The world's largest oil companies scored record profits last year as they extracted ancient carbon from the ground for deposition into the atmosphere. ExxonMobil, Chevron, Shell, Total, and BP raked in nearly $200 billion. It was an opportunity to make long-term investments in carbon-free energy like solar, wind, geothermal, biomass, and hydropower. The global renewable energy market is robust. In June, the International Energy Agency (IEA) expected renewable energy would achieve unprecedented growth in 2023. The IEA estimates the world's renewable energy capacity will grow by the end of 2024 to match the total power capacity of China and the United States combined.
Instead, the major oil companies used their windfall to increase shareholder dividends and boost share prices by buying back their stock. Why? Greed is the obvious reason. The industry rejects the science that says most of the world's proven oil, natural gas, and coal reserves must remain in the ground to keep the Earth from warming more than 1.5 degrees Centigrade. Last year, the IEA warned that fossil fuel extraction must stop if we are to achieve the widely accepted goal of net zero carbon dioxide emissions by 2050.
However, the industry still adheres to the philosophy that its only obligation is to make money for shareholders. The idea it must walk away from trillions of dollars in underground assets is heresy. Yet, it must shift to producing carbon-free energy to survive long term. It rationalizes that technical fixes will reconcile the contradiction between carbon fuels and decarbonization. But there are no commercially viable ways to trap and bury its pollution, vacuum carbon dioxide out of the air, or geoengineer the planet's carbon cycle. But even if there were, none of these fanciful fixes would be able to compete with a global shift to clean energy and greater energy efficiency.
Government and social subsidies enable the industry's dangerous illusions. Although 90 nations promise to achieve net-zero carbon emissions, the International Monetary Fund (IMF) says the oil, coal, and gas industries received $7 trillion in direct and indirect public subsidies last year. According to the Rainforest Action Network and several other non-government organizations, the world's 60 largest banks, including 49 that promise to achieve net-zero emissions, provided $5.5 trillion to oil, gas, and coal enterprises in the seven years after nations signed the Paris climate agreement.
Industry analysts say pipelines are on a "steady growth trajectory" that will cost more than $273 billion by 2027. As 2023 began, 8,548 miles of pipelines were under construction or soon will be in North America alone, while another 10,321 miles were planned. The IEA projected the world would invest $950 billion in oil, gas, and coal production this year, up more than 6 percent from 2022.
However, it's reasonable to assume political pressure will build to phase out fossil energy use as global warming's impacts become more severe. The result will be stranded infrastructure investments, including "zombie pipelines" that could leak toxins and pollute increasingly precious groundwater. This is already an issue in the United States.
The ongoing investments in fossil fuels and the need for an orderly transition to a new energy economy should be high on the agenda of COP-28, the international conference starting at the end of this month, to assess the world's progress in mitigating and adapting to global warming. At COP-27 a year ago, nations refused to set a deadline for phasing out these fuels. They'll probably refuse again because the man who will preside over COP-28 is the CEO of the Abu Dhabi National Oil Company.
He told The Guardian newspaper that while the fossil-fuel phaseout is inevitable, the onus is on consumers, not oil companies. The paper quoted him saying, "It's the consumer who contributes to increasing CO2 emissions, not the producer," and discussing a fossil-fuel phaseout is "a trap of division."
Clearly, the people who control our future – lawmakers, investors, corporate executives – are engaged in near-termism, a refusal to look past the next business quarter, shareholder meeting, or election. Yet we have been amply warned about what's coming if we don't act now.
The Intergovernmental Panel on Climate Change (IPCC) says multiple drivers will produce climate impacts in all world regions by 2100. There will be 14 times as many deadly heat waves. Oceans will swallow entire cities. Northern Europe will suffer frequent flooding, while the Arabian Peninsula will get 70 percent less rain. Deadly weather will occur more often, be more intense, and last longer. And these disasters will not always happen one at a time. We will see "compound" extreme events with enormous impacts on virtually everything, from personal health and security to food and fresh water supplies.
The year 2100 seems far away, but it isn't. We may think we have time for change, but we don't. The dystopia scientists describe is within the expected lifetimes of children born today. For example, a child born in Brazil this year will be 76 at the turn of the century. A child born in the UK in 2017 will be 86. A baby born two years ago in the United States will be 80.
Global warming is like a rapidly metastasizing cancer. We should have begun treating it as soon as we diagnosed it. It isn't waiting for us to get our act together.
In the United States, for example, the national government declared 16 times as many disasters last year as it did in 1988. With this year's hurricane season still to come, the government ran out of disaster response and recovery funds. Insurance companies have underestimated the extent of weather disasters, leaving nearly 40 million homes in the US underinsured and facing significant increases in insurance rates. Many homeowners will lose their insurance because it is unaffordable, or insurers have pulled out of their regions. A government committee warns, "Climate change poses a major risk to the stability of the US financial system and to its ability to sustain the American economy." The Deloitte Economic Institute warns that without rapid changes in federal policies, climate change could cost the economy $14.5 trillion over the next 50 years. Short-termism is as dangerous as outright climate denial. It's like careening down a winding road at night without using headlights.
We cannot afford another COP of unmet promises and carbon coddling.
We should be pragmatic about our response, but the situation demands climate pragmatism – the acceptance that the Earth, the atmosphere, and the laws of physics don't negotiate. If we want to keep the world livable, it is we who must change.