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OPINION: Jeremy Leggett
The year was only two days old when the US State Department made clear its intentions on climate change.
Secretary of State John Kerry has been quietly pursuing “a systematic, top-down push to create an agencywide focus on global warming”, The New York Times reported. “His goal is to become the lead broker of a global climate treaty in 2015 that will commit the United States and other nations to historic reductions in fossil-fuel pollution.”
Four days later, Christiana Figueres, the UN official in charge of negotiations for that treaty, came in strongly behind this encouraging development. The world is running out of time, she warned. The Warsaw climate summit in November had ended with commitments only to do more homework. That homework will need to end up in deep cuts in fossil-fuel burning and a significant acceleration of renewables.
On 7 January, ministers from Germany, France and six other EU countries called for Brussels to set a 2030 goal for renewables. They want a target consistent with the 2°C global warming ceiling that is the basis for European and much other international policymaking.
The battle lines on climate become ever clearer. In November, research showed that just 90 companies have caused two thirds of greenhouse gas emissions since the dawn of the industrial age.
In December, the most extensive study to date of the anti-climate action lobby showed that conservative groups may have spent up to $1bn on promoting climate science denial and generally stalling policymaking, including the active suppression of renewables. It is clear to everyone who is familiar with the politics of climate that there is much traffic between conservative funders defending inaction on climate and the main emitters.
There are growing signs, though, that the investment environment is souring on Big Energy over climate.
Figueres warned that fund managers and pension-fund trustees will increasingly have to act consistently with this imperative to fulfil their duty of fiduciary responsibility. In private conversations at the UN, the talk was of potential jail sentences in the years to come if they don’t.
Meanwhile, Shell issued its first profit warning in ten years while the UN meeting was on. Others in Big Oil are faring little better. And the financial press is starting to notice the large deficits being run by the US shale industry. On 2 January, The Wall Street Journal printed a story that large foreign investments in US shale oil and gas leases are drying up rapidly. In 2013, foreign companies spent only $3.4bn on stakes in US shale formations — less than half the 2012 total and a tenth of what they spent in 2011.
The Financial Times ran an article headlined “Shale boom leaves investors underwhelmed”. The US independent exploration and production sector has achieved spectacular feats in developing shale, the paper reported, but it has “done nothing to excite its shareholders for years”.
Meanwhile, renewables fight on against the increasingly desperate fossil-fuel industry.
On the downside, investment in clean energy fell for the second year running as the energy establishment’s rearguard actions took their toll on pro-renewables policymaking. On the upside, good-news stories continued to clock up. Wind power broke monthly, weekly and daily records in the UK in January. It helped ward off outages during the icy blast in the US. Headlines pointed to a “Solar panel craze on Wall Street” as installations grew globally.
But still most of the incumbency refuses to search for new business models. The Big Six UK energy utilities have begun cancelling wind projects. Total announced that it would be joining the pursuit of a British shale boom. Its supporters in the government, including, sadly, Prime Minister David Cameron, plan to bribe councils to accept fracking. Renewables companies will no doubt be consulting their lawyers about the scope to sue for restraint of trade.
We are in for an interesting year.
All the evidence for this article can be found at www.jeremyleggett.net
Jeremy Leggett is founder and non-executive chairman of international PV company Solarcentury. His latest book, The Energy of Nations: Risk Blindness and the Road to Renaissance, is published by Routledge