It is the first time that Ecuadorians will vote on an ecological issue of this magnitude. Experts consulted by Climate Home News said the referendum will define the economic model for the country’s future.

The environmental referendum is a first of its kind for Ecuador and, if approved by a simple majority of Ecuadorians, would ban all new oil wells in the Yasuní park, as well as phasing out existing concessions.

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Pedro Bermeo, spokesperson for Yasunidos, a coalition of NGOs that led the call for the vote, said the public debate around climate change is already a victory. He added the referendum is a “milestone in the history of Ecuador”.

“Beyond the result, we must see this as an opportunity to value what this referendum has already provoked: a national debate that has never existed before,” Bermeo said.

The vote is scheduled to take place on August 20. At the time of publication, there have been no public opinion polls.

Vote for the rainforest

The Yasuní National Park, Ecuador’s largest, hosts one of the largest biodiversity hotspots on Earth, and is the home of the Tagaeri and Taromenane people in voluntary isolation. 

For decades, Yasuní has been threatened by extractive industries, such as mining and oil. For over six years, Ecuador’s State oil company, Petroecuador, has been operating in this territory. 

According to reports from the Andean Amazon Monitoring Project, at least 689 hectares have been deforested in the Yasuní, most of it, by the oil industry.

This is the size of 1,200 American Football fields and exceeds the 300-hectare limit established after a previous referendum in 2018.

Ecuador, Amazon Rainforest, Rio Napo, Near Coca, in the Yasuni National Park, on November, 14 2022. (Photo: Reuters / Stevens Tomas / ABACA)

Data provided by the Ministry of Environment, shows there have been more than 1,500 oil spills in the Ecuadorian Amazon in the last decade, which means at least 12 occur every month. 

Experts warn that both deforestation and oil spills threaten the unique biodiversity of the Amazon.

Activists have called for a vote on whether to keep drilling for oil in this region but, in 2013, the country declared Yasuní as an area of national interest and began extracting crude soon after. 

Bermeo’s Yasunidos proposed a referendum to nullify the declaration, but the process was blocked by an electoral court.

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Climate debate

The current government says approving the referendum can have “catastrophic” effects on the economy. Still, they’ve claimed they won’t campaign against it.

Fernando Santos, Energy Minister, has said in several interviews that the country “won’t gain anything by not producing [the Yasuní] ITT oil”. He has also argued that removing existing infrastructure will actually have negative costs for the country.

But experts claim the benefits from oil in Ecuador’s Amazon could be short-lived. 

During a hearing at the Constitutional Court, Petroecuador’s technicians explained the oil from Yasuní is low-quality “extra-heavy crude”, which requires high investments to process and sell.

When drilling began in Yasuní, Petroecuador expected to reach a daily production of 200,000 oil barrels by 2022. However, official data shows it has remained at 55,000 — about a quarter of what was expected. Pedro Bermeo says that the “figures they [the government] are giving are false”. 

As a result, a 2019 study by the Geological and Energetic Research Institute, a public research institution in Ecuador, estimated that by 2029, “oil could no longer be the main source of income” in the country. The study called for a change in the economic model.

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An important precedent

Luis Suárez, Executive Director at Conservation International Ecuador, said the referendum is an opportunity to rethink the country’s future, and suggested a move to tourism and bioeconomy. “What is the country going to bet on?”, he asked.

Domingo Peas, Territory Coordinator for the Cuencas Sagradas Initiative and a longtime leader of the Achuar nationality, says the vote will be “historic for Ecuador and the world” because “it will frame strategies for the next generation”. 

For the indigenous nationalities living in the Amazon, including the Tagaeri and Taromenane, the referendum is a way of respecting their human rights, he added.

“We, indigenous people, have said that we only want a dignified life”, and the approval of the referendum will grant that, Peas said.

Still, all experts consulted said the referendum will not stop oil production overnight. “We know these changes take time”, said Peas, “but it is imperative that they occur eventually”.

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Brazil’s environmental regulator Ibama, late on Wednesday, said it would block a request by state-run oil giant Petrobras to drill at the mouth of the Amazon river near Amapá, in a much-awaited decision that followed a technical recommendation by Ibama experts to reject the project.

In a filing, Petrobras said it planned to file an appeal for Ibama to reconsider its ruling, saying it “strictly complied with all the requirements of the licensing process.”

The decision by Ibama, which is overseen by Lula’s environment minister, the globally recognized environmentalist Marina Silva, has riled some within the governing coalition.

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Lula, who hails from the poor northeast, has staked his international reputation on reversing environmental back-sliding under his far-right predecessor former President Jair Bolsonaro. But he is also under pressure to deliver much-needed growth to poor, under-developed regions in the north and northeast, and wants state-owned Petrobras to be an engine of that growth.

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Senator Randolfe Rodrigues, who represents the state of Amapa, said Ibama had taken a decision with major economic impact for the state without taking into account the views of the people of Amapa or its state government. Rodrigues is a senior Lula ally who ran his presidential campaign last year.

“We’ll fight against this decision,” Rodrigues wrote on Twitter, adding that “the people of Amapa want to have the right to be heard”. He later announced he was departing his party, the center-left Sustainability Network, in light of the decision.

A decisão do Ibama contrária à pesquisas na costa do Amapá não ouviu o governo local e nenhum cidadão do meu estado. O povo amapaense quer ter o direito de ser escutado sobre a possível existência e eventual destino de nossas riquezas (…)

— Randolfe Rodrigues (@randolfeap) May 18, 2023

The Sustainability Network was founded in the early 2010s by Silva, the environment minister, who appointed Ibama head Rodrigo Agostinho.

Agostinho told GloboNews TV on Thursday that Petrobras would be allowed to file a new request to drill in the region, but noted that studies presented by the firm to date were not enough for the move to be cleared.

Petrobras said in its filing that it was not giving up hope on its plans to develop an oil-rich region with potential reserves of up to 14 billion barrels of oil.

“The company remains committed to the development of the Brazilian Equatorial Margin,” it said, adding it would “ensure the country’s energy security.”

Final decision

Despite Petrobras’ stated intentions, the ruling effectively ends all future development of the unexplored oil prospects at the mouth of the Amazon river, former Ibama boss Suely Araujo told Reuters.

Araujo said that even if Petrobras undertakes the deeper studies requested by Ibama, the final say would still rest with the regulator. “The decision is final,” she said, adding she expected Lula to support Ibama’s ruling.

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Exploration rights in the area were auctioned in 2013, but oil majors BP and TotalEnergies pulled out due to the cost of the off-shore studies and difficulties in obtaining licenses for drilling, while Petrobras kept going.

Neither Lula’s office, nor the environment ministry responded to requests for comment.

Environmental groups celebrated Ibama’s decision.

In a statement, Greenpeace said Ibama had emphasized the need for “a fair energy transition, instead of insisting on yet another oil exploration frontier in the context of the climate crisis.”

Ibama has “postponed the end of the world,” environmental group Observatorio do Clima proclaimed.

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The bank announced a deal last week to finance the Néstor Kirchner pipeline, a project that would allow the country to export gas from the Argentinian Patagonia’s Vaca Muerta field, which campaigners have described as a ‘carbon bomb’ due to huge emissions potential.

Vaca Muerta currently holds the world’s second-largest shale gas deposit and could lead to “record oil and gas production,” according to Argentina’s president Alberto Fernández.

Sergio Massa, minister of economy, said in the past that Argentina did not have the finance to carry the project forward, but now they have an “opportunity for Chile, Argentina, Bolivia, Brazil and Uruguay to access the world’s largest reserves of gas, which we have at our disposal”.

The move could contribute to pushing global temperature rise beyond 1.5C – a threshold above which climate impacts will be significantly worse for people and ecosystems. The International Energy Agency stated in a 2021 report that new oil and gas projects are incompatible with international climate goals.

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Carbon bomb

Activists are critical of the initiative due to its impact on carbon emissions. However, the national government points to Vaca Muerta as an economic hope.

According to 350.org in Latin America, the project is a “carbon bomb” that threatens to use up more than 11% of the world’s remaining carbon budget to reach 1.5C.

Talks to expand gas exports from Vaca Muerta date back to the early 2000s, but were abandoned after Argentina focused its gas production for domestic use. But a 2010 discovery found large gas reserves and led to initiatives to boost exports.

Currently, 31 oil and gas companies have contracts to operate in Vaca Muerta, among them Shell, ExxonMobil and Argentinian company YPF.

To transport shale oil and gas from Vaca Muerta, the Néstor Kirchner pipeline will run more than 570 kilometers from Tratayén, in the shale fields, to northern Argentina’s Santa Fé province.

A map of the Vaca Muerta field in the Argentinian Patagonia. (Photo: Ministry of Economy of Argentina)

Ilan Zugman, 350.org Latin America managing director, said the fracking technique used in the oil and gas extraction is dangerous to the environment. Chemicals used in the process are polluting rivers.

According to 350.org estimates, costs from healthcare, stranded assets and oil spills from Vaca Muerta’s operations could reach between $2.2 and $5.6 billion, compared to the estimated project profits of $2.1 billion if all the oil and gas is exploited.

The first stretch of the pipeline is set to be inaugurated by the middle of this year. At the same time, Argentina is experiencing its hottest recorded summer. The combination of heatwaves and drought is affecting agricultural yields, causing economic losses and negative health impacts.

The high temperatures and drought sparked fires that affected critical energy infrastructure. For several days, about half of Argentina faced blackouts.

Help from abroad

Zugman said Argentina does not have sufficient resources to bring to market all of Vaca Muerta’s oil and gas by itself. As a result, the government is seeking deals overseas to finance critical export infrastructure.

President Fernández discussed the issue with a number of European leaders. Meanwhile, state-owned oil and gas company YPF has landed a deal with Malaysia’s Petronas to develop an LNG terminal at the port of Bahia Blanca, in Buenos Aires.

In January, during a meeting between Fernández and Brazilian president Lula da Silva, the latter  considered financial support for the project. “We’re going to create the conditions to finance within our possibilities and help the pipeline,” Lula said.

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Earlier this year, the Argentinian government sent a delegation to Brazil to secure gas sales from Vaca Muerta.

President Lula has promised to gradually reduce fossil fuel use, but he said he will support oil and gas production in Brazil.

Zugman said Brazil’s support for the pipeline would contradict Lula’s environmental policies.

While Lula’s government claims to prioritise the protection of indigenous people, supporting Vaca Muerta represents a threat to the Mapuche people in Patagonia, he said.

The Brazilian National Bank for Economic and Social Development (BNDES) told Climate Home that it currently has no plan to finance oil and gas projects outside Brazil.

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The study published in the journal Nature found that a typical 1.5C energy transition model expects nations like China, India and South Africa to get off coal faster than any country has ever got off any energy source before.

But these models ask for much slower reductions in oil and gas – fuels that tend to be produced and used more in wealthy countries.

The study’s lead author Greg Muttitt told Climate Home that these models are amplified by the Intergovernmental Panel on Climate Change’s (IPCC) scientific reports and guide decision-makers’ policies across the world.

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“The models currently are asking so much more of India and South Africa than they are of Canada and France and that’s a problem”, he said.

What are these models?

To work out how to limit global warming to 1.5C, academics make integrated assessment models (Iams). They use formulas and spreadsheets to model factors like how much forest must be saved, how quickly cars must become electric and how fast use of different fossil fuels must drop.

The IPCC takes these models and puts them in its regular reports, which are then signed-off by governments. With this stamp of approval from governments and scientists, the findings of these reports become benchmarks for decision-makers across the world.

Muttitt, who worked with University College London-based modellers on the study, said that estimates tend to be based in rich nations and to therefore have subconscious biases.

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Modellers based in the UK, he said, will be aware of the factors limiting how fast polluting vehicles can be replaced with electric ones. “You will be more sensitised to that than you will the difficulties of closing down a coal power plant in India,” he adds.

What do the models say about coal?

Last year, the IPCC published a report based on the models, concluding that to limit global warming to 1.5C coal use should fall by nearly three-quarters between 2020 and 2030 while oil and gas use goes down by around a tenth.

The modelled transition away from coal is even faster in the power system. The IPCC says coal use for electricity should fall 88% between 2020 and 2030.

Muttitt’s study compared this scenario with previous rapid energy transitions like South Korea’s move away from oil after the 1973 Opec crisis and the USA’s transition away from coal during its 2010s boom in home-grown fracked gas, but results were not realistic.

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He found that, to reach an 88% fall, coal-reliant nations like China, India and South Africa would have to move off the fossil fuel twice as fast as the previous world records, relative to the size of their energy systems.

“This raises questions about socio-political feasibility,” the study says. It adds that coal phase-out dates of 2030 for wealthy countries and 2050 for developing ones are better targets as they are “difficult but possible”.

What limits the speed of coal phase-out?

Coal tends to be dug up and burned for power in geographically concentrated areas, where the fuel happens to be abundant. The communities in these areas come to rely on coal for their local economy.

Environmentalists in South Africa’s coal heartland told Climate Home recently that coal “is the backbone of our economy” and so, despite their concern for climate change, they were wary of a rushed, unfair transition away from the fuel.

Avantika Goswami, the climate change lead at Indian think-tank the Centre for Science and Environment, said renewables must be paired with grid-scale battery storage and that “currently grid-scale battery storage can’t compete yet with coal-based power in terms of cost”.

She added that, for developing countries, borrowing money to invest in renewables is more expensive than for richer nations.

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But Pieter de Pous, head of E3G’s fossil fuel transition programme, said that emerging economies could break previous records. “Lets not rule out the [Global] South being able to go faster than anyone thinks is conceivable”, he said.

He said that Europe’s experience is there is no trade-off between a fast transition away from coal and a fair one. Spain and Portugal had phased coal out fast while looking after coal communities, he said.

IPCC author Joeri Rogelj agreed that the transition could happen faster than previous examples “because there is a fundamental difference dynamic between accidental emissions reductions in the past that happened as a side effect of societal disaster and disruption, and targeted policy driven emissions reductions that set out a positive development path over multiple decades”.

He added: “The same differences exist for the pace of technology phase-outs and therefore require careful consideration.”

What do models say about oil and gas?

If coal is phased out slower than the IPCC envisions then oil and gas will have to be phased out faster to meet the 1.5C target. Muttitt suggests oil and gas should be phased out 50% faster than the IPCC’s figures propose.

This would place more responsibility on rich nations like the US and Europe. In particular, the use of oil to power cars, trucks and ships would have to fall particularly fast.

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“The pace of oil and gas phase out is very gentle in these models,” said Muttitt, “and it’s very gentle because a lot of the work of emissions reduction is done by phasing out coal”.

Only a handful of nations have promised to stop producing oil and gas. At Cop27, a group of producers including Saudi Arabia, Iran and Russia blocked a commitment to phase out all fossil fuels.

Why are models important?

It’s hard to prove a link between these models and real-world decisions but climate policy, particulary in rich countries, has prioritised global reductions in coal use over oil and gas.

In climate talks, coal has been singled out. As Cop26 hosts, the UK said the summit was about “coal, cars, cash and trees”. At the summit, governments committed to phasing down coal use but did not mention oil or gas.

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Many big and wealthy nations, multilateral development banks and private banks ended finance for overseas coal before they ended it for oil and gas. China, Japan and South Korea all announced in 2021 they would end support for overseas coal but have yet to extend this to oil and gas.

Only a handful of nations have joined an initative, led by Denmark and Costa Rica, to end oil and gas production.

This article was updated on 20th February to include Joeri Rogelj’s comments.

The post Study: IPCC asks emerging countries to drop coal faster than rich nations did appeared first on Climate Home News.

On Friday, the US Interior Department opened the leasing programme for 2023-28 to a 90-day consultation.

Interior secretary Deb Haaland, a supporter of the Green New Deal and fossil fuel critic, hinted that these auctions might not all go ahead, depending on the public response.

“President Biden and I have made clear our commitment to transition to a clean energy economy. Today, we put forward an opportunity for the American people to consider and provide input on the future of offshore oil and gas leasing. The time for the public to weigh in on our future is now,” she said in a statement.

Ten of the eleven proposed leases are in the yellow area of the Gulf of Mexico. (Screenshot/BOEM)

Ten of the proposed leases are in the Gulf of Mexico off the coast of Texas, Louisiana and Mississippi. One is in southern Alaska’s Cook Inlet, near state capital Anchorage. These areas all have existing production and infrastructure.

The plan rules out expansion of drilling to the Atlantic and Pacific coasts, as former president Donald Trump’s administration had intended, with 47 leases earmarked for auction 2023-28.

One of the proposed leases is in the Cook Inlet, in southern Alaska, near Anchorage. (Photo: BOEM)

In January 2021, Joe Biden’s administration paused new oil leases on federal lands and waters. Six months later, it was ordered to resume the programme by a Louisiana judge, who cited the “millions and possibly billions of dollars” at stake.

The case was brought by a group of 12 state attorneys general: 11 Republicans and one Democrat. The Koch brothers, who have substantial fossil fuel interests and a record of promoting climate denial, contribute funds to the Republican Attorney General Association. So too do oil companies Anadarko Petroleum and Noble Energy.

The offshore leasing proposal follows a similar compromise on land. Last week, the Biden administration held auctions of oil leases covering more than 120,000 acres, mostly in Wyoming.

But the administration has increased royalties and environmental groups launched legal challenges, dampening the industry’s enthusiasm. There were no bids on more than a third of the chunks of land up for auction on day one, according to Reuters.

The number of leases has declined over the last few decades and concentrated in the Gulf of Mexico. (BOEM/Screenshot)

Oil lobbyists expressed concern that the consultation might result in no new offshore lease sales. The gap between licensing rounds is “leaving US producers at a significant disadvantage on the global stage and putting our economic and national security at risk,” argued the American Petroleum Institute’s Frank Macchiarola.

The oil industry has presented drilling as a solution to fast-rising fuel prices, although it will take years for new supplies to come onstream.

Last year, the International Energy Agency said that no new fossil fuel production was compatible with limiting global warming to 1.5C, the most ambitious goal of the Paris Agreement. “Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our [net zero emissions] pathway,” it said.

“This proposed five-year program is out of line [with] the Biden admin’s climate & environmental justice goals,” said the National Resources Defence Council. “Oil and gas companies already hold significantly more leases than they use and new leasing will lock us in to decades of climate-harming pollution and carbon emissions.”

The post US proposes up to 11 new offshore oil leases, under industry pressure appeared first on Climate Home News.

Gas and oil are commonly found together and the gas can either be captured and sold, burned as waste (known as flaring) or allowed to leak (known as venting). All these options lead to greenhouse gas emissions. Oil producers flare and vent gas when they don’t think capturing and selling it would be profitable.

In 2015, then Mexican president Enrique Peña Nieto was one of 31 world leaders to promise to end routine flaring by 2030. Three years later, president Andrés Manuel López Obrador was elected on a promise to support Mexico’s state-owned oil industry and World Bank data shows flaring has shot up 67% from 3.9 billion cubic metres a year in 2018 to 6.5 billion cubic metres in 2021.

Mexico’s flare volumes have risen while oil production declined (World Bank)

The World Bank described this as a “worrying increase”. In its annual gas flaring report, the bank said: “Mexico’s focus over the last few years has been on energy security, however the increase in gas flaring has occurred while Mexico has also steadily increased natural gas imports, highlighting the potential flare gas recovery could play in its energy independence.”

This increase in flaring took place “despite oil production declining” the World Bank said. Mark Davis, CEO of flaring analytics company Capterio, said the rise was “due to higher poorer operational performance with much higher ‘flaring intensity’ (flaring per barrel of production)”.

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According to Capterio’s analysis, two oil fields stand out with dramatically higher flaring in 2021 – the Perdiz/Ixachi field in Veracruz and La Venta in neighbouring Tabasco. Both are on Mexico’s oil-producing Caribbean coast and are operated by state-owned Pemex.

Perdiz (left blue dot) and La Venta (right blue dot) are both in Mexico’s oil hub. (FlareIntel Pro by Capterio)

“What’s particularly striking is that the flaring at the Perdiz flare changed from regularly flaring less than 5 million [cubic feet] a day in 2020 to regularly flaring around 100 million [cubic feet] a day from late January through to late November in 2021”.

The reduction in flaring from 28 November, Davis said, appears to have coincided with bringing online a new plant which conditions the gas so it can be sold for power or cooking. There has been no such drop in flaring at La Venta.

The La Venta flare is visible from Google Earth and just a few hundred metres from peoples’ homes.

Globally, flaring volumes have risen and fallen with levels of oil production over the last few years. Progress in reducing flaring in countries like Nigeria, Kazakhstan and the US has been cancelled out by setbacks in Russia, Iran and Venezuela.

If the world is to eliminate routine flaring by 2030, Capterio analysis suggests it needs to be reduced by 44% a year from 2022 onwards. Progress so far has been “woefully inadequate”, Capterio says.

The World Bank says there has been “mixed progress” and signatories like Russia, Iraq and Mexico have “tremendous opportunities for improvement” as their flare volumes and flare intensity has increased.

But some environmentalists criticised the World Bank’s “problematic” framing of capturing gas as a climate solution. Friends of the Earth’s Luisa Abbot Galvão told Climate Home: “The [bank] frames the issue as gas being ‘needlessly’ flared, but bringing gas to market and potentially expanding countries’ gas infrastructure still contributes to climate change.”

She added: “Yes we need to reduce this pollution, which is harming frontline communities first and foremost, but the [bank] should be helping countries do this in the context of supporting their equitable phase-out of oil and gas more broadly.”

Galvão criticicised the bank’s energy director Demetrios Papathanasiou for suggesting that oil and gas production can be “decarbonized”. She called this a “dangerous narrative”.

Pemex did not immediately respond to a request for comment.

The post Mexico’s oil gets even dirtier as flaring continues to soar appeared first on Climate Home News.

Justin Trudeau’s government announced its emissions reduction plan on Tuesday, outlining how it plans to meet its target to reduce emissions by 40-45% between 2005 and 2030.

It predicts that oil production will continue to grow while emissions from oil production fall. Campaigners said this “doesn’t add up” and “bets too heavily on [carbon capture technology]”.

At Cop26, Trudeau told world leaders that the town of Lytton had burned down because of climate change and promised “we’ll cap oil and gas sector emissions today and ensure they decrease tomorrow at a pace and scale needed to reach net zero by 2050”.

“That’s no small task for a major oil and gas producing country,” he said. “It’s a big step that’s absolutely necessary.”

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But Tuesday’s plan did not include a cap on production emissions from oil and gas. Environment minister Steven Guilbeault said earlier this month that this policy will be deferred to late 2022 or early 2023.

Announcing the plan in Vancouver, natural resources minister Jonathan Wilkinson explained: “We committed to the [oil and gas] sector that we would work with them in a collaborative basis to establish the cap”.

He added: “We will be working with them over the coming months to ensure we put in place an appropriate cap that’s going to work in a manner that will continue to employ people but that will allow us to get at those emissions”.

The way in which the cap is implemented is still up for debate. Guilbeault has said that a cap and trade system is one of the options. This is when a limited number of pollution permits are issued in key sectors and companies that cut their emissions faster can sell unused allowances to those emitting more.

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The government projects that emissions from oil and gas production will decline 42% on 2019 levels, while oil production will rise 22% between 2020 and 2030.

The emissions reduction plan states: “The intent of the cap is not to bring reductions in production that are not driven by declines in global demand”.

Catherine Abreu, director of Destination Zero, told Climate Home it was good that Canada is “finally moving to address the glaring gap in all of its previous climate plans – the oil and gas sector”.

But, she said: “Increasing oil production while trying to reduce oil and gas emissions doesn’t add up… Canadian governments need to ask whether it makes sense to keep ramping up extraction in this critical decade of decarbonisation.”

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Measures to reduce emissions without reducing production include tax credits for carbon capture technology and potentially domestic and international carbon offsets for “a small portion of the reductions”, the plan says.

Julia Levin, from the Environmental Defence Canada, said the plan “bets much too heavily on [carbon capture]”.

Jan Gorski, from the Pembina Institute think tank said that the projected oil and gas emissions reductions for 2030 were not ambitious enough. He said that the industry’s fair share was a 45% reduction from 2005 levels by 2030 not the plan’s 31% projection.

His analysis suggests this can be achieved through stopping methane leaks and venting, electrification, carbon capture, facilities reaching their end of life and “other decarbonisation activities for which we do not yet have adequate information”.

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While campaigners criticised it, the oil and gas industry welcomed the plan. The Canadian Association of Petroleum Producers said that it “acknowledges that global demand for natural gas and oil will continue for decades and Canada has a role to play in providing lower emission resources to the world’s energy mix”.

According to the International Energy Agency, if the world is to reach net zero by 2050 then oil demand should fall by 75% between 2021 and 2050. Gas demand should decline by 55% over the same period.

Guilbeault said last November that the federal government doesn’t have the constitutional right to cap oil and gas production – that’s in the power of Canada’s provinces. But the federal government can cap production emissions.

Canada is the only G7 country whose emissions are still growing. This is largely because of the growing emissions from its oil and gas production and growth in polluting forms of transport like SUVs.

Canada’s Greenhouse gas emissions (kt of co2e) since 2005, compared with G7 European countries. Japan and the US have not been included for visual clarity but their emissions have also fallen. (Source: World Bank)

The emissions reduction plan includes C$9bn ($7bn) of new green investments in electric vehicles, green buildings, farming, restoring nature and a community air pollution fund. This is in addition to Canada’s rising carbon price on pollution.

The plan set interim targets for phasing out the sale of new internal combustion engine passenger vehicles. By 2026, 20% of new vehicle sales should be zero-emission. By 2030, this should be 60% and by 2035 it should be 100%.

The post Canadian government ducks fight with oil and gas industry appeared first on Climate Home News.

As well as looking at the parties’ manifestos, they will be judging the record of six years of government by Justin Trudeau’s Liberal Party.

In 2015, a month after taking over from Conservative climate sceptic Stephen Harper, Trudeau told the Paris climate conference: “Canada can and will do more to address the global challenge of climate change.”

But, over the next four years, Canada’s emissions increased to their highest level in decades. Canada is the only G7 country to have increased its emissions since the Paris Agreement.

When asked about this in election debates, Trudeau blamed his predecessor. “We inherited a government from Conservatives that did not believe in the fight against climate change and had a lot of catching up to do,” he said.

Isabelle Turcotte, the Ottawa-based director of federal policy at the Pembina Institute, agreed that Trudeau’s government was hamstrung by its predecessor’s legacy. “It takes time to turn a big boat around,” she said.

She added: “The Liberal party could have taken more ambitious climate action but there’s only so much inertia, so much pushback and political battles you can fight so some compromises were made in the name of national unity.”

Judging Trudeau’s record in full is difficult as emissions figures only go up to 2019. That’s the year that Trudeau’s government introduced, against fervent Conservative opposition, a C$20 ($16) per tonne price on carbon which will increase every year until it reaches C$170 ($134) in 2030.

Figures for 2020, 2021 and onwards are likely to show more of an effect from this carbon price – although the trend could be obscured by the impact of the coronavirus pandemic.

It’s fair to say that, in its first three years, Trudeau’s government did not reverse the upward trend in Canada’s emissions, which is driven by emissions from road vehicles and oil and gas production. Decreases in emissions from electricity generation and heavy industry have only partly cancelled these increases out.

Oil production has continued to rise and the processing of oil and gas, particularly from tar sands, uses a lot of energy and releases a lot of greenhouse gases.

Waste gas is burned off a a Suncor production facility in Alberta. (Photo: E M/Greenpeace)

There has been a government drive to reduce “fugitive” emissions in oil and gas processing, which come from methane leakage or deliberate venting or flaring of gas as a waste product. This resulted in an 8% drop.

The Clean Air Task Force NGO’s Jonathan Banks worked with government on fugitive emission policies and said action in this area had been “fairly strong”.

But it was not enough to offset the emissions from increased production.

Emissions from processing oil and gas have risen 7% since 2015, from 97.5m tonnes of Co2 equivalent (tCo2e) to 105m, the total annual emissions of Belgium. This does not include emissions from burning the fuels, much of which takes place in other countries and shows up in their greenhouse gas inventories.

“Carbon intensity per barrel has been reducing but, in Canada, we are increasing production which means we are increasing overall emissions,” said Climate Action Network Canada’s domestic policy manager Caroline Brouillette.

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While much of Canada’s oil and gas policy is in the hands of provincial governments, the federal government does have authority over pipelines – and it has backed them.

In 2018, it defied criticism from environmentalists to buy the Trans Mountain oil pipeline linking Alberta’s tar sands with coastal ports. When Joe Biden took office and cancelled permits for the Keystone XL pipeline through the US, Trudeau leapt to its defence.

Aside from oil and gas production, Canada’s other major and growing emitter is road transport. Its emissions have been rising for decades and Trudeau’s government has failed to reverse this trend, overseeing a 5% increase to 153 mt Co2e a year in 2019.

The Honda CRV is one of the top-selling SUVs in Canada. (Photo: Eurovision Nim/Flickr)

In a 2021 submission to the UN, the government said this is “largely due to more driving” as more people buy vehicles.

“Despite a reduction in kilometres driven per vehicle, the total vehicle fleet has increased by 42% since 2005, most notably for trucks (both light- and heavy-duty), leading to more kilometres driven overall,” the government wrote in 2021.

As in much of the rest of the world, vehicles used are also becoming more polluting. A report by Equiterre found that light-duty trucks like SUVs, pick-up trucks and vans accounted for 80% of new vehicle sales in Canada in 2020,

Turcotte added the development of public transport in cities is “not there yet” and there are particular challenges for rural communities in such a large country. The uptake of electric vehicles has been slow, she added.

As it ramps up, Canada’s carbon price will make buying fuel increasingly expensive. This is likely to make less polluting vehicles, including zero-emission ones, more appealing to Canadian drivers.

The post Oil and SUVs: Why Canada’s emissions have risen since Trudeau took office appeared first on Climate Home News.

Reliance said on Thursday that it would build four “gigafactories” to manufacture solar panels, electric batteries, green hydrogen and hydrogen fuel cells on a mass scale in Jamnagar, western India, as part of its New Energy mission to achieve net zero emissions by 2035. 

“The world is entering a new energy era, which is going to be highly disruptive. The age of fossil fuels, which powered economic growth globally for nearly three centuries, cannot continue much longer,” Reliance chairman Mukesh Ambani, Asia’s richest man, told the company’s AGM. Reliance, India’s largest public company, has an annual revenue of $70 billion. 

Biden scales down climate spending in search of bipartisan deal

“Let me tell you, in all humility, that New Energy is the most exciting, most challenging and most purpose-driven mission I will be pursuing in my life,” he said, adding that the company has started developing the green energy complex on 5,000 acres in Jamnagar. This area is equivalent to nearly 3,000 football pitches.

Analysts welcomed the announcement which they said marked a major shift in policy for one of the world’s largest oil refiners. 

“It signifies the post-pandemic private investment shift towards clean energy,” Swati D’souza, research lead for climate action at the National Foundation for India, told Climate Home News. “This announcement is a sign of a good diversification strategy.

“Reliance Industries is the biggest private refiner in India and the announcement shows a definite shift in priorities for the company since oil and gas has been its bread and butter,” said D’souza. The development would spur the creation of green jobs, she added. 

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Sunil Dahiya, from the Centre for Research on Energy and Clean Air, told Climate Home News that it was encouraging to see Reliance realise the potential of renewable energy, but said it still planned to continue investing in oil and gas. 

“This is definitely a good step for renewable energy development but not enough, particularly looking at the repercussions we are seeing of damaged environmental quality, health impacts and climate change catastrophes,” Dahiya said.

“We are at a stage where big corporations have to cut their absolute emissions through clearly stated policies of moving away from fossil fuels and we haven’t seen that happening,” he said. 

India is on track to exceed its target of delivering 450GW of renewable energy by the end of the decade but it continues to expand its coal capacity. The world’s third largest emitter after China and the US, India has so far resisted setting a more ambitious 2030 goal, despite mounting international pressure. 

For its climate plans to be compatible with limiting global warming to 1.5C, India would need to abandon plans to build new coal power plants and phase out all coal generation by 2040, according to Climate Action Tracker.

The post India’s biggest oil refiner to invest $10bn in clean energy ‘gigafactories’ appeared first on Climate Home News.

Two months later, in November, Shell was conducting tests to fix the problem when the pipeline spilled again.

Pipelines fail: it’s a widely understood risk when liquids are pumped at pressure across land and sea. Since 1986 there have been nearly 8,000 oil and gas pipeline incidents in the US, spilling 76,000 barrels per year, resulting in more than 500 deaths, 2,300 injuries and nearly $7 billion in damage, according to the Center for Biological Diversity.

Tiny cracks, often invisible to the eye, appear as infrastructure ages. Detecting them before they cause spills is a multi-billion dollar global business.

But according to industry insiders and a prominent accident investigator, oil pipeline inspection companies may be overstating their ability to find these defects.

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A California state fire marshal report, accessed through a records request by Climate Home News, said three separate inspection companies assessed the San Pablo Bay pipeline during a series of accidents between September 2015 and May 2016. All of them failed to detect anomalies in the areas that burst.

After the two 2015 spills, Shell hired Rosen Group, an international inspection company, headquartered in Switzerland, to replace T.D. Williamson, another global company.

The state fire marshal reported that Rosen tested the pipeline in December 2015. The company found more than 20 abnormalities, which were repaired. Later, more abnormalities were identified, of which some were also repaired. After that round of maintenance Rosen told Shell there were no “actionable defects” on the line, the fire marshal said.

After receiving the Rosen analysis, Shell increased the pressure in the pipeline on 17 May, 2016. Three days later, it ruptured again.

This time 500 barrels spilled. The soil had to be scraped up and held in containers on a nearby wind farm. Texan firm Kinder Morgan Energy Partners was called in by Shell to re-examine Rosen’s findings and confirmed the data had showed no obvious problems, the fire marshal said.

Inspection companies make no guarantees that their inspections will find every fault. But according to Richard Kuprewic, a pipeline incident investigator with 40 years in the industry and president of safety-consulting firm AccuFacts, services are less reliable than the vendors admit to their clients.

“The ability of inline inspectors to identify such features is, in my opinion, being way overstated,” Kuprewic said.

Kuprewic said the problem runs through the pipeline industry. CHN spoke to two former employees of an internationally operating inspection company. Both recently resigned over practices they said included misleading pipeline operators about inspectors’ ability to identify certain weaknesses in order to win contracts. They asked to remain anonymous.

One of the former employees told CHN: “I joined the business to help prevent environmental disaster and in the end I had to lie to clients that actually wanted to accurately inspect their pipelines.

“The pipeline inspection business in general is going wrong. Some pipeline operators do strive to ensure security, but they are being misinformed by inspection companies that overstate their abilities,” said the former inspector.

A spokesperson for Rosen said the company could not answer questions about its analysis of Shell’s pipeline because of confidentiality. T.D. Williamson did not respond to emails. Kinder Morgan chose not to comment.

The websites of these and other inspection companies promote their services as reliable and accurate.

US industry standards, developed by the National Association of Corrosion Engineers, charge both operator and service vendor with analysing the capabilities of inspection tools.

But Kuprewic said inspection companies must know that they exaggerate the reliability of the tools. “No one sells [in-line inspections] claiming they don’t work,” he said.

Time to bring inspection products to market is often more important to companies than the quality of their surveys, said another former inspection company employee. The quality depends on the tools – called pigs – that run through the pipelines to scan them; as well as the software, which is developed in-house; and the size and experience of the team that analyses the data sets produced by the tools.

Operators are liable for pipeline safety, so inspection companies have no legal incentive to improve their tools, said Kuprewic.

“The operator is responsible for identifying the various types of threats that may be on segments of their pipeline. And guess who will be responsible if a pipeline blows up either from running or using an in-line inspection pig unwisely?” he said.

Contaminated soil was removed from around the site of the May, 2016 spill (Photo: Noah Berger/Greenpeace)

Particularly problematic are a type of pipelines that are commonly used in oil and infrastructure around the world, both onshore and offshore: Double Submerged Arc Weld (DSAW).

“This welding type is hard to inspect and cracks are very hard to find, this can lead to serious analytical mistakes,” a second former inspector told CHN.

This is the type of weld that binds the sections along Shell’s 285km San Pablo Bay Pipeline. There is no evidence the three inspection companies misled Shell in the case of the 2015-16 spills. But the fire marshal found that problems were missed. Rosen and Kinder Morgan both concluded incorrectly that their survey data did not report any problematic features at the location of the May 2016 failure.

According to the state fire marshal, a subsequent internal report by Shell found Rosen software had discovered a crack-like feature at the location of the failure. But during the manual review, a Rosen analyst had selected an incorrect setting and the depth of the anomaly was miscalculated.

A Shell spokeswoman told CHN the company continues to use Rosen for in-line inspection and has filed no legal action over the Tracy spills.  “Further, Shell will not publicly comment on the internal evaluation of contractor performance,” she added.

She told CHN that Shell had sought to improve its inspection methods after the incidents.

“We will continue to use the most appropriate assessment methodology on our pipeline systems as warranted and will decide best approach, given all the information available – this includes both in-line investigation as well as hydro tests,” the company spokeswoman said in a written response.

She noted the incident report prepared by the California State Fire Marshal Pipeline Safety Division had found one of the contributing factors to the spill had been fluctuating pressures of oil in the line. This was now being remedied, she said.

Shell is also replacing 19.3km of the pipeline after the fire marshal’s strong recommendation to do so.

Kuprewic said the Pipeline and Hazardous Materials Safety Administration (PHMSA) was aware of the issues with pipeline inspections and was “trying to introduce detailed safety regulation to avoid miscalculation”. The PHMSA did not respond to a request for comment.

Industry experts are asking for inspection firms to make their results public for peer review to verify assertions and environmental advocates are calling for stricter rules on pipeline inspections and higher penalties after incidents.

But Kuprewic warned that US federal government imperatives to cut, rather than strengthen, regulation was hampering those efforts.

“These are dangerous times concerning deregulation. Expect more high profile pipeline rupture failures as deregulation takes place,” Kuprewic said.

Soila Apparicio created the timeline in this report.

Republish this article

The post Oil pipeline inspection industry ‘going wrong’ as surveys fail to prevent spills appeared first on Climate Home News.

Speaking at a press conference in the country’s capital Nairobi, the country’s energy minister Charles Keter said the Early Oil Pilot Scheme, that had been slated to start this month, had been moved to September pending approval of an energy bill.

“After consultation with stakeholders in the county, we will do it by the end of the year,” Keter told journalists on Thursday.

The Early Oil Pilot Scheme is a government project that was meant to kickstart the exploitation and marketing of Kenya’s oil at small scale to test the market. It was expected to run for two years from mid-2017.

The energy bill is currently before Kenya’s Senate, which has been disbanded in preparation for the general elections slated for the 8th of August, meaning that any legislation can only be passed after a new Senate is constituted after the elections.

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When passed, the new law will give guidance on how the revenue from the oil proceeds will be shared between the county and the national government.

Last year, Kenya’s president Uhuru Kenyatta had directed Tullow Oil to expedite oil exploration in the country’s arid and often volatile region.

At the time, Tullow chief operating officer Paul McDade said his company had made good progress and would be ready to start oil exportation in June 2017 at an initial 2,000 barrels per day from five existing wells and that the oil company had already stored more than 70,000 barrels of oil in Lokichar, an outpost in Turkana ahead of the early export plan.

Kenya’s oil fields are in the country’s remote northern region of Turkana. The area was badly affected by this year’s drought, which gave rise to conflict between neighbouring communities over pasture and water. More recently, raids and counter raids between the Turkana and the Pokot, two of the dominant tribes in the region has led to the loss of lives and destruction of property.

Observers have raised concerns that an oil boom in the unstable region could exacerbate tensions.

Apart from the sporadic insecurity in the area, announcement of the commercial production of crude in the region pitted Kenya’s central government against Turkana’s local leadership over the revenue share from the proceeds of petrol.

President Kenyatta and Turkana governor Josphat Nanok have on at least one occasion had verbal exchanges over revenue sharing proposals.

Nanok, and most Turkana leaders, are pushing for at least 10% of oil revenues to be withheld by the county while the national government is pushing for a 5% ceiling.

The postponement of exploration might vindicate some of Kenya’s neighbours who pulled out of a multi-country oil infrastructure project that would have seen the creation of pipelines and road networks between Kenya, Uganda, Tanzania and South Sudan.

Just last month, Uganda officially pulled out of the ambitious Eastern Africa project citing insecurity and instead opted to piggy back on Tanzania’s already under construction pipeline to transport its own crude out of its wells.

Construction of Kenya’s oil infrastructure network of roads and a pipeline that would move the crude to the port city of Mombasa some 900 kilometres south of the oil fields has been halted by the contractors over security concerns.

But at Thursday’s press conference, the energy minister dismissed insecurity as a factor for its decision to suspend oil production.

“Insecurity has nothing to do with what Tullow Oil has been doing in Turkana… insecurity happens everywhere. There have been incidences of insecurity in the area even before drilling started,” he said.

Kenya’s oil discovery in 2012 was hailed as a ‘major breakthrough’ by the then president Mwai Kibaki who said the county’s economic programs, which had and continue to be supported by trade, tourism and agriculture would be significantly boosted by oil revenues.

The post Tullow oil project in drought-hit part of Kenya suspended appeared first on Climate Home News.

The two Asian countries will be the first to do business with Kenya when it ships out its oil in June in what the government is calling a test programme.

British oil company Tullow, the firm that discovered oil in Kenya in 2012, has stored 60,000 barrels of oil in Lokichar, 600km north of the country’s capital, Nairobi.

The oil will then be transported by road from Turkana to Kenya’s main port in Mombasa, more than 1,000km away. From there it will be shipped to Asia.

The shipments mark the start of what the Kenyan government and Tullow hope will become a major new source of African oil. Tullow estimates its Kenyan reserve at 750 million barrels of oil, with further exploration planned.

Tullow and the government expect that by 2020, Kenya will have embarked on large-scale oil production and by then, a pipeline connecting the oilfields and Lamu, another Kenyan port, will have been completed.

Once complete, the 865-kilometre pipeline will pump out approximately 100,000 barrels a day, far more than the 2,000 to be moved by tankers by road each day and stored in facilities at the Kenyan coast.

Advocates of the pipeline in Kenya estimate that the production of oil could bring $650m per year to the government coffers by the late 2020s, even if oil prices stay at a depressed $45 per barrel.

In the latest update from Tullow, released on April 26, the company said the process of constructing the pipeline was underway.

Report: Kenyan Met Office predicts rains to fail sparking crisis worse than 2011

“Finance studies and preparations are under way for the environmental social impact assessment and [initial project design], which are planned for the second half of 2017,” Tullow said.

Kenya’s oil is expected to fetch top dollar on the global market because government tests have found it to be sweet and light – slang for oil that is low in both sulphur content and density.

In early April, an official of the Ministry of Energy said Kenya’s crude oil was similar to Brent crude – highly rated oil from the UK’s North Sea.

In mid-April, Kenya’s principal secretary in the petroleum ministry, Andrew Kamau, said Nairobi had made an agreement with firms in India and China. Part of the deal was that the exporters cater for transport costs.

It was unclear why plans to ship the oil to a European oil refinery for the pilot export phase had fallen through.

“About Europe, let’s just leave it until people have confirmed they will pick it up,” Kamau told Business Daily.

The Turkana region is plagued by long term drought – which has been exacerbated by climate change – and ethnic conflict between tribes of pastoralists over land and water resources. In 2015, a study warned that Turkana risked falling victim to the “oil curse” suffered in other remote and restive regions where oil had been discovered.

“The recent discovery of oil will exacerbate pre-existing tensions and likely result in full-blown violent conflicts among the already marginalised Turkana against local and foreign investors such as Tullow Oil,” said researchers in the African Geographical Review.

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Disputes over sharing the proceeds from Kenyan oil are already emerging between Kenyan political leaders. President Uhuru Kenyatta recently differed openly with Turkana governor Josphat Nanok over the changes the president had made to a law about how the national and county governments would share the money.

In April, Kamau said the money to come from the initial oil sales will go directly to the treasury – minus Tullow’s cut.

“We will only receive the funds from our agent Tullow after they deduct their operational expenses,” he told The East African, adding that when a proposed sovereign wealth fund is created, the proceeds of the sales would be channelled there.

The post China, India swoop on first barrels of Kenyan oil appeared first on Climate Home News.

Shares in TransCanada, the construction company behind the Keystone XL pipeline, jumped in early trading on Tuesday as it was reported by Bloomberg that president Trump would reverse Barack Obama’s decision to reject the project.

The move, thus far unconfirmed by the White House, comes as little surprise after Trump’s keenness embrace the oil industry was trailed throughout the election campaign. Rumours of the announcement have circulated throughout the week.

Environmental groups were quick to voice their anger at the news. Greenpeace USA Executive Director Annie Leonard accused the president of “giveaways to his fossil fuel cronies”.

“Renewable energy is not only the future, but the only just economy for today. Keystone, the Dakota Access Pipeline, and fossil fuel infrastructure projects like them, will only make billionaires richer and make the rest of us suffer. We will resist this with all of our power and we will continue to build the future the world wants to see,” she said.

TransCanada shareholders woke up a little better off this morning pic.twitter.com/6fXHASz17V

— Karl Mathiesen (@KarlMathiesen) January 24, 2017

In a press conference on Monday, White House press secretary Sean Spicer told reporters: “I’m not going to get in front of the President’s executive actions but I will tell you that areas like the Dakota and Keystone pipeline areas that we can increase jobs, increase economic growth, and tap into America’s energy supply. That’s something that he’s been very clear about.”

Keystone XL is a proposed 1,897km pipeline that would carry 800,000 barrels of tar sands oil from the pits of Alberta to the US network. Tar sands are among the most carbon intensive of oil sources. Obama rejected the project in 2015 after five years of prevarication saying the project would have “undercut” the US’ global leadership on climate.

Obama’s government also declined approval for the Dakota pipeline, which was the scene of a pitched battle between native American protesters and police during 2016.

Trump expected to promote construction of #Keystone pipeline — @ChristineRomans explains why it's so controversial. https://t.co/3rTaalF0NZ

— CNN News Central (@NewsCentralCNN) January 24, 2017

The post Trump to approve Keystone XL, Dakota pipelines – report appeared first on Climate Home News.

The verdicts, there, of columnists from the Edmonton Sun and National Post on a supposed “gaffe” that dominated the Canadian media this weekend.

How had the prime minister so embarrassed himself? He had the temerity to suggest, in a town hall meeting in Ontario, that the country ultimately needs to get out of the tar sands business.

“We can’t shut down the oil sands tomorrow. We need to phase them out. We need to manage the transition off of our dependence on fossil fuels. That is going to take time,” said Trudeau.

Underlying this backlash is anxiety about jobs – a recognisable theme from many declining industrial and extractive regions across the world.

If his opponents are genuinely outraged by this, though, they clearly haven’t been paying attention lately – let’s put Trudeau’s remarks in context.

1. 195 countries agree

At a 2015 UN summit in Paris, 195 governments adopted a deal to put a lid on dangerous climate change.

The agreement promised “to achieve a balance between anthropogenic emissions by sources and removals by sinks… in the second half of the century”.

That’s effectively a fossil fuel phase-out. Coal, oil and gas can only be burned if their emissions are pumped underground or offset by large-scale tree planting, for example.

2. Even Saudi Arabia

Yes, the world’s biggest oil producer has ratified the Paris pact. What is more, it plans to diversify its economy away from hydrocarbons.

Deputy crown prince Mohammed bin Salman reckons that by 2035, the kingdom will no longer be financially dependent on oil.

That may be tough in practice and not everyone shares the young reformer-in-chief’s optimism. But debate about the end of the oil era has entered the mainstream.

3. Stephen Harper said the same

Trudeau’s predecessor may have pulled Canada out of the Kyoto Protocol, but he endorsed this agenda before leaving office.

It was Harper who signed a G7 statement ahead of the Paris summit committing Canada to decarbonise its energy sector by 2050 and entire economy by 2100.

G7 countries are responsible for nearly a quarter of global greenhouse gas emissions (Pic: Number 10/Flickr)

4. This won’t happen overnight

In the very same video clip, Trudeau defends new oil pipelines he has approved, clearly signalling a role for tar sands for decades yet.

Environmentalists complain he is giving out mixed messages, posing as a climate leader on one hand and facilitating oil development on the other.

Trudeau argues his administration has “a fundamental responsibility” to get Canada’s resources to market, until the world develops large scale alternatives.

5. The market will decide

Nobody knows quite how fast economies will switch over from combustion engines to electric vehicles, but the direction of travel is clear.

As climate policies and clean technology kick in, the most expensive sources of oil will be the first to go. Tar sands, which take a lot of energy to process, are on the expensive end of the scale.

Established fields could stay viable for 20 or 30 years, according to Andrew Grant, an analyst at Carbon Tracker, but new ventures are risky. “There is a danger of Canadian investors misreading future demand for oil,” he told Climate Home.

6. Time to talk just transition

Trudeau’s critics are right about about one thing: this affects workers.

When communities are built around one commodity and it tanks, it’s hugely disruptive. Thousands of staff were laid off in Alberta after oil prices slumped from mid-2014.

Climate policies will undermine oil demand and ultimately the level of employment in that sector. There are no easy answers, but think-tanks like the Canadian Centre for Policy Alternatives are preparing for a “just transition” to greener jobs.

Instead of whipping up empty outrage, right wingers would do well to get involved in that discussion.

The post Six bits of crucial context for Trudeau tar sands “gaffe” appeared first on Climate Home News.

The Norwegian struck a pessimistic note at the annual Oil and Money conference, which traditionally offers upbeat assessments on the hydrocarbon sector.

But his logic was simple: transport accounts for 55% of oil use, and the electric vehicle industry is starting to gather pace meaning a once-guaranteed market could start to fade – fast.

According to an International Energy Agency (IEA) report in June, there are now more than one million electric cars on the roads, with sales up 70% from 2014 levels.

Oil demand will peak in 2020s "then we'll have a shrinking oil industry" as vehicles are electrified, says Statoil boss Eldar Saetre #OM2016 pic.twitter.com/LFAQaPVkzR

— Andrew Ward (@andrew_ward1) October 18, 2016

Range anxiety is also waning, reports the Carbon Brief website, as electric batteries get larger and more efficient, meeting 98% of daily driving needs.

It’s still tiny compared with the numbers of cars with traditional combustion engines, and the charging infrastructure remains mixed. The US, China, Norway and Netherlands dominate growth.

Speaking at an event held by Bloomberg earlier this month, BP chief economist Spencer Dale laughed off the threat: “It’s not a game changer over 20 years, even with aggressive electric vehicle penetration,” he said.

Still, it’s a development that last month led analysts at BHP Billiton to brand 2017 as the year when “the electric car revolution really gets started”.

By 2035 they believe 140 million of cars on the road will be electric, about 8% of the global fleet, displacing 2.3 million barrels of oil a day – equal to about 2% of demand.

“Our projections in this regard put us firmly at the ‘green’ end of the spectrum, well above the levels projected by ‘traditional’ industry consultants,” reads the BHP report.

#OPEC Watch: #SaudiArabia #oil minister says market "clearly rebalancing", industry at end of "considerable downturn" #OM2016 #OOTT #OPEC pic.twitter.com/wmPZ74xTcP

— Javier Blas (@JavierBlas) October 19, 2016

Well – not quite. The team at Bloomberg New Energy Finance reckons electric vehicles could account for 35% of car sales and displace 13 million barrels of oil by 2040.

This week Fitch Ratings issued a warning that global credit markets covering a quarter of outstanding corporate bonds were potentially threatened by the rise of Tesla, Toyota Prius and other EV makers.

Fitch cautions that the switch from oil to electric won’t be overnight, largely due to high battery prices, but predicts a quarter of the global car fleet could be weaned off oil by 2035.

Even that could be underestimating the growth trajectory, suggest the report’s authors, considering battery prices fell 35% over the last 12 months.

(Pic: Bloomberg New Energy Finance)

“We believe it will be important for oil companies to react early, and we will continue to evaluate their strategies for doing so even though the changes discussed here would occur well beyond our rating horizon,” reads its summary.

“Many are already taking initial steps such as diversifying into batteries or renewables or focusing more on natural gas, and many are actively participating in the debate around future energy sources.”

PwC’s upcoming Low Carbon Economy Index will also suggest change is afoot with most governments developing plans to decarbonise electricity and electrify transport.

“Electric vehicles are potentially disruptive in the medium term, but inevitably there’s a time-lag between EV sales and emissions reductions as petrol and diesel cars sold today will be on the road for the next 15 years,” said PwC director Jonathan Grant, lead author of the LCEI.

The post Statoil chief: rise of electric cars will shrink oil industry appeared first on Climate Home News.

Heavy pollution shrouds sunset in Beijing (Pic: Theis Kofoed Hjorth/Flickr)

By Ed King

Subsidies for fossil fuels that cause climate change have soared since 2013, a new study from the International Monetary Fund has revealed.

Oil, gas and coal costs will be subsidised to the tune of US$5.3 trillion a year in 2015. The last time the IMF ran the data it calculated they were worth $1.9 trillion.

Economists say the latest figures are more accurate as they represent the “true” cost of energy, which includes the environmental, health and climate impacts of burning fossil fuels.

“Over half of the increase is explained by more refined country-level evidence on the damaging effects of energy consumption on air quality and health,” IMF officials Benedict Clements and Vitor Gaspar wrote in a blog.

The figure is larger than the health spending of all the world’s governments combined, a reckoning the pair called “shocking”.

(Pic; IMF)

Coal is the biggest recipient of polluting subsidies, the IMF found, given its combined impact on air quality and high carbon emissions.

“The most dramatic difference, compared with the pre-tax figures, is for coal which is the biggest source of post-tax subsidies, amounting to 3.0% of global GDP in 2011 and rising to 3.9% in 2015,” says the study.

The World Bank and IMF have been campaigning hard for countries to stop subsidising fossil fuels, arguing it can help stimulate stronger and more inclusive growth.

In the past three year’s leaders at the Major Economies Forum, G20 and G7 have all called for an end to harmful subsidies.

Report: European Commission drops demand to cut fossil fuel subsidies

Earlier this year US secretary of state John Kerry said coal subsidies were “simply destructive”, but the IMF research suggests high levels of funding are still common around the planet.

The largest national offender is China, which when pollution is taken into account, offered a $2.3 trillion subsidy to its one billion energy consumers this year.

It’s followed by the United States (US$699 billion), Russia (US$335 billion), European Union ($330 billion), India (US$277 billion), and Japan (US$157 billion).

UN talks

The news comes as leading economies meet in Berlin to discuss plans for a global climate treaty, due to be signed off in Paris later this year.

Slashing subsidies this year could cut carbon emissions 20% and boost government revenues $2.9 trillion says the IMF, and raise what it terms “economic welfare” by $1.8 trillion.

“Conditions are ripe to decisively engage in energy taxation and energy subsidy reform, further favored by lower international oil prices and low inflation,” said Clements and Gaspar.

“Steps at the national level could hasten progress at the global level ahead of the Paris climate change summit in December.

“By acting local, and in their own best interest, policy authorities can contribute significantly to the solution of a global challenge.”

The post Fossil fuel subsidies to hit $5.3 trillion in 2015, says IMF study appeared first on Climate Home News.

(Pic: BP)

By Kieran Cooke

Companies and governments responsible for 40% of global gas flaring have made a commitment to stop their climate-damaging activities within the next 15 years.

Announcing the “Zero Routine Flaring by 2030” initiative at a meeting in Washington DC, the UN Secretary-General, Ban Ki-moon, said its supporters are demonstrating real action in the run-up to the all-important UN conference on climate change in Paris later this year.

“Reducing gas flaring can make a significant contribution towards mitigating climate change,” he said. “I appeal to all oil-producing countries and companies to join this important initiative.”

The World Bank (WB), which launched a Global Gas Flaring Reduction Partnership in 2002, estimates that each year 140 billion cubic metres of natural gas produced together with oil are burned or flared at thousands of oil fields worldwide − adding 350 million tonnes of carbon dioxide emissions to the atmosphere.

Generate power

If the flared gas was used to generate power, the Bank says, it would produce more electricity than is at present consumed throughout the African continent.

Flaring – much of which can even be seen from outer space − takes place when there are no facilities to harness the gas, or when oil producers decide it is uneconomical to process or pipe the gas.

Russia is at present the world’s largest flarer − the other big flaring nations being Nigeria, Iraq, Iran, Algeria and Venezuela.

Those committed to ending flaring by 2030 − at the latest – include nine countries, 10 oil companies and six development institutions.

Among the oil companies are Royal Dutch Shell, ENI of Italy, and the Norwegian Statoil group. The countries that say they will end flaring by 2030 include the Russian Federation, Kazakhstan, Gabon and Angola.

Report: Use fossil fuel subsidies for climate aid – World Bank envoy 

And the state oil companies involved include SOCAR of Azerbaijan, Petroamazonas of Ecuador, and the Kuwait Oil Company.

A number of financial institutions and development organisations have also joined the scheme, including the Islamic Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development.

Although the WB says many other countries and oil companies are considering joining the no-flaring initiative, such commitments have been made before – and not fulfilled.

The issue of flaring is particularly contentious in Nigeria’s Niger Delta, the country’s main oil-producing region. Shell, Chevron and other companies, including the Nigerian National Petroleum Company, have made repeated announcements about putting an end to flaring, but the practice is still widespread.

Toxic chemicals released in the flaring process can cause serious health problems, and can damage crops and the environment in surrounding areas.

Nigeria has not so far joined in the WB initiative, and neither has the US, which flares gas from thousands of shale oil production sites.

Beyond money

Faith Nwadishi, a representative of various Nigerian civil society groups, says that those involved in the no-flaring initiative had to make a real commitment to end what she called the evil of gas flaring.

“The issue of gas flaring goes beyond the amount of money that can be saved or how much money people can get out of the business,” she told the Nigeria-based Business News.

“We really have to think about the fact that people are not sensitive to the plight of the people who live in active gas flare sites.”

The WB says that by endorsing the no-flaring initiative, governments, oil companies and development institutions are acknowledging that routine gas flaring is unsustainable – both from resource management and environmental perspectives.

“Gas flaring is a visual reminder that we are wastefully sending CO₂ into the atmosphere,” says Jim Yong Kim, the WB president.

“We can do something about this. Together we can take concrete action to end flaring and to use this valuable resource to light the darkness for those without electricity.”

This article was produced by the Climate News Network

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Riyadh – the capital and largest city of Saudi Arabia (Pic: Hamza82/Flickr)

By Ed King

Gulf states must stop relying on fossil fuels as their main source of income or face a social and economic crisis in the future, says a report released today by Chatham House.

Increasingly youthful populations demanding more freedom, coupled with the recent collapse in global oil prices, is placing governments in the region under intense pressure, it warns.

“Expenditure commitments are growing sharply but revenues are capped by oil production and prices, while the capacity to raise taxes is weak, with political consequences,” says the report.

“Bahrain, with its limited reserves, serves as a warning of what is yet to come: escalating political pressure and heavy borrowing to finance social spending.”

The study focuses on the six countries in the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

Of these, Oman and Bahrain’s oil production are expected to last for 10-15 years. Kuwait, Qatar and Saudi Arabia are in a better position, with projected oil reserves of 80-100 years based on current estimates.

Financial crunch

The authors say these countries are “chronically dependent on high oil prices”, with Saudi Arabia needing US$97 a barrel to balance its budget.

The price of oil is hovering just over $50 and experts are divided on how long that might last.

Bob Dudley, chief executive of BP, predicts it could be up to three years before prices rise. Other analysts say they could fall as low as $10-20.

Finances of the GCC states have been stretched by $150 billion of spending commitments made in 2011, creating thousands of new public sector jobs.

Huge sovereign wealth funds amassed in Abu Dhabi, Saudi Arabia and Kuwait can cover low prices for a few years, says the report, but the longer term outlook is not so certain.

“The situation is more pressing than many observers realize, even for these wealthy countries, because their public spending is rising so fast,” write the authors.

“And [it] will be even more critical if oil prices remain at lower levels than those to which the Gulf countries have become accustomed in recent years.”

Public anger in Bahrain and Oman in recent years is linked to “pressure on their limited oil resources” and ability to distribute wealth, the authors add, which could be repeated across neighbouring states.

“Across the region, a combination of population growth and dwindling resources will place pressure on the implicit economic bargain between rulers and societies.”

Climate impacts

The study does not address what the possible consequences of a global climate change deal – due to be signed off later this year – could be on GCC countries.

Talks are well advanced on a deal that could see all governments accept varying greenhouse gas emission reduction goals from 2020.

One of the ideas for that pact is a long term zero emissions target for the second half of this century, which would force all countries to accelerate their decarbonisation plans.

This would rule out the use of fossil fuels unless they were burnt using carbon capture technologies, which are expensive and have only been deployed on a few power plants.

Last month Saudi Arabia’s climate envoy Khalid Abuleif told RTCC oil and gas should be part of any future climate deal, and rejected the idea of a zero emissions goal.

UN-backed scientists say the world has around 30 years of emissions at current levels before dangerous levels of warming are locked into the Earth’s climate, causing more floods, droughts and rising sea levels.

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China’s policies to cut air pollution and greenhouse gas emissions are curbing oil demand (Pic: Flickr/michael davis-burchat)

By Megan Darby

Oil demand is set to grow just 1.2% a year to 2020 as climate change policies and weak economic recovery take effect.

That is the conclusion of the International Energy Agency’s first medium-term outlook report since the dramatic fall in oil prices over the second half of 2014.

It is “business-as-unusual” for the oil market, analysts said, with emerging economies like China entering a less oil-intensive phase of development.

Maria van der Hoeven, executive director of the IEA, said: “The world is more and more aware of carbon dioxide emissions. That means that energy efficiency on the one hand and technology are necessary to bring this growth of emissions down. This is something we can see all over the spectrum.”

Action on emissions is dampening oil demand, while the US is expected to continue ramping up shale oil production later this decade.

These trends will see the market reset at a lower price than last year’s highs of over US$100 a barrel, the IEA predicts.

In June 2014, the IEA was assuming a steady decline in import prices from an average of US$108 a barrel in 2014 to $87 in 2020.

The price started to plummet soon after, hitting six-year lows of less than $46/bbl last month. Now, the IEA is assuming an average price of $55/bbl in 2015, rising to $73/bbl in 2020.

Source: IEA Medium-term Oil Market Report 2015

But significant uncertainty remains, the research body stressed, with “extraordinarily elevated” political risks to supply.

The report notes that governments are “recasting energy policies” in light of climate change concerns.

China, previously “an unstoppable engine of near-vertical demand growth”, is making a concerted push for clean energy.

Its government is “clearly targeting a serious climate change agenda”, with a target to cut energy use 16% per yuan of GDP growth over 2011-15. Emissions curbs are likely to tighten in the next five-year plan, the analysts forecast.

Meanwhile, the latest European Union figures show oil consumption fell 18% between 2005 and 2013.

The bloc has brought in vehicle emissions limits and other energy saving regulations under a target to improve efficiency 20% by 2020.

Suppliers are responding, with Chevron, Shell and BP among the oil majors to announce cutbacks to investment in their recent financial results.

“Climate change affects the picture in two ways: it is affecting expectations of future demand and this is translating into investment decisions today,” said Antoine Halff, chief oil economist at the IEA.

Oil is losing market share to natural gas and renewable sources of energy, he added.

The post China climate policy hits oil demand growth forecast appeared first on Climate Home News.

Pic: Dieter Gora/Flickr

By Sophie Yeo

Norwegian oil major Statoil will go ahead with Arctic drilling plans, despite the drop oil prices and threat of climate change.

Tim Dodson, executive vice president of Statoil, quenched rumours that the company had given up its exploration work in West Greenland because of low oil prices – a move UN climate chief Christiana Figueres highlighted as an example of stranded assets becoming a reality.

But at this week’s Arctic Frontiers conference in Norway, Dodson insisted: “We don’t make our decisions based on short term oil prices. This is about not seeing sufficient potential to move forward, to drill wells and to eventually make discoveries and commercial developments.”

With oversupply leading to a dramatic drop in the oil price in recent months, there have been doubts over whether expensive Arctic projects are still viable.

This is a pattern that will continue for “some time”, added Sun Xiansheng, director general of China National Petroleum Corporation. All the same, he said: “China is willing and capable to assist in the Arctic oil and gas cooperation.”

Climate limits

The difficulty of operating in the harsh environments – as well as the particular sensitivity of the region in the case of an oil spill – means that undertaking exploration work is a risky undertaking.

The difficulties are magnified by the spectre of a new UN climate change treaty, which could see countries commit to decarbonising their economies by 2050.

NGOs, and in particular Greenpeace, have protested against oil companies’ efforts to explore for more oil in the Arctic. Burning all the existing reserves of fossil fuels would see temperatures rise beyond the internationally agreed limit of 2C.

Dodson stressed that Statoil would continue with its long term programme of Arctic drilling and exploration. Some of its projects may not come into fruition until after 2030 – the date by which the EU has pledged to reduce its emissions by at least 40%.

The Arctic, he said, is one of the few areas left, alongside the Middle East and Russia, where there is the potential to make large discoveries – necessary if exploitation is going to be profitable.

The US Geological Survey estimates that the region contains 22% of undiscovered, technically recoverable fossil fuel resources in the world.

Dodson added that the company was still pursuing exploration projects in the Barents Sea, and that they hoped to acquire new land on which to drill in the future.

Norwegian support

This is an ambition supported by the Norwegian government, which this week opened up new licensing blocks in the far north for the first time since 1994. Production licenses will be awarded in the first half of 2016, with Statoil among the companies which has been invited to apply.

Ironically, this was possibly only because new data showed that the ice cap had receded – a result of global warming.

“The push from the oil and gas industry is going to be a smaller part of our growth in the years to come,” said Norwegian prime minister Erna Solberg, also speaking at the Arctic Frontiers conference.

But in the north of Norway, she added, “activity related to oil and gas will become stronger”.

The UN’s climate director for strategy Halldor Thorgeirsson emphasised that, in light of the challenges of climate change, the energy sector would need to go through a real transformation.

“You may ask, can’t we fix this with adjustments and improvements… But the reality is that these emissions will need to stop rising soon and start declining,” he said.

Greenpeace Denmark campaigner Jon Burgwald suggested that the tone was akin to a “new form of climate denial”.

He wrote in the Arctic Journal: “Everyone agrees on the urgency, while at the same time way too many are praising a continuous race down a dead-end road.”

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Syncrude Aurora tar sands, Canada
(Pic: Flickr/Elias Schewel)

By Megan Darby

Oil cartel OPEC will not cut production even if prices drop to US$20 a barrel, Gulf ministers have insisted.

From a June peak of US$116 a barrel, oil prices have almost halved to their lowest levels in five years, on weak demand.

That unexpected drop has achieved what environmental protesters could not: prompted oil companies to cancel or delay risky tar sands and deepwater projects.

US shale developments could be next for the chop after Gulf states this week reiterated OPEC’s November decision to maintain output.

OPEC’s production has been steady for years at 30 million barrels a day, noted Saudi Arabia oil minister Ali Al-Naimi, while other countries ramped up.

In an interview with the Middle East Economic Survey, Al-Naimi explained: “In a situation such as this, it is difficult if not impossible for the kingdom or for OPEC to take any action that would result in reducing its share of the market and allow for an increase in the shares of others at a time when it is difficult to exert control over prices. This would result in the loss of both market share and price.”

Whether the price falls to US$60, $40 or $20 a barrel is “irrelevant”, said Al-Naimi, who also represents the Gulf state at UN climate talks.

Suhail Al Mazrouei, energy minister for the United Arab Emirates, echoed that sentiment in remarks reported by Bloomberg.

‘Irresponsible’ production

He accused non-OPEC oil producers, of which the biggest are US and Russia, of “irresponsible” supply growth and urged them to halt investment.

Goldman Sachs estimates almost US$1 trillion of new oil and gas fields, not including US shale, need a price of US$70 to turn a profit.

The investment bank did not comment on the implications of climate change for these projects, but its conclusions reinforced analysis by the Carbon Tracker Initiative.

Before oil prices fell, Carbon Tracker was warning that effective action to tackle climate change would slash demand for fossil fuel, “stranding” high-cost oil assets.

Its analysts calculated projects with a breakeven price of US$95 a barrel or more would become unprofitable.

Canada’s tar sands fall into the high risk category. If expansion plans are cancelled, it could weaken the case for the embattled Keystone XL pipeline, conceived to carry oil from Canada to the US.

Republicans are expected to try to push through the pipeline, which was narrowly rejected by the Senate last month, when they take control of Congress in January.

But president Barack Obama has the option to veto its construction. His lukewarm remarks at a press conference last week will give heart to opponents, who argue it would drive up emissions.

“It’s very good for Canadian oil companies and it’s good for the Canadian oil industry, but it’s not going to be a huge benefit to US consumers,” Obama said of the project.

VIDEO: Barack Obama is downbeat on Keystone XL

A separate analysis by ClearView Energy Partners cuts the production forecast for four US shale oil sites by 40%. Last week’s decision by New York state to ban fracking for shale gas and oil in the region, over health concerns, only heaped political risk on economic pain for the sector.

The Gulf producers’ stance also hurt fellow OPEC members such as Venezuela, Iran and Nigeria, which depend on prices of more than US$100 to balance their budgets.

Saudi Arabia, which produces nearly a third of OPEC’s total, plans to draw on financial reserves to maintain its spending on development and social welfare.

Al-Naimi said he was “optimistic” the low price was a “temporary and fleeting phenomenon” and demand would recover.

Others argued the low price offers a chance to wean economies off fossil fuel for good.

Analysts at Bloomberg New Energy Finance said it could boost economic growth in oil importing regions including China and Europe, increasing the scope to invest in clean energy.

Maria van der Hoeven, chief of the International Energy Agency, is urging policymakers to seize the “golden opportunity” to put a price on carbon.

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By Ed King in Lima

The tumbling price of oil proves it is a risky investment and should boost renewable energy technologies, the UN’s climate chief said on Monday.

Christiana Figueres was speaking at the start of two weeks of negotiations aimed at developing a global emissions reduction agreement, involving nearly 200 countries.

The price of Brent Crude fell to $67.53 a barrel on Monday, its lowest since October 2009, following a decision by the OPEC oil cartel to maintain supply at 30 million barrels a day.

The glut of oil on world markets and low cost of energy has sparked fears it could encourage countries to slow plans to invest in greener forms of energy, but Figueres argued it was the opposite.

“The fact that oil prices are so unpredictable is precisely one of the reasons we need to move to fuels which has a completed predictable cost of zero for fuel,” she said.

“Of course you have upfront costs… but that is one of the major recommendations for renewables over fossil fuels.”

She also praised Monday’s decision by German energy giant EON to split in two and dispense with its power plants, focusing on clean energy and grid technologies.

“This is in tune with the many varied pieces of good news that we have had over the past three months,” she said, citing September’s move by the Rockefellers to ditch $50 billion of oil, gas and coal investments.

“The world has changed when the Rockefellers decide they are going to divest.”

But figures released late on Monday by the Climate Action Network suggest support for fossil fuels remains strong around the world, especially in Europe, which has long branded itself as a climate leader.

Over €78 billion is being spent by the likes of France, Germany, Spain, Poland and the UK in “propping up” fuels which are contributing to rising carbon emissions, it said.

“If we are going to have a clean energy system by 2050 then funding should be stopped immediately and phased out completely by 2020 in the EU,” said Maeve McLynn, policy officer at CAN Europe.

According to scientists global CO2 emissions need to peak this decade to ensure the world stays on a trajectory to limit warming to below 2C, beyond which the intensity of heatwaves, floods, droughts and rising sea levels could increase.

Earlier on Monday Peru’s environment minister Manuel Pulgar Vidal, chair of the meeting, said he was encouraged by what he termed “good signals” from leading economies in the lead up to this meeting.

“We had received a good atmosphere… not only before because we heard good mobilisation in capitalising of the Green Climate Fund but also because we received and heard good announcements from the EU, US and China,” he said.

Pulgar Vidal said he wanted to encourage more participation in UN climate talks, revealing he had given youth, gender and civil society groups more opportunities to make their voices heard during discussions in Lima.

“It has shown us we are in the same road and will succeed in this effort,” he said.

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(Pic: BP)

By Megan Darby

World oil prices hit a 4-year low on Thursday, as major oil producing countries decided not to restrict supply at a meeting in Vienna.

The Brent oil index fell to US$76 a barrel, down from US$105-110 in June.

In the short term, this is likely to boost demand and therefore carbon emissions. But it could also kill off high-cost (and controversial) oil extraction projects, for example in tar sands and Arctic waters, that would lock in fossil fuel use long term.

Abdourhman Ataher Al-Ahirish, Libyan vice prime minister and president of OPEC, warned in his opening speech: “If the recent price trend continues, the long-term sustainability of capacity expansion plans and investment projects may be put at risk.”

$60 Brent here we come #OPEC

— Chris Adams (@chrisadamsmkts) November 27, 2014

Al-Ahirish did not mention climate change, despite a growing recognition that most fossil fuels must stay in the ground to prevent dangerous temperature rise.

REPORT: Energy companies unprepared for climate risks

But his words will lend weight to calls on oil companies to halt investment in capital-intensive projects and return money to shareholders.

That is exactly what shareholder activists Arjuna Capital and As You Sow are demanding from Exxon Mobil, in a shareholder resolution filed this week.

The resolution argues that the company is putting profits at risk by failing to plan for global action on climate change.

Governments around the world have signed up to limit global temperature rise to 2C.

According to the International Energy Agency, that means no more than one third of proven fossil fuel reserves can be burned.

REPORT: Oil price slump exposes Canada’s tar sands risk

Effective action to restrict greenhouse gas emissions will dampen demand for oil, which could leave high cost projects stranded.

Analysts at the Carbon Tracker Initiative estimate Exxon Mobil is planning US$56 billion of investment in projects that are unlikely to pay off in a 2C world.

The company has previously dismissed Carbon Tracker’s analysis, saying it was “highly unlikely” governments would restrict emissions to that extent.

Natasha Lamb, director of shareholder engagement at Arjuna Capital, said: “Exxon Mobil should return capital to shareholders rather than gamble with investor resources.

“A fossil fuel volume play in the face of global climate change is simple folly. We should not be in a rush to find and burn all the carbon we can, regardless of cost and irreversible climate impact, but instead focus on value, figuring out how to do more with less.”

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Pic: Carol Von Canon/Flickr

By Valerie Brown

Oil and coal producers in the US are planning to use mile-long tanker trains to transport vast quantities of fossil fuels to the coast through areas that environmental groups believe should be protected.

The change in world fossil fuel production, consumption and costs caused by tar sands exploitation in Canada and the fracking boom in the US is causing what Bill McKibben − author, environmental activist and co-founder of the international climate campaign group 350.org − calls a “chokepoint” in the unspoiled Northwest of the country.

Coal is already being exported in ever-larger amounts from the US because it cannot compete with cheaper gas from fracking. Now campaigners fear that the oil industry also wants to export cheap oil to Asia − although so far the companies deny it, saying it will be sent by sea to other parts of the US.

The largest of the 11 proposals to build new or expand existing crude-by-rail terminals is that of Tesoro-Savage at the Port of Vancouver, Washington, just across the Columbia River from Portland.

The company wants the capacity to transfer crude oil from the North American interior to seagoing tankers and barges. Four “unit trains”, each a mile long and comprising up to 100 tanker cars, would arrive at the terminal daily, delivering 360,000 barrels of oil. This would be the largest such terminal in the region.

Ecosystem lifeblood

The Columbia River is the lifeblood of the Pacific Northwest ecosystem, and was once home to what were claimed to be the world’s largest salmon runs.

It is already stressed by 14 hydroelectric dams and barge traffic hauling grain and other products from the interior, as well as radiation leaking from the Hanford Nuclear Reservation in Richland, Washington.

The oil and coal trains must pass through the Columbia River Gorge National Scenic Area, a protected section of the river and its environs where hundreds of waterfalls create micro-habitats for species of plants found nowhere else on Earth.

Rail tracks run along very narrow routes on both sides of the river, sometimes on causeways on the river’s edge. They have already seen traffic increases. According to a report in the Oregonian newspaper, there was a 250% increase in the number of tankers passing through Oregon between 2006 and 2013.

Since the Arab oil embargo in the 1970s, the US government has banned the export of crude oil. This means that, for the time being, crude oil from North Dakota will go to refineries in Washington state and California, replacing the declining supply from Alaska.

In addition, the Vancouver terminal “would have the capacity to displace 30% of the crude oil currently imported to West Coast refineries from foreign countries”, according to an email written by Elizabeth Watters, a spokesperson for Tesoro. She added that this would “increase US energy security in an uncertain world”. Watters also said Tesoro-Savage has no plans to export oil.

Claims that oil interests aren’t planning to export is “all bovine scatology, smoke and mirrors”, says Eric de Place, policy director for the Washington-based Sightline Institute, a not-for-profit sustainability thinktank.

“I think it’s likely that in the near term they might transport some of the fuel to west coast refineries in Washington or California, but it’s pretty clear that they have their sights set on a robust export market.”

In addition, De Place says, the terminals “could be receiving Canadian tar sands oil on day one” and exporting it immediately, because tar sands oil from Canada isn’t under US export jurisdiction.

Coal can already be exported. In fact, US coal exports have nearly doubled since 2007, and three coal terminals are currently under consideration in Oregon and Washington. If all were built, about 100 million tonnes of coal would depart from the Pacific Northwest annually.

There is remarkable resistance among disparate political and economic interests to expansion of the fossil fuel industry in the region.

The International Longshore and Warehouse Union objects to the Tesoro-Savage terminal on worker safety grounds because Bakken crude is far more flammable than other oil types, and there is opposition from a local real estate developer working because he fears that the terminal would make his riverfront office/restaurant project untenable.

Potential spills

The city of Vancouver has passed a resolution against the terminal because of concerns about potential spills or explosions and traffic congestion. The state of Oregon rejected Australian corporation Ambre Energy’s coal terminal proposal at the Port of Morrow, and the Port of Portland has declined to consider adding oil-by-rail and coal terminals for the time being.

Governors of both Columbia River states have expressed concerns about climate impacts from the expansion of fossil fuel transportation in the region.

In a recent election debate, Oregon governor John Kitzhaber said: “It makes no sense to me to subsidise the burning of fossil fuels in Asia while we adopt state and federal policies that do just the opposite.”

Washington governor Jay Inslee is the sole person who will decide the Tesoro-Savage project’s fate. According to Inslee’s spokesperson, Jaime Smith, the governor believes that if “we are trying to wean ourselves off carbon-based fuels and use more clean energy technologies − if that is our intended goal as a state, as a nation − shouldn’t we be taking a look at that?”

But none of the political entities involved in deciding whether Tesoro-Savage can move ahead is obligated to consider climate impacts, leaving objections to the fossil fuels mostly to environmental campaigners. However, the states do have to consider issues of rail safety and the impact of possible spills.

If oil traveling to the Vancouver terminal is not exported, it wouldn’t necessarily add to the CO2 emissions already occurring in the US because it would just “top up” the domestic supply − provided that US consumption doesn’t rise.

But fossil fuels exported from the Pacific Northwest to Asia would certainly add to those emissions as Asia’s economies grow. Moreover, it would hoist the west coast by its own petard by increasing the hydrocarbon air pollution that already travels eastward across the Pacific from oil and coal burned in Asia.

Watters, asked whether Tesoro is concerned about climate change, wrote: “Tesoro recognises that climate change is an important global issue, and we are committed to reducing [greenhouse gas] emissions from our refineries to below 1990 levels.” He did not comment on the global warming potential of the fossil fuels Tesoro-Savage would be transporting.

Fuel prices

What lifting the crude oil export ban would do to international and domestic crude oil and fuel prices is unclear. Brookings Institution analysts calculate that doing so would lower the price of gasoline by about $0.09 per gallon if the ban were lifted in 2015, and that US exports would not affect the behaviour of the Organisation of the Petroleum Exporting Countries (OPEC).

But De Place says: “The prevailing view among industry analysts is that that would raise the price of oil domestically.” He also warns that “the history of energy analysts predicting what the price of oil will do is the history of people going to the casino”.

The planning and permitting process for all the proposed Columbia River facilities will take several years.

Tesoro-Savage must submit a detailed environmental impact statement (EIS) to the Washington Department of Ecology, and a release of the draft EIS is expected in the spring of 2015, at which time public comment will be solicited.

The Washington energy facility siting agency will then make a recommendation to Governor Inslee, after which he will make his decision.

Other Pacific Northwest proposals are also in various stages of the process.

Until the oil and coal proposals are approved or rejected, it is still an open question whether the Pacific Northwest chokepoint will close to fossil fuels or be opened wider.

This article was produced by the Climate News Network

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Pic: Greenpeace Finland

By Sophie Yeo

Shell has applied for a permit to drill for oil in the Alaskan Arctic next summer, in a move criticised by environmental campaigners.

The company hasn’t made a final decision to persevere with summer drilling in the notoriously difficult location, it said, but that the proposals submitted to Washington kept its options open.

“We are undertaking activities including submitting this plan, in order to keep the option of a 2015 season,” said Shell spokesperson Megan Baldino.

The plan proposes two drilling rigs in the Chukchi Sea, producing more than 400,000 barrels a day.

Environmentalists are staunchly opposed to oil exploration in the Arctic. They point to the difficult conditions and fragile landscape, which means an oil spill would be particularly damaging and challenging to contain.

Reserves

The US Geological Survey estimates that around 13% of the world’s undiscovered oil reserves reside in the Arctic.

Climate campaigners, meanwhile, say it is illogical and financially risky to look for more oil when current reserves are more than enough to tip the planet into dangerous levels of warming.

Shell’s Arctic plans have been in motion for over a decade and cost around US$6 billion, but so far there is little to show for it. The company has drilled only two wells, neither of which struck oil.

Exploration in 2013 was thwarted by a series of errors, including Shell’s drilling barge, the Kulluk, running aground off the coast of Southern Alaska.

Plans were halted again in 2014, following a US federal court ruling that the area had been illegally opened to exploration.

“The company is lurching forward despite the flood of reports from government agencies and environmental groups that Arctic drilling is too risky, that the Arctic is too vulnerable, and that Shell itself is too incompetent to proceed,” said Greenpeace Arctic campaigns specialist John Deans.

“If the Obama Administration is serious about climate change, it needs to prove it by keeping Shell out of the Arctic.”

Tar sands failure

Shell’s failure to meet regulations in its exploitation of Canadian tar sands has given rise to further concerns that Arctic drilling could damage the environment.

Lorraine Mitchelmore, head of Shell Canada, admitted on Wednesday the company may not be able to meet its targets on reducing toxic waste produced by the oil sands.

“It’s going to be very challenging,” to meet targets for next year, she told the Wall Street Journal. She called for more flexible regulation that would ease requirements on the industry.

A report last year from Alberta’s Energy Resources Conservation Board said that Shell’s two tar sands mines had failed to meet 2009 clean-up goals. It waived financial penalties, angering environmentalists.

Louise Rouse from campaign group ShareAction said the failure to comply with regulation set a worrying precedent for Shell’s Arctic operations.

“It’s worrying to see Shell apparently failing, yet again, to comply with regulatory requirements on high-risk projects.

“Given the company’s highly controversial plans for US offshore Arctic drilling, investors should be troubled that the company’s focus appears to be on encouraging regulators to reduce requirements rather than ensuring full compliance with vital regulations.”

The post Shell prepares for 2015 Arctic drilling appeared first on Climate Home News.

Tar sand exploration in Alberta, Canada: a risky investment, says the Carbon Tracker Initiative

By Megan Darby

Green campaigners have sought to block oil exploitation of the Arctic and Canada’s tar sands in horror at the impact on the natural environment.

The Carbon Tracker Initiative (CTI) is taking a different tack: highlighting the financial risk of such projects.

Its latest research shows the top 20 undeveloped high-cost oil projects – which happen to be among the most environmentally damaging – risk wasting US$91 billion of investors’ money over the next decade.

If the major oil companies cancelled these and other risky plans they could return US$357 billion to shareholders by 2025, it found.

“Investors are concerned about the levels of capital being sunk into future fields by the oil sector, but are not getting answers on the economics of the projects from the companies,” said James Leaton, CTI’s research Director.

“CTI has responded to demand for detail to enable shareholders to challenge where money is spent.”

Oil companies are exploring ever more difficult environments, from ultra deep water to tar sands, to find resources.

From Greenpeace’s Save the Arctic campaign to Tar Sands Action, protesters have focused on the climate impact of such ventures and risk of oil spills in sensitive environments.

“Without the Ice the Earth Will Fall” Emma Thompson’s moving call to #SaveTheArctic http://t.co/1znyHS7GFu Join her > http://t.co/ApDeu1VQGh

— Save The Arctic (@savethearctic) August 13, 2014

Analysis from CTI shows such projects are also a gamble for investors, which include the pension funds and insurance companies ordinary people rely on to safeguard their money.

These projects depend on a high future oil price to get a return on the capital investment. Meanwhile, political action to halt dangerous climate change is expected to cut demand for oil, pushing the price down.

International negotiators are aiming for a deal in Paris next year to cut greenhouse gas emissions and keep world temperature rise to 2C.

If they succeed, then only a fraction of the world’s fossil fuel reserves can be burned within the remaining “carbon budget”, estimated by the Intergovernmental Panel on Climate Change (IPCC) to be less than 500 gigatonnes of CO2.

Price gamble

The think-tank’s earlier research showed effective action on climate change should rule out ventures that need a price of more than US$95 a barrel to break even.

Some of the projects identified by CTI in its latest report need a price of more than US$150/bbl. That is according to data compiled by industry experts at Rystad Energy.

The most expensive was a US$2 billion Canadian tar sands venture by ConocoPhillips, which needs a price of US$159/bbl.

For the investment to pay off, the oil price would have to rise significantly from the US$105/bbl Brent benchmark price today. Oil prices can be volatile and have fallen as low as US$40/bbl twice in the last decade.

Shell is the most exposed, CTI found, with US$84 billion earmarked for risky projects. Exxon Mobil is next, with plans to spend up to US$56 billion on projects needing more than US$95/bbl to break even. Chevron and Total are each considering US$52 billion worth of high-cost ventures.

“This analysis demonstrates the worsening cost environment in the oil industry, and the extent to which producers are chasing volume over value at the expense of returns,” said Andrew Grant, CTI analyst.

“Investors will ask whether it is prudent for oil companies to bet on ever higher oil prices when they could be returning cash to shareholders.”

Industry position

Oil companies have shelved some risky projects already, as they try to keep capital spending under control.

Total, Suncor, Shell, BP, Chevron, Statoil and Eni have all cancelled or deferred oil sands and deep sea projects this year.

However, they have rejected the CTI’s analysis of the systemic problems in the sector.

The CTI put the “carbon bubble” concept on the map in March 2012 and it has been steadily gaining traction ever since.

This is the idea that fossil fuel companies are overvalued, because they are not taking account of climate change risk.

The report warned that to put the world on a 2C path, 80% of known fossil fuel reserves had to stay in the ground.

By continuing to explore new and expensive sources of fossil fuels, companies risk creating “stranded assets”. Their investments will become worthless as demand for their product is constrained.

In May, the CTI homed in on the oil sector. It has similar analyses of the coal and gas sectors in the pipeline.

It drew a defensive response from oil companies, with Shell branding the report “alarmist”.

A round-up of oil company arguments by Carbon Brief found they broadly accepted the science of climate change. However, they cast doubt on the likelihood of effective political action to curb emissions and insisted demand for their product would continue.

In a rebuttal to Shell’s assurances, CTI accused the company of “Orwellian doublethink”.

The sector has yet to reconcile the contradiction between its acceptance of the need to tackle climate change and its pursuit of high-risk oil projects, the CTI says.

The post Oil majors gambling US$91bn on 20 high-risk projects appeared first on Climate Home News.

Pic: Maurice/Flickr

By Kevin Smith

There’s no denying that the divestment movement is gathering pace.

With the World Council of Churches recently announcing its withdrawal from the fossil fuel sector, and a whole series of universities taking the first progressive steps towards greening their endowments, people are wondering which other institutions will recognize the ethical imperative in distancing themselves from the climate-devastation being carried out by fossil fuel companies.

There’s a growing awareness that after universities and faith-based institutions, it’s the cultural sector that needs to take steps to ensure that it isn’t helping to legitimize oil companies well past their sell-by date.

In the UK, big prestigious arts and culture organisations have been taking oil money for decades. It’s not about investments and endowments – it’s about long standing sponsorship deals.

In the week that parts per million of atmospheric carbon hit 400 for the first time in thousands of years, Tate Britain launched its major rehang – the “BP Walkthrough British Art.” More recently the National Portrait Gallery celebrated 25 years of BP sponsoring the BP Portrait Award. Shell has an on-going association with the Science Museum, including branding its climate science gallery.

Legitimacy

These relationships may seem like a trivial affair in themselves, but the many links that oil companies cultivate and maintain with all manner of galleries, theatres, museums, festivals and even children’s toy manufacturers like LEGO, all add up to support their “social licence to operate.”

This is an industry-term for the state of legitimacy and social acceptance that oil companies need in order to keep carrying out hugely controversial and contested operations like devastating communities, ecosystems and the planet. When oil companies sponsor an art gallery, they’re not doing it because they are art-loving philanthropists, they’re doing it because it’s an integral part of their business model of drilling and selling more and more oil.

Ending the sponsorship links between oil companies and cultural institutions is about stigmatizing those companies that are responsible for destroying the climate in much the same way that the divestment movement is doing.

Like the divestment movement, success depends on the change being pushed for from with the institutions.

Fee-paying Tate members have repeatedly tried to raise the issue at the annual Members AGM. Artists have teamed up with activists to from Liberate Tate, to create powerful unsanctioned performance pieces in gallery spaces like last year’s Parts Per Million.

An artist who was short-listed three times for the BP Portrait Award has spoken out on what it means to create work accompanied by the logo, writing: “I realised long ago that, as a painter, offering legitimacy to fossil fuel corporations is a far more significant statement than anything that might be communicated by an exhibition.”

In this last week some 70 theatre professionals were brought together by playwrights Mark Ravenhill, Caryl Churchill and BP or Not BP to discuss the growing controversy of the issue.

Breaking ties

The terrifying threat of climate change and the increasingly climate conscious public means that now is the time to redefine the boundaries as to what are the acceptable forms of corporate sponsorship.

Twenty five years ago before BP took over, the National Portrait Award was being sponsored by the John Player tobacco company. People recognized that tobacco companies shouldn’t benefit from the kudos of cultural associations, and an ethical funding boundary was created.

It’s important to note that arts institutions and sporting events were all able to adapt and survive when tobacco sponsorship was given the boot. According to our research on the proportion of income that oil money represents to the biggest arts institutions, the same would be the case today.

As Archbishop Desmond Tutu recently said, “People of conscience need to break their ties with corporations financing the injustice of climate change… We can encourage more of our universities and municipalities and cultural institutions to cut their ties to the fossil-fuel industry.”

Breaking the sponsorship link between arts and oil will not alone prevent the worst impacts of climate change from happening. But by creating and informing a public debate that questions the legitimacy of these companies in being associated with respectable and cherished cultural institutions, we can strengthen attempts to hold them accountable in other political and financial spheres.

This is an essential step in ending the stranglehold that the companies have on the corridors of power – a major obstacle that we face in the transition to a low carbon society.

Kevin Smith is an oil and sponsorship campaigner at Platform (@platformlondon)

The post Should the arts reject money from oil companies? appeared first on Climate Home News.

Source: Flickr/Elvert Barnes

By Sophie Yeo

Government efforts to stop climate change are “highly unlikely” to reduce the amount of oil and gas that ExxonMobil intends to burn over the coming 25 years.

This is the outcome of two reports published today by Exxon, assessing whether the company might have to leave a significant proportion of their reserves in the ground, due to government restrictions on greenhouse gas emissions.

But the company has found that ‘stranded assets’ pose essentially no risk to their future operations. “The world will require all the carbon-based energy that ExxonMobil plans to produce during the Outlook period (up to 2040),” they say.

“The scenario where governments restrict hydrocarbon production in a way to reduce GHG emissions 80 percent during the Outlook period is highly unlikely.”

An 80% reduction in greenhouse gases by 2050 is the target that many – including the UK and the European Union – are advocating in order to keep the world below 2C of warming, beyond which governments have agreed the risks of climate change become unmanageable.

Unbearable costs

The reports were produced in response to pressure from stakeholders, who were concerned about the risk that strengthening climate legislation could pose to the value of the business.

New restrictions could slash the value of Exxon, which has the second-largest stockpile of carbon contained in its hydrocarbon reserves after Russia’s Gazprom. Bloomberg’s Carbon Risk Valuation Tool shows that the company’s share price could decline by 45% in a stranded assets scenario.

But Exxon said it they were not considering the possibility of such a ‘low carbon scenario’ emerging in the future, as the impacts of such an overhaul of the world’s energy systems would be more than society “would be willing to bear”.

For instance, they calculate that putting a price on carbon that would provide the market incentive keep carbon dioxide stable at a safe level would cost the average American household an extra $2,350 per year in energy by 2030.

They added that it was also incompatible with development agendas in poorer countries, where 1.3 billion people still lack electricity, with half of these in Africa.

They said that while it was always possible that the world could choose the low carbon pathway, “it is difficult to envision governments choosing this path in light of the negative implications for economic growth and prosperity that such a course poses.”

Under the banner of the UN, all countries are working on a deal to keep climate change from exceeding dangerous levels, which is due to be signed off in Paris in 2015.

Exxon said it would continue to focus on energy efficiency as a less damaging means of driving down greenhouse gas emissions, while continuing to provide from a growing demand in energy up till 2040 as populations and wealth expands globally.

Disappointment

While acknowledging that Exxon’s decision to publish information on its risk of stranded assets puts it a step ahead of other energy companies, including Chevron, who have refused to disclose this information, many have expressed disappointment at the outcome.

Natasha Lamb of Arjuna Capital, one of the companies who asked for the repost, said: “Investors now know that ExxonMobil is not considering a low-carbon scenario in its planning, which places shareowner capital at risk.

“We believe the company should protect shareholder value by divesting assets at greatest risk of stranding, diversifying investments into low-carbon alternatives, and returning money to shareholders that might otherwise fund future ‘at risk’ assets.”

Andrew Logan of Ceres, a sustainable investment group, said that “investors disagree” with Exxon’s verdict that a low carbon scenario was unlikely, and said they would continue to push Exxon to “align their planning with this reality”.

Anthony Hobley, CEO of Carbon Tracker, said: “Exxon saying there is no risk does not constitute prudent management of shareholder funds. It’s like King Canute assuming he can hold back the tide, but investors can see that a shift in energy is already coming in.”

The findings released on the same day that the Intergovernmental Panel on Climate Change released its latest report on the impacts of climate change. This confirmed that catastrophic effect that continued warming would have on food systems, infrastructure and human security.

Tim Ratcliffe, European Divestment Coordinator at 350, said: “It’s incredibly cynical of Exxon to announce that it intends to exploit its reserves until the last drop, the same day scientists highlight the sweeping impacts of climate change on humans on every continent.”

The post Exxon Mobil dismisses climate change risks to future growth appeared first on Climate Home News.

Alberta’s oil sands at dusk (Pic: Kris Krug)

By John McGarrity

Oil from Canada’s carbon-intensive tar sands – one of the world’s single biggest sources of greenhouse gas pollution – could be used in the petrol tanks of European motorists from 2020 after the European Commission proposed to scrap curbs on imports of highly emissions-intensive fuels.

The EC’s executive arm said in its 2030 climate and energy framework yesterday that it wouldn’t set new thresholds on the carbon intensity of fuels used in transport from the start of the next decade.

Environmental groups said the EC’s proposal to drop a law curbing the carbon intensity of transport fuels would enable oil and products from tar sands to be brought to Europe, particularly if new pipelines are approved.

“[The EC proposal] is good news for oil companies and Alberta, with its high-carbon tar sands, but bad news for Europe in our move towards a more sustainable transport system,” said Nusa Urbancic, a campaigner with Transport and Environment in a statement.

Report: EU’s 2030 climate & energy package explained

The EU’s existing Fuel Quality Directive  aims to reduce the carbon intensity of Europe’s transport fuel by 6% by 2020.

“But the measures governing how the law will actually be implemented have yet to be released by the Commission, allegedly because of extreme pressure from oil companies and the Canadian government,” Urbancic said.

The measure to scrap the fuel law may be discussed at a meeting of EU governments in March on the climate and energy package, although a final decision on the 2030 proposals might not come until early next year.

On Wednesday, EU climate chief Connie Hedegaard told journalists: “There are still discussions on how to proceed on the fuels.”

A recent report from the US green group the National Resources Defense Council said the export of crude oil and refined products derived from tar sands could raise the carbon intensity of Europe’s fuel stocks by up to 32.5 million metric tons annually from 2020.

Canada’s tar sands, branded as ‘carbon bomb’ by environmentalists, could supply up to 7% of the EU’s fuel stock from the beginning of the next decade, the NRDC said.

US President Barrack Obama hasn’t yet decided whether to approve the northern branch of the hugely controversial Keystone XL pipeline, which would enable tar sands crude to be refined and from the Gulf Coast to export markets in Europe.

Riddle of the sands

New export markets for tar sands oil would  help increase western Canadian tar sands production from 1.4 million barrels  per day in 2012 to 5.8 million bpd by 2030, the NRDC estimates.

Emissions from the process could triple to 107 million tonnes of CO2 equivalent a year by 2030 compared with 2011, according to the Canadian government’s own figures, driving up the country’s overall emissions at a time that developed countries will be expected to cut their carbon footprint in any future UN climate pact.

But green groups say that Canada has so far under-reported the carbon footprint of its oil sands industry, which has transformed Alberta’s economic fortunes and is a powerbase of Conservative Prime Minister Steven Harper.

The EC’s 2030 proposals yesterday also recommended that the EU drop the 10% target for renewables in transport that currently applies until 2020, a decision broadly welcomed by green groups.

They say the 10% requirement has mostly met with biofuels, which are blamed for competing with food crops and being even more emissions intensive than conventional fuels.

VIDEO: Quebec chief on region’s new cap-and-trade scheme

The post Canada tar sands set to benefit from EU 2030 climate plan appeared first on Climate Home News.

Source: IAEA Imagebank

By Sophie Yeo

Booming levels of oil production from shale formations will not affect the country’s commitment to cutting its carbon footprint, US energy secretary Ernest Moniz has told a London audience.

“Producing more oil should not be confused with increasing oil dependence. We are decreasing oil dependence even as we produce more oil,” he said.

In November, the International Energy Agency predicted that the US would surpass Russia and Saudi Arabia as the world’s top oil producer by 2015, and be close to self-sufficiency in the next two decades.

Alongside the recent boom in shale gas, which has been largely credited with pushing down US emissions by 12% between 2005 and 2012, oil production has soared over the last five years. In 2011, the US became a net exporter of refined petroleum products for the first time since 1949.

Moniz said efficiency, alternative fuel use and electrification were the “three prongs” the USA would employ to wean itself off oil.

He added that, historically, innovation in the field of energy production tends to arrive at a time when production is booming: “It’s a lot easier to be introducing new technologies and new players when the pie is growing,” he said.

“At the same time as we celebrate our domestic production with all its benefits, we do not lose sight of in any way our commitment to lowering our oil dependency,” said Moniz. He added that natural gas was a “bridge to a low carbon future” envisaged by President Barack Obama in his Climate Action Plan, though it would at some stage require carbon capture and storage technology.

“Producing more oil should not be confused with increasing oil dependence. We are decreasing oil dependence even as we produce more oil.”

The glut of oil has led to an increasing debate over whether the US should lift its ban on the export of crude oil, which was put in place following the 1970s decision by Arab countries not to export to America. Moniz reinforced that, while this decision rested with the Department of Commerce, “There are many, many issues that need a relook from the 1970-1975 period.”

Fracking

Moniz’s perspective on the recent changes in America’s energy landscape took on particular relevance during his address to the UK audience, as the government attempts to push for a similar shale gas boom across the UK, amid concerns that this would blight the landscape and lock the country into a new source of fossil fuel.

After an impressive decline over the past few years, US emissions rose by 2% again in 2013, the International Energy Agency announced last week, as gas prices move up again, leading to a greater use of coal. This trend, said Moniz, was partly seasonal and could be attributed to the polar vortex.

“The price of gas has gone up there has been some switch back to coal, but keep this in perspective: it wasn’t long ago that we were talking about 50% coal and 20% gas in the power sector,” he said.

“Now the gas is 28%. I think there will be some ups and downs, but fundamentally the trend is towards substitution.”

He added that the impact upon the landscape would be less avoidable, as the process of fracking for the shale gas will inevitably lead to a rise of industry. A House of Lords committee heard last week from the CEO of US company Liberty Resources that the UK would need about 35 rigs in the UK, drilling around 700 wells, in order to replicate the American boom.

“Producing that amount of gas or oil is a big industrial enterprise,” said Moniz.

“You can avoid the fact that there are a lot of truck movements coming in and out and that’s something that communities and the government are going to have to deal with in terms of mitigating those impacts.”

The post US committed to cutting fossil fuel use despite shale oil boom appeared first on Climate Home News.

(Pic: Lord Browne)

1 – Fracking will not cut energy prices
Cuadrilla chairman and former BP chief Lord Browne says that fracking will not bring down energy prices in the UK, reports the Guardian. This contrasts with previous statements from David Cameron and Chancellor George Osborne, who have used encouraged the controversial technology with promises that it will drive down household bills.

2 – China to bump up coal imports
China will raise its threshold for coal imports, tighten approvals for new coal mines and push industry consolidation in a bid to help its ailing coal sector. This comes as China’s new leaders have vowed to tackle a pollution crisis that has stoked public anger, according to Reuters.

3 – Oil drilling exploration in Pechora Sea
Gazprom Neft, the fourth largest oil producer in Russia, is preparing for the construction of another two ice-protected oil platforms designed for the icy waters of the Pechora Sea. According to Barnets Observer, an exploration well will be drilled in the area in 2014, and a field development plan will subsequently be elaborated.

4 – Rising temperatures in Indian Ocean linked to Australian bushfires
A new study in Nature Geoscience has shown that extreme weather in Australia, such as drought and bushfires, is linked to temperature changes in the Indian Ocean. The effects are likely to strengthen as the climate warms. Last month, Australian Prime Minister Tony Abbott accused UN chief Christiana Figueres of “talking through her hat” when she linked Australian fires with climate change.

5 – Energy firms asked to freeze prices
The British government is asking the country’s big six energy firms to hold prices until the middle of 2015, designed to cut annual bills by around £50. Industry sources have told the BBC the government wants to avoid another round of price rises that could be blamed on government green levies.

The post Lord Browne: Fracking will not bring down energy bills appeared first on Climate Home News.

Source: Flickr/Tom Doyle

By Sophie Yeo

Shell hopes to resume Arctic drilling in 2014, the company’s chief financial officer announced yesterday.

Speaking as the company unveiled its disappointing financial results for the third quarter, Simon Henry said: “We have not yet confirmed if we drill in 2014 but we do expect to file an exploration plan shortly.

“Clearly we would like to drill as soon as possible.”

The company was forced to abandon its plans to drill in the Arctic this summer, due to serious setbacks which culminated when the Kulluk rig ran aground in the Beaufort Sea.

Operations in the immediate future would focus on the Chukchi Sea, said Henry, where the water is deeper. The programme will depend on whether the company is able to gain the necessary permits and authorities, after it submits its exploration plan to the US federal authorities next month.

Henry said that the Arctic remained Shell’s “most attractive single opportunity for the future”, adding that the Chukchi Sea was “by far the biggest prize”. It is believed to hold larger oil reserves than the Beaufort Sea.

Shell’s plans for the Arctic have proved deeply unpopular with environmentalists, who say that the remote location and difficult conditions make it difficult to respond should a disaster occur.

Despite spending more than $5 billion on its oil exploration campaign, Shell has yet to locate any oil-bearing rocks.

Speaking at a conference on the business potential of the polar regions on Tuesday, Robert Blaauw, Shell’s senior advisor on the Arctic, said that there would be no “rush for resources” in the Arctic and that “projects will be few and far between.”

“It will take a long time even testing, let alone developing hydrocarbon resources,” he said, adding that more scientific research would have to be undertaken before exploratory drilling could proceed to the extraction stage.

The post Shell hopes Arctic drilling will resume in 2014 appeared first on Climate Home News.

(Source: ggallice)

Ecuador: Ecuador’s President Rafael Correa has abandoned a unique and ambitious plan to persuade rich countries to pay his country not to drill for oil in a pristine Amazon rainforest preserve. (The Guardian)

New Zealand: New Zealand scaled back its target for reducing carbon emissions on Friday, saying the move was an interim step ahead of a new United Nations pact from 2020. (Reuters)

Research: Methane emissions from natural gas production are not well quantified and have the potential to offset the climate benefits of natural gas over other fossil fuels, says new research. (Wiley Online Library)

UK: The Church of England has begun legal action to claim ancient mineral rights beneath thousands of homes and farms, prompting fears the church could seek to cash in on fracking. (The Telegraph)

Ireland: Ireland will experience “huge increases” in temperatures over this century, according to a leading Irish expert on climate change. (Irish Times)

Australia: On Friday, opposition leader Tony Abbott visited a Linfox trucking depot in Melbourne, despite the fact that the company previously signed a statement supporting the idea of a carbon price and featured in a Labor government promotional video. (Sydney Morning Herald)

US: Dow Chemical’s chief executive Andrew Liveris is spearheading a public campaign against increased exports of natural gas, which he sees as a threat to a manufacturing renaissance in the United States. (New York Times)

Research: Smallholder farmers in the Amazon sell timber from trees that have grown on fallow fields to improve income, but such production can go unrecognised in official statistics — often because it is commercialised through informal channels, according to research. (Forests News)

US: After nearly three years, the White House began installing solar panels on the First Family’s residence this week, a White House official confirmed Thursday. (Washington Post)

Denmark: The Danish government has analysed 78 possible projects that will help it to achieve its 40% emissions reduction target by 2020. (RTCC)

UK: ActionAid report says biofuel costs are likely to send petrol bills spiralling, but producers disagree. (RTCC)

Research: Climate scientists have predicted maize and wheat yields could fall by 19-30% by 2065, a disparity which has now been solved by researchers at Princeton University. (RTCC)

The post Ecuador abandons Yasuni initiative to stop Amazon drilling appeared first on Climate Home News.

Natural gas flares at North Dakota’s Bakken oil fields can be seen from space (Pic: NASA Earth Observatory/ NOAA NGDC 2012)

By Sophie Yeo

The amount of gas flaring in North Dakota has more than doubled, propelling the US to join Russia, Nigeria and Iraq as one of the world’s top ten flaring countries.

Between May 2011 and May 2013, the volume of gas flared as a by-product from oil production in the Bakken formation in North Dakota grew 2.5 times, from approximately 106,000 to 266,000 Mcf per day.

It is an environmental disaster that is visible even from space.

Images taken by NASA during their “Earth at Night” project reveal that the lights from the gas flaring at the Bakken formation shine almost as brightly as the city lights of Chicago and Minneapolis.

“The U.S. is now one of the top 10 flaring countries in the world, primarily due to the rapid growth of flaring in North Dakota,” said Ryan Salmon, the report’s lead author and manager of Ceres’ oil and gas program, which produced the report.

“Although the state’s oil and gas industry is stepping up its efforts to curb flaring, the total volume of flared natural gas continues to grow. Investors are looking for producers and regulators to take more aggressive action to prevent the loss of this valuable fuel.”

This growth in the volume of flared gas has continued to grow, despite the fact that the percentage of natural gas being flared onsite peaked at 36% in September 2011.

Production of unconventional oil has grown at a ferocious rate since 2007, increasing 40 fold from 18,500 to 760,000 barrels per day. This has led to a concurrent rise in production of the associated natural gas, 29% of which is flared.

.@enviroblack Yes, it is equivalent to increasing CO2 emissions of each unit of shale gas sold by 50%. Then add on fugitive CH4 emissions.

— Chris Hope (@cwhope) July 30, 2013

The amount of flaring taking place in North Dakota is a problem both environmentally and economically. The greenhouse gas emissions that are emitted as a result of the flaring increase the carbon footprint of the oil production.

In 2012 alone, flaring resulted in the loss of about $1 billion in fuel, and emitted the greenhouse gas equivalent of adding one million cars to the roads.

Professor Paul Stevens, Fellow in Energy, Environment and Resources at Chatham House, told RTCC, “Flaring creates CO2 which is a greenhouse gas. On the other hand, if you don’t flare it and let the methane go into the atmosphere, that’s a far stronger greenhouse gas, and therefore has much greater damaging effects.

“Obviously it would be much better if it wasn’t flared at all, and re-injected into a field, but if it is burnt, then it obviously has implications for CO2 emissions and therefore for climate change.”

Poor infrastructure

In spite of the apparent economic wastefulness of flaring North Dakota’s natural gas – the reserves contain high volumes of liquids such as propane and natural gasoline, making them potentially four times more lucrative than the dry gas produced elsewhere in the US – it is still easy for companies to obtain licenses that exempt them from capturing the gas.

One of the main problems with natural gas is that it requires its own infrastructure if it is going to be captured rather than flared, which requires further investment.

The high price of oil compared to the low price of gas means that companies can argue that it is not “economically feasible” for them to install this infrastructure, and that they should therefore be exempt from flaring regulations.

Over the past two years, 95% of applications were granted by North Dakota regulators.

While the poor infrastructure is the obvious problem, 45% of flaring occurs where the wells are connected to an infrastructure, due to pipeline capacity and compression challenges.

“The flaring of natural gas is a tremendous economic waste, and it threatens the oil and gas industry’s license to operate, as well as the environment,” said Pat Zerega, senior director at Mercy Investment Services, which successfully urged a leading North Dakota oil producer to set a flaring reduction goal earlier this year.

“As oil and gas developments expand into more remote regions like North Dakota, the issue of flaring will continue to be a concern for investors, the environment and the industry.”

Stevens said, “Flaring has started to come back again because with the expansion in liquids production in the US, the infrastructure is not really there to manage a lot of the gas, so a lot of it is being flared.”

But he is optimistic about the situation in the US. He adds, “It will only be a matter of time before they manage to get the infrastructure sorted out so the flaring goes down. It’s still a much bigger problem in other parts of the world – Nigeria is the obvious example.”

The post North Dakota gas flares equal to a million extra cars on road appeared first on Climate Home News.

But the Carbon Tracker Initiative‘s latest study reveals the country is well placed to exploit huge opportunities if international efforts to develop a low carbon economy progress.

Carbon Tracker has calculated that 60-80% of stated coal, oil and gas reserves cannot be burnt in the next few decades if the world it to stay within the 2C warming target agreed in 2010. As a result it says many fossil fuel companies with significant ‘assets’ are overvalued, and risk causing another financial crisis.

This report indicates Brazil is in a relatively good position, with a strong renewable energy sector and low cost oil reserves located in the ‘pre-salt’ region off its Atlantic coast.

Experts predict wind energy will increase rapidly in the country. (Source: Heitor Carvalho Jorge)

“Investing in a 2°C world will have winners and losers – Brazil may well be placed to come out ahead,” said Luke Sussams, senior researcher, Carbon Tracker.

The good news for Brazil is that much of its oil production is considered “burnable” because it is low cost and low risk. But the report says there will come a point when the Brazilian state-owned oil company Petrobras has to make a decision over future drilling.

“The challenge for investors that is unique to Brazil is that they will need to understand and identify at which point development of the pre-salt reserves becomes unviable in a carbon constrained environment,” the report says.

The estimated size of the pre-salt reserves in Brazil varies between 70 and 100 billion barrels of oil – approximately 7-10 times the size of current proven oil and gas reserves.

Energy options

The alternative to developing its oil and gas sectors in Brazil is to increase investment in its burgeoning renewable sector.

Brazil currently sources over 40% of its energy from renewables, and is currently the second largest producer of biofuels in the world behind the US according to a recent study by Bloomberg New Energy Finance (BNEF).

Combined with its established hydropower programme, Bloomberg estimates these two sectors alone have the ‘reserves’ equivalent to two fifths of Brazil’s oil and gas reserves. Wind energy is also predicted to increase rapidly in the country.

According to Carbon Tracker, renewables in Brazil’s energy mix are expected to increase by 4%, led by biofuels (+5.1%), while coal (+0.5%) and gas (+0.6%) are expected to grow more timidly. Furthermore, oil will decrease by 5.3%.

If these predictions are proved right, Brazil could continue on the path to achieve a low carbon economy with an energy mix based fundamentally on renewable sources, even with the increase in the production of fossil fuels.

“Brazil comes out very favourably when compared to other countries seeking to develop significant hydrocarbons. South Africa has a domestic focus on coal, whilst Australia is reliant on coal export,” the report says.

“The focus of Brazil on low-cost production of oil for the global market puts it in a strong competitive position to gain some of the carbon budget which is allocated to the combustion of oil for transport. Brazil’s strong renewable resources base also provides high exposure to alternative markets which should prosper in a low carbon world, whilst also maintaining Brazil’s domestic sustainability”.

The post Brazil at climate change crossroads – Carbon Tracker appeared first on Climate Home News.

Developing countries’ demand for oil has overtaken rich nations’ for the first time, the International Energy Agency (IEA) has revealed.

Data for the last quarter shows that members of the Organisation for Economic and Cooperation and Development (OECD), fell behind non-OECD countries for the first time.

The IEA Medium-Term Oil Market Report found that the demand for oil products, liquid fuels, transport fuels and petrochemicals, will jump from 49% to 54% from 2012 to 2018.

“The idea that non-OECD economies would overtake the OECD nations is nothing new, but now it is happening, and it is happening fast,” said Maria van der Hoeven, executive director of the IEA at the launch of the report on Tuesday.

“It is happening faster than expected. There is a growing perception that the peak in OECD oil demand, including the US, is behind us,” she added.

“The non-OECD growth has been led by China but Africa is also becoming increasingly important.”

IEA Executive director Maria van der Hoeven says the shift in oil demand is no surprise (Source: IEA)

As emerging economies develop and the middle class grows, key indicators like car ownership increase. The World Bank estimates that the number of motor vehicles per 1000 people in China has increased from 37 in 2008 to 58 in 2010.

The growth in oil demand isn’t exclusively from transport. The consumption of plastic is increasing too. In India it has grown from around 5kg per person today to 20kg to 2020, according to industry data from inside the country.

Developing nations are in the unique position of being able to leapfrog oil-based technologies with the right technical, logistical and financial support.

A number of options to supersede oil-based products already exist or are in development.

Here are some of the options alternatives that could curb the growth of oil demand in developing nations and set them further down the path of low carbon development:

Nanocellulose

Nature’s wonderstuff consists of long molecules that make up tree trunks, cotton and cardboard and has a variety of applications. Scientists at the University of Texas have found a way to use bacteria to boost the nanocellulose production rates of algae. This can then in turn be used to produce more sustainable biofuels to cut down on liquid fossil fuel use.

Nanocellulose can also be used to produce alternatives to plastic or to reinforce traditional plastics, cutting down the amount of oil needed.

Solar

Those living rurally in developing countries are often unable to connect to the electricity grid. Diesel generators and kerosene lighting often fill the void. A number of organisations are looking to supply small scale solar power to bring electricity to communities that are located off the main electricity grid.

Azuri Technologies offers pay-as-you-go solar power in rural Africa. Users pay a small up-front cost with the rest of the payment for the panel, cabling and lights funded out of the payments.

Off grid solar is one of many solutions that can help cut the demand for oil in developing countries. (Source: Eight19)

E.coli diesel

There are other biofuel production options under development that sidestep the need to use crops like corn and sugar cane that could alternatively be used for food.

Shell-funded research at the University of Exeter is experimenting with a modified version of the E.coli bug, more commonly associated with food poisoning, to produce biodiesel. E.coli cells convert sugars into oils and the modified E.coli produces molecules almost identical to regular diesel.

The virus can be fed agricultural and food waste and could potentially be run on human and animal waste too.

Coffee fired engines

The UK’s Cooperative Group sponsored the conversion of a Ford pick-up truck to run on waste material from coffee crops. The Bean Machine holds the not-so-hotly contested title of the fastest coffee-powered vehicle in the world. It can also run on wood pellets and the concept could be extended to use other agricultural waste.

Gas powered transport

The iconic tuk-tuk transport common in many parts of Asia usually run on inefficient 2-stroke petrol or diesel. The Philippines has experimented with converting some of its auto rickshaws to electricity. Bangladesh has switched its fleet to Liquid Petroleum Gas (LPG), still a fossil fuel but unpegged at least from global oil prices with lower pollutant levels and less impact on the climate.

The post Five reasons why an oil-free future is possible appeared first on Climate Home News.

nef warns that nations’ dependence on oil could cripple their economies and prices rise (Source: Damian Gadal)

‘Economic peak oil’ could cripple the world’s economies by 2014 according to a UK-based think tank, which recommends governments take urgent action to wean their economies off fossil fuels.

In its latest report the New Economics Foundation (nef) argues that the end of cheap oil, and a new age of sustained high oil prices will bring economies to a standstill, create unemployment and deepen poverty.

The Foundation argues that the threat is as real and imminent as the banking crisis which hit the developed world in 2006.

The traditional definition for peak oil is the point at which production of cheap, conventional oil peaks, plateaus and declines relative to continuing demand.

The report suggests that the case for peak oil is economically driven. Nef defines ‘economic peak oil’ as the point when the cost of supply exceeds the price economies can pay without significantly disrupting economic activity.

In its World Energy Outlook 2012, released yesterday, the International Energy Agency (IEA) revealed fossil fuel subsides increased 30% to $523 billion in 2011, hiding the threat of high oil prices.

The IEA also warned that only one-third of current proven fossil fuel reserves can be burned before the 2°C threshold of global warming is crossed – a warning to countries that they must leave these fuels in the ground.

Nef says the looming threat of ‘economic peak oil’ – which could be reached as early as 2014 or 2015 – offers another reason for countries to reduce their reliance on fossil fuels.

With limited known new sources of cheap oil and increasing efficiency being a slow progress, nef argues that the only option for limiting oil price impacts is by transitioning to a low carbon economy.

Prepared countries would continue to prosper, but this will need political leadership driving this transition, nef warns.

Read the full nef report.

The post Could ‘economic peak oil’ rival the banking crisis? appeared first on Climate Home News.

– The day’s top climate change stories as chosen by RTCC
– Tweet @RTCCnewswire and use #RTCCLive hashtag
– Send your thoughts to ts@rtcc.org
– Updated from 0900-1700 BST (GMT+1) 

Latest news – Tuesday 24 July

1700 The debate over what impact the US drought could have over food prices still rages. This article in the Financial Times warns that the world should brace itself for a global food crisis as climate change takes hold.

1600 Access to drinking water is a major issue in the developing world. Could a new solar powered water-filter bag be the answer?

1500 India says it is spending 2.6% of its GDP to deal with the impacts of climate change and is calling on rich nations to honour their commitments to address green issues.

1350 The San Diego chapter of the Sierra Club have filed a lawsuit against San Diego County for not doing enough to thwart global warming. The group challenged the county’s Climate Action Plan, saying San Diego needs a more enforceable strategy to reduce emissions.

1300 Blog post from GLOBE International Secretary General Adam Matthews argues that now is the time for the EU to work more with China rather than bickering over climate policy positions at UNFCCC negotiations.

And sticking with China, the country has identified 20 technologies that it will focus on to limit the effects of climate change and help it to adapt.

1200 Mexico’s new president could stop the country’s climate laws before they have even been fully implemented, say policy experts.

Enrique Pena Neito – who will take office in December after winning the election earlier this month – and his party the Institutional Revolutionary Party’s main focus is on accelerating economic growth and ramping-up oil and gas production.

1100 Every wondered what the carbon footprint of your summer holiday is? A new map, featured on the Guardian website, tracks the movements of a sample of residents from Greater Manchester and West Sussex to track the carbon footprint of UK leisure flying.

0900 Americans will face higher food prices because of the drought this summer, but the increase should not have a lasting impact on inflation, according to analysts.

The state of England’s natural world and the sustainability of its society and economy are set to be tracked as the Department for Environment and Rural Affairs releases its new sustainable development indicators.

China is set to become a major player in the North Sea, and operator of its biggest oil field, after announcing two deals worth almost £11 billion.

RTCC’s John Parnell takes a look at how monitoring and controlling traffic flow could be the key to cutting emissions from a sector responsible for 9.9% of global greenhouse gases.

Top Tweets

CDM board rejects coal projects…

RT @ideacarbon:Clean coal projects unlikely to play a big role in the EU ETS following CDM EB rejection alturl.com/ch84w #CO2 #Coal #CDM

— UN_CarbonMechs (@UN_CarbonMechs) July 24, 2012

If you haven’t already read this blog by Bill McKibben in Rolling Stone, you should.

Wow — 450,000 people read @BillMcKibben‘s startling new article about the math on climate change. If you haven’t: bit.ly/NRdlCN

— 350 dot org (@350) July 24, 2012

More on the wild weather being experienced this summer in the US…

You can’t connect any 1 hot day directly to climate change. You can connect the last 15 hot years, nyti.ms/MRqs54. — David Leonhardt (@DLeonhardt) July 22, 2012

Stat of the day

Iceland is expected to be the first nation running off 100% renewable energy in a few decades time.

For more great stats visit the Greenpeace website.

Picture of the day

Flying in to the UK, over E. Sussex coast. View utterly ruined by Camber Wind Farm; looks like industrial estate. Not. twitter.com/MLiebreich/sta…

— Michael Liebreich (@MLiebreich) July 24, 2012

Video of the day

The Climate Institute of Australia asked 40 people what they thought about climate change…

The post Climate Live: US drought send food prices up, England tracks natural capital and China oil industry becomes player in North Sea appeared first on Climate Home News.

Van der Hoeven says protecting consumers from high oil prices is not always the right thing to do. (Source: Wikimedia/Rama)

High oil prices must not be offset by government money, the head of the International Energy Agency (IEA) has told a conference in Kuwait.

Maria van der Hoeven said that governments had to review how they interact with the energy industry, including their climate change policies.

“Governments also need to think carefully about price subsidies and taxes. End-user subsidies, while carrying noble social objectives, are often economically inefficient and distort price signals to consumers,” said the IEA executive director.

“The public will not respond to triple digit international prices if it is paying only a fraction of that at the pump,” she said.

Rising oil prices, largely due to increasing instability in the Middle East, can encourage consumers to change behaviour, making fewer car journeys and increasing energy efficiency at home.

However, in developing countries, spikes in cost of oil can price some out of the market.

With many communities in the developing world not connected to an electricity grid, they frequently rely on oil for generators, cook stoves and kerosene lighting.

Van der Hoeven also called for governments to review environmental policies relating to energy to ensure they are “predictable, practical, economic and internationally coordinated”.

A number of figures have recently called for the removal of all fossil fuel subsidies including President Obama and the EU Climate Change Commissioner Connie Hedegaard.

The post IEA chief: Stop oil subsidies from meddling with fuel prices appeared first on Climate Home News.

Water’s significance to the Middle East has been underlined with the announcement that an International Water Summit will be held in Abu Dhabi next year.

The summit will be held alongside the World Future Energy Summit in 2013, in association with the International Water Association (IWA).

Speaking at a press conference, Dr Rashid Ahmad Bin Fahd, United Arab Emirates Minister of Environment and Water said the new initiative was a response to the growing importance the UAE government gives to water.

“Sheikh Mohammad [Crown Prince of Abu Dhabi] underlined in a lecture last month that water is much more important than oil for the UAE and its people,” he said.

“As a result of the increased pressure on this valuable resource due to various factors including overpopulation, agricultural and economic growth, and unsustainable consumption patterns, various countries around the world are currently facing real problems with water resources.”

“Climate change has increased the pressure on this resource as well,” added Bin Fahd.

Water scarcity – both in terms of clean drinking water and that used for agricultural irrigation – are already putting pressure on many countries, including those in the Middle East.

Hydro-climatic hazards such as droughts and floods are likely to further exacerbate the problem and could put more pressure on existing social tensions in the region.

This announcement comes the same week as a European Commission event entitled ‘Climate change and water security in the Middle East’ looks to address these problems.

In 2011 a study from risk analysts Maplecroft found much of the Gulf and North Africa ranking high or extreme for water stress, compared to much of Europe where water stress is low.

Many commentators are already predicting that water resources will be the next big issue in these regions which have already experienced political and social unrest over the last year.

The post Water summit underlines growing importance in Middle East appeared first on Climate Home News.