Ireland is close to becoming the first country in the world to completely divest from fossil fuels, thanks to a new bill recently passed by the Irish Parliament.
If set into law after review, the vote – which passed with 90 to 53 votes last Thursday – would halt public funding of fossil fuels like coal, oil, and gas from the €8 billion (US$8.6 billion) Ireland Strategic Investment Fund.
"This principle of ethical financing is a symbol to these global corporations that their continual manipulation of climate science, denial of the existence of climate change, and their controversial lobbying practices of politicians around the world is no longer tolerated," Deputy Thomas Pringle, who introduced the bill, told the media.
"We cannot accept their actions while millions of poor people in underdeveloped nations bear the brunt of climate change forces as they experience famine, mass emigration, and civil unrest as a result."
At this stage, the bill still has to be signed into law after review. If it passes, the Ireland Strategic Investment Fund would have to drop all investments in fossil fuel companies over the next five years.
This means public money would stop going towards energy juggernauts like Exxon. It would also bar the country from investing in fossil fuel companies in the future.
There's been no word just yet about where the freed-up funds will be used, though the Sustainable Energy Authority of Ireland (SEAI) would be a good fit.
The move has been applauded by environmental groups throughout the country.
"The Irish political system is now finally acknowledging what the overwhelming majority of people already know: that to have a fighting chance to combat catastrophic climate change, we must phase out fossil fuels and stop the growth of the industry that is driving this crisis," Éamonn Meehan, executive director of the Catholic poverty charity Trócaire, told the Belfast Telegraph.
The bill would also mark the first time an entire country divested totally from fossil fuels, though some countries have started marching toward that end goal already.
Back in 2015, Norway decided to divest from coal, pulling out a whopping €7.4 billion (US$8 billion) investment from their sovereign wealth fund. But the country has yet to fully divest from fossil fuel interests.
Besides taking on the funding of fossil fuel companies, the Irish parliament is also starting to examine their relationship with fracking – a controversial process to obtain natural gas from deep inside underground rock beds by using water to force it to the surface.
At this stage, it's not clear what will result from that meeting, but it'll be interesting to see how the world reacts to Ireland’s clear move away from fossil fuels.
Fossil fuel reserves would crush climate goals: report
Developed oil, gas and coal reserves, if exhausted, are enough to push Earth well past the threshold for dangerous climate change, according to a report published Thursday.
Fossil fuels from active fields and mines allowed to operate through their projected lifetimes would punch through the two degree Celsius cap for global warming laid down in the Paris Agreement, said the report, based on industry data.
The analysis by Oil Change International was released the day after world leaders gathered in New York to speed the global climate pact, signed by 195 nations in December, into force.
That is likely to happen before the end of the year, UN Secretary-General Ban Ki-moon said Wednesday.
As climate change impacts—heat waves, deadly flooding, storm surges fuelled by rising seas—hit earlier and harder than predicted, pressure has grown to accelerate the transition away from carbon-intensive fossil fuels.
The coal industry has been hit hardest, with moratoriums on new plants put in place this year in China and Indonesia, along with one covering federal land in the United States.
The Paris Agreement calls for holding global warming at "well below" two degrees Celsius (3.6 degrees Fahrenheit) compared to pre-Industrial Revolution levels, and under 1.5 C (2.7 F) if possible.
Existing reserves of oil and gas alone, even without coal, would be enough to breach the 1.5 C barrier, according to the 60-page report.
"If the world is serious about achieving the goals agreed in Paris, governments have to stop the expansion of the fossil fuel industry," said Stephen Kretzmann, executive director of Oil Change International.
Many of 200 climate scientists gathered in Oxford, England this week at a conference on the more stringent climate change goal have said that staying under 1.5 C may be out of reach.
An incentive to continue
The planet has already heated up 1.0 C (1.8 F), and could see its first year above 1.5 C "within a decade," said Richard Betts, head of climate impacts research at the Met Office Hadley Centre in England.
The new analysis compares the projected emissions of burning fossil fuels from current operations to the carbon "budget"—the sum total of CO2 that can be emitted without exceeding the 2C limit.
Scientists calculate that budget to be less than 1,000 billion tonnes of CO2.
Previous studies of these limits have focused more on the consumption of oil, gas and coal rather than the potential for supply.
"Once an extraction operation is underway, it creates an incentive to continue so as to recoup investment and create profits," Greg Muttitt, lead author of the report, said.
This is how carbon emissions get "locked in", he added.
Projected investment in new fields, mines and transportation infrastructure over the next 20 years is $14 trillion (12.5 trillion euros), according to industry figures.
Some of the biggest projects in the pipeline are in the United States, Canada, Australia, India, Russia, Qatar and Iran.
For coal—the dirtiest, or most carbon-polluting, of the major fossil fuels—two countries, Australia and India, are moving forward with large-scale new mining development.
In 2015, India set a target of tripling national coal extraction to 1.5 billion tonnes per year by 2020, though some commentators say the country will be hard put to reach that goal.
Historically, India has not been a major contributor to climate change, and even today its population—on a per capita basis—produces far less carbon pollution than Western nations, or even China.
The report's findings were based on data from Rystad Energy, a leading oil and gas consultancy.
3 reasons why fossil fuel companies should disclose their reserves
Fossil fuel companies hold vast oil, gas and coal reserves that help determine their market value. These reserves are also the basis to understanding the potential climate risks of burning these fuels. Yet not a single fossil fuel company in the world discloses potential emissions from their reserves – and that is a big problem.
This emissions information is important for investors, as well as the broader public, to understand the risks to these companies and the planet. Research shows that a large portion of the world’s fossil fuel reserves will have to be left in the ground if we are to avert the most dangerous impacts of climate change. And the Financial Stability Board – the 20 most powerful central bankers and finance ministries in the world – today released a landmark report which calls for companies to disclose climate-related risks, both financial and physical.
Part of the challenge for fossil fuel companies is that until now there hasn’t been a consistent, credible methodology for them to calculate their potential emissions. Today, WRI launched the first-ever comprehensive methodology to measure and report potential emissions from oil, gas and coal reserves.
Companies owe it to their investors and to the public to use this new guidance and reveal the potential impacts of their reserves. There are three reasons:
1. If the entire reserves of fossil fuel companies are extracted and burned, the world will veer way off track to tackling climate change.
Scientists overwhelmingly agree that preventing the worst impacts of climate change will require limiting warming to 2 degrees C (3.6. degrees F). The world’s “carbon budget,” or the amount of emissions it can release and still stick to the 2-degree limit, is 986 GtCO2 between 2011 and 2100.
Failing to stay within this budget could warm the planet past key tipping points, which would bring dire consequences such as wilted croplands, bleached coral reefs, mass extinctions of animals, and some regions such as North Africa and the Middle East becoming uninhabitable.
Fossil fuel companies have enough carbon stored in reserves to take us well over the 2-degree threshold. Preliminary analyses show that the 200 largest publicly traded companies (by reserve size) have at least 1,541 GtCO2 worth of potential emissions stored in their reserves, or 156 per cent of the world’s carbon budget.
Alarmingly, this figure is based only on fuel burning, leaving out an important emissions source – the production and processing of the fuels. These upstream sources account for between five per cent and 37 per cent (an average of 15 per cent) of fossil fuels’ total emissions, from exploration to consumption.
These upstream emissions are expected to increase as the world’s conventional fields get depleted and companies turn to fields that require more energy to extract, such as oil sands.
2. Investors are increasingly asking for information on emissions performance.
In light of the climate challenge and government commitments to address it, disclosure requirements are on the rise as investors want to know more about their investments, especially in the fossil fuels arena.
New analysis by Reuters shows that 48 per cent of the world’s 4,400 largest companies report their emissions to investors and stakeholders. This disclosure trend will continue, as socially responsible investing has grown 10-fold since the 1990s and continues to outpace other strategies.
Investors are most concerned about the future performance of companies, and data on potential emissions from reserves in the ground offer valuable information about a company’s future prospects. Increasing climate protection policies, like Canada’s carbon tax, could affect the valuation of their assets and eventually profits, so it’s essential for investors to know the potential emissions so that they can calculate the expected liability.
Investors have already collaborated on a number of initiatives to standardise the disclosure of carbon-related data and improve data availability in the fossil fuel industry. For example, CDP’s annual climate change questionnaire has a module tailored to the oil and gas industry that calls on companies to disclose production and reserves by reserve type, emissions by stage in the value chain and development strategy.
The Global Climate Disclosure Framework, a reporting guide issued by the Institutional Investors Group on Climate Change, Ceres and the Investor Group on Climate Change, calls on oil and gas companies to disclose the carbon intensity of their operations. Potential emissions data offers a complimentary perspective here because, when combined with data on reserve size, it is an indicator of the carbon intensity of future production.
3. Companies are reducing the size of their reported reserves to reflect big structural changes in the economy.
In order to keep global temperature rise within range of safe levels, fossil fuel companies will need to consider a major shift in strategies, including limits on how much of their reserves they would use. Indeed, we’re already starting to see how this scenario could play out as a result of dropping oil prices.
For example, ExxonMobil recently announced that it no longer considers 20 per cent, or 4.5 billion barrels, of its proved oil reserves to be extractable. This reduction applies mostly to the company’s oil sand deposits in Canada, which are expensive to extract and use, and therefore particularly sensitive to dips in oil prices. The write-down is possibly the largest single-company revision in the history of the industry. This example suggests what governments could accomplish leveraging market forces to achieve their climate policies.
By reporting potential emissions, a company would acknowledge its contribution to the carbon budget and implicitly show that it is preparing to respond to policies and market signals for a low-carbon future, such as a price on carbon pollution.
The demand is there—and now with the new reporting framework released today, companies have the resources to act. It’s now up to companies to step up and start disclosing their potential emissions as an integral part of their emissions reports.