The Paris climate change talks – the 21st annual Conference of the Parties – begins this Monday, and there is a lot at stake.
For the environmentalists, and anyone who can understand basic science, it is about protecting the world against the ravages of runaway climate change. The most in industry, it is about sending the policy and market signal that this is finally being taken seriously. For the fossil fuel industry, it is about protecting their future.
Here are some simple graphs that illustrate the challenge ahead.
Graph 1: The world is warming: The first graph is the state of the climate. The World Meteorological Organisation released its annual update this week, noting that the world is on track for its hottest year, and the hottest five years on record.
It estimates that temperatures will have already risen by more than 1C by the end of 2015 over pre-industrial averages. That is half way to the agreed “limit” that the world has vowed to avoid. Even at 2C, there is perhaps only a 50-50 chance of avoiding runaway impacts, hence the push to tighten the target to 1.5c.
Still, climate deniers look at that graph and say, “nope, no warming here” and still hang on to their no warming since 1998 mantra.
Graph 2: The pledges are missing the target. So far, the pledges received by more than 170 nations amount to a small reduction from where the world was heading, but nowhere near enough to cap warming at an average 2C.
As this graph above from HSBC shows, so far the reductions amount to 4 gigatonnes of CO2 equivalent. There is another 15GT/CO2-e that needs to be reduced each year by 2030. The IEA and IRENA and others think that can be done largely through deployment of renewable energy and energy efficiency.
Graph 3: Australia’s pledges miss the target by a long way: This graph above, from The Climate Istitute, illustrates the challenge for Australia. The Turnbull government insists it is at the front of the pack, but if it is serious about the 2C target, it will have to take drastic action post 2030 unless its targets are increased.
The problem for the Turnbull government is that as fast as they are buying emission reductions through the Direct Action program, the rest of the economy is busily increasing them. This is particularly the case in the electricity sector where emissions have jumped sharply as more coal is burned after the repeal of the carbon price.
Australia says it will meet its 2020 targets from the Kyoto treaty, but that is largely through a generous hangover from its initial 2012 allowance, which meant that Australia could increase emissions from 1990 levels rather than reduce them.
That means Australia still has no mechanism to effect an economy wide decarbonisation program. Repeated scenario planning from the likes of the Climate Change Authority and ClimateWorks Australia have been ignored. Soon enough, Australia will no longer be able to rely on accounting tricks. It will need a real policy.
Graph 4: Whose fault is it anyway? One of the most intractable problems of the climate change negotiations has been the notion of responsibility. Greg Hunt likes to focus on the emission growth of developing nations such as China and India when seeking to justify Australia’s modest emissions reduction targets.
That’s an argument that might stick in Australia, but not so much on the international stage, where the question of differentiated responsibilities is paramount.
It is true that China is by far the biggest emitter, and India is catching up quickly. But this graph above puts it in some context, with China and India having very low emissions per capita since 1850. It is largely those emissions which have taken the world to average warming of 1C since pre-industrial times.
Graph 5: China and the US take centre stage. This next graph puts those figures in an added context, the historic and recent emissions from the two biggest emitters, two biggest economies, and two most powerful nations, China and the US.
China has rapidly overtaken the US in absolute emissions, although – despite a recent rise – its current emissions pre capita remain significantly below that of the US, and in terms of emissions per capita, its efforts can be seen in the third graph of the three above.
It was the inability of China and the US to agree on much that undermined the Copenhagen talks, but bilateral negotiations between Barack Obama and Xi Jinping has resulted in a significant breakthrough, although there are still some difficulties, particularly around finance and verification.
Graph 6: It’s all about the budget. Back to the carbon budget, because it is that which will count most for business, investors and governments. The graph above, from Barclays, highlights the two budgets defined by the UNFCCC and the IPCC – the first a strict budget consistent with a 66 per cent chance of capping temperature at 2C, and the second giving a 50-50 chance.
Either way, the world is set to burn through more than half of its carbon budget within the next 15 years. If the stricter budget is observed, three quarters will be gone by 2030, precipitating a major reduction in fossil fuel burning in subsequent years.
Graph 7: Big black hole for coal: The most dramatic impact on the fossil fuel industry is felt by the coal industry. As this graph above from HSBC shows, coal is affected only slightly by the current country pledges, but if a trajectory to the 2C scenario is locked in, then the use of coal in electricity generation is virtually redundant by 2050.
Graph 7: Fossil fuels on the slide: And coal is not the biggest loser, in absolute terms, as this graph, again from Barclays, shows an estimated reduction in fossil fuel revenues of $US34 trillion from now to 2040 under the 2C scenario.
While coal is the biggest loser in percentage terms, but in absolute loss of revenues, the oil industry would be down more than $US22 trillion.
Barclays notes that COP-21 in itself is “clearly not going to put the world on a 2°C track”. But that does not mean that fossil-fuel companies can simply carry on with business as usual and ignore the implications of the IEA’s 450-ppm pathway. A strong agreement in Paris will still send a clear signal for future investment patterns.
