkinson: “Is every project the government is supporting something which we will be glad to have in a post-fossil fuel world?”

Theories for why the University of Toronto divested from fossil fuels

Not mutually exclusive:

  1. They are about to launch a bicentennial fundraising campaign with themes including healthy lives, sustainable future, and the next generation. They feared negative public relations attention if they launched the campaign while continuing to refuse to divest
  2. The university’s investment managers have decided that they can better retain authority and control by choosing how to divest on their own terms, and particularly with little reference to the culpability of the industry
  3. In trying to implement the prior environmental, social, and governance (ESG) screening method, the investment managers at the University of Toronto Asset Management (UTAM) corporation decided that divestment would be easier or better based on their secret internal metrics
  4. The Harvard announcement and COP26 have added to the pressure to announce new efforts
  5. U of T perceived that it was increasingly behind when a growing number of Canadian schools had made divestment commitments
  6. A student-led volunteer campaign persisted through multiple setbacks and core cohort graduations and was sustained by the University of Toronto Leap Manifesto chapter and subsequently the Divestment & Beyond faculty- and union-led campaign after the Toronto350.org / UofT350.org effort

As in the campaign as a whole, the university’s penchant for secrecy makes it challenging to explain or understand their actions. In particular, that includes the parlour trick of setting up your own investment management corporation as a means of evading oversight, by pretending that somehow the advice from this organization should only be available to the administration in secret.

The pro-carbon chorus at COP26

From today’s Globe and Mail:

I know Canada’s major media sources tend to be reflexively pro-fossil, but it’s still remarkable to see people insisting that the industries causing climate change should not be targeted as we try to keep it from destroying us.

Reading about the resistance dilemma

Today I received and began reading George Hoberg’s new book: The Resistance Dilemma: Place-Based Movements and the Climate Crisis.

The usefulness is threefold. It speaks directly to my concern about how the environmentalist focus on resistance isn’t a great match with building a global energy system that will control climate change. It references much of the same literature as my dissertation, so it provides a useful opportunity to check that I haven’t missed anything major. Finally, it’s an example of a complete, recent, and successful piece of Canadian academic writing on the environment and thus a model for the thesis. It’s even about 300 pages, though a lot more fits on a published book page than a 1.5-spaced Microsoft Word page in the U of T dissertation template.

Saying no to climate solutions

In This Changes Everything, Naomi Klein highlights the utility of a “Blockadia” strategy to keep fossil fuels in the ground through local land-based resistance campaigns. As George Hoberg raises in his latest book, and many others have discussed, the inclination of the environmental movement runs more toward stopping and preventing things than toward building solutions. For one thing, they get caught up in what I see as false narratives that corporations are exclusively to blame for climate change, or that somehow the world would be able to use drastically less energy. Environmentalists also tend to see any environmental impact as grounds for opposing a project. Impact on birds is a reason to resist wind; impact on the landscape is a reason to oppose solar; offshore wind may ‘mesmerize crabs.’ They point out that even if we bring climate change under control we will have problems with lost biodiversity, toxic pollution, and many other issues — and thus spread their skepticism about electric vehicles or battery power because of the mineral resource requirements.

All this leaves us in a position where environmentalists are accurately raising the alarm about climate change, while rarely suggesting a path forward for replacing that energy and for providing new energy to the parts of the world that are developing economically. As David MacKay put it at the end of his book:

Because Britain currently gets 90% of its energy from fossil fuels, it’s no surprise that getting off fossil fuels requires big, big changes — a total change in the transport fleet; a complete change of most building heating systems; and a 10- or 20-fold increase in green power.

Given the general tendency of the public to say “no” to wind farms, “no” to nuclear power, “no” to tidal barrages — “no” to anything other than fossil fuel power systems — I am worried that we won’t actually get off fossil fuels when we need to. Instead, we’ll settle for half-measures: slightly-more-efficient fossil-fuel power stations, cars, and home heating systems; a fig-leaf of a carbon trading system; a sprinkling of wind turbines; an inadequate number of nuclear power stations.

We need to choose a plan that adds up. It is possible to make a plan that adds up, but it’s not going to be easy.

We need to stop saying no and start saying yes. We need to stop the Punch and Judy show and get building.

If you would like an honest, realistic energy policy that adds up, please tell all your political representatives and prospective political candidates.

Global energy use is about 576 EJ (5.8 x 1020 J), and world electricity consumption to be about 63 EJ (6.3 x 1019 J). Giving all 7.7 billion people on Earth the 125 kWh/day energy use of the average European would require energy production of 962.5 billion kWh per day (3.5 x 1018 J), or 351.3 trillion kWh per year (1.3 x 1021 J). That’s equivalent to about 45,000 1,000 MW power stations. If we want to avoid climate change in a way that is at all politically plausible, we need to get building.

Related:

Divestment announced at the U of T Governing Council

At yesterday’s meeting, President Gertler announced the new divestment policy. I transcribed the relevant parts of the meeting from the audio:

[16:58] President Meric Gertler: With the latest UN climate change conference, known as COP26, taking place in Glasgow beginning this Sunday, the world’s attention will be focused on the urgency of the climate crisis and measures to address it. In anticipation of this meeting I wrote to our community yesterday providing an update on the university’s approach to investment, operations, and engagement and announcing some new measures to help tackle the huge challenge of climate change. In particular I announced that UTAM will be divesting from its fossil fuel holdings in our endowment — a fund that in total is about $4 billion including some other long-term investments — and that divestment process will begin immediately.

UTAM undertakes to fully divest from direct investments in fossil fuels by the end of 2022, so roughly within the next 12 months. And moreover to divest from indirect investments in fossil fuels, that is in the form of pooled and co-mingled funds that are managed by third-party investment managers, as soon as possible and by no later than 2030. Also, to allocate at least 10% of the endowment, so roughly about $400 million, towards sustainable, low-carbon, and green investment strategies by 2025. And to achieve net-zero emissions in the endowment portfolio by 2050. Related to that last goal, UTAM has become the first university asset manager, and University of Toronto the first university in the world, to join a group called the Net Zero Asset Owner Alliance: an alliance which requires us to set and meet five year targets, increasingly stringent, targets that lead us towards the net zero objective by 2050 at the latest.

[18:55] These new commitments build on the tremendous progress already achieved by UTAM to reduce the carbon footprint of its long-term investments by 37% as of this past June 30th. That’s against a 40% reduction goal that it had set for itself by 2030. And in this case the carbon footprint is measured as tonnes of CO2 equivalent emissions per million dollars invested. Over the same period UTAM has also shrunk absolute carbon emissions in its portfolio by more than 21%. These reductions have resulted from UTAM’s use of an ESG framework to assess all of its long-term investments in the energy sector, but also across the rest of the economy. The sectors of manufacturing, retail, transportation, construction, and agriculture. Having made this much progress this quickly, and having reduced fossil fuel holdings to roughly 6% of our long-term investments.

The time was right to set new goals, to decarbonize our investments still further. We hope that these actions will inspire other institutional investors and governments at home and abroad to take similar actions, and to accelerate the transition to a low carbon economy as they tackle the challenge of climate change. These announcements will complement U of T’s other ambitious plans to fight climate change, including our new climate positive St. George campus plan, which Governors heard about back in the September workshop, a plan that will convert the campus into a net carbon sink by 2050. Our local, national, and global leadership organizations and initiatives like the Canadian Universities’ Climate Charter, the UC3 group of North American universities, and the U7+ global alliance of universities, each of which is working on climate-change-related initiatives.

[21:02] A lot of this work has been championed by our very own Committee on the Environment, Climate Change, and Sustainability, co-chaired by Professor John Robinson and Ron Saporta. For example, pioneering the development of sustainability pathways that students can pursue in any program of study, as well as making available opportunities for students to engage in campus-as-a-living-lab experiences where they can engage in climate-related experiential learning opportunities. And of course this also is complemented by the tremendous amount of research being done across our three campuses, supporting the United Nations Sustainable Development Goals, for example we have a new institutional strategic initiative focused on climate-positive technologies, the development and application of energy-saving technologies and practices.

[21:57] So this is, I think you will agree, a comprehensive effort on our part, kind of a watershed moment in the history of the university, and I think contributing to a very important moment in the history of the world. I will say that since the announcement was made yesterday, the response thus far has been overwhelmingly positive. Let me shift to a couple of other items… [ends at 22:20]

[54:00] Meric Gertler: Shashi Kant, I see you have your hand up so we’ll go to you next.

[54:04] Shashi Kant: Thank you Chair, and thank you so much Meric and Trevor for updating us on everything. So first of all, I just want to express Meric on behalf of all my students, and myself, and the staff your leadership in climate change and for the investment and the carbon sink announced, and I think we and our students proudly can say the university walk the talk in terms of sustainability, it’s not that we are talking about sustainability. Also there is the carbon sink only for the St. George campus, I guess the other two campuses will also join on that point soon.

[54:50] I am moved, I am happy with our policy and our commitment for climate change. I am also disturbed, very disturbed on approach to sexual harassment… [ends at 55:05]

[1:03:00] Meric Gertler: Susan, I think you are up next.

Susan Froom: Thank you, and thank you as well to yourself and President Gertler for your reports. I do echo Shashi’s concerns around harassment, I’ll speak to that next item , but now I do want to say thank you to President Gertler for your wonderful announcement yesterday around divestment from fossil fuel investments. It’s a fantastic step forward, I’m glad the university is doing that, and I am very much hoping that U of T will continue to be a leader in this regard and particularly with President Gertler’s latest appointment that may be even easier to do, let’s hope so.

[1:04:10] I also wanted to acknowledge that in the announcement President Gertler did pause to thank the students that pushed the administration to do the right thing, and I just wanted to recall before this body that it was back in March of 2014 that it was the U of T chapter of 350.org that first put this issue on the table formally. There has been a lot of back and forth since then. In some ways President Gertler and the administration went beyond what was asked, which is admirable. In some ways, not as far, which is one reason the challenge kept coming. So it’s something that I think we as a body need to feel good about. This is part of what Governing Council does, it’s a place where these ideas can come forward, can be brought to fruition. Where it allows student activists to bring forward their ideas and the administration to carefully ponder them and implement them. So kudos all around and let’s keep this fight going. [end at 1:05:28]

[1:59:22] Speakers unknown: Thank you Mister Chair. The board received a comprehensive presentation on the [fundraising / development] campaign’s academic priorities and its goals. As part of the ensuing discussions, Mr. Palmer addressed a member’s concern about investment of endowment funds in the fossil fuel industry. Mr. Palmer stated that the campaign would pursue funding for a wide range of academic priorities related to climate change and sustainability, including those referenced earlier in the meeting such as clean tech, climate policy, climate science, etc. He also noted that students were the primary beneficiaries of campaign funding priorities and donations. In response to another member’s question about whether the university’s endowment policies related to fossil fuel divestment would have an impact on fundraising results, Mr. Palmer stated that to date they have not diminished the university’s ability to raise funds and he expected that track record of success would continue into the public phase of the new campaign. That concludes my report. [ends at 2:00:27]