So what would happen if, tomorrow, Chase announced that it was going to phase out lending to the fossil-fuel industryâ€”probably first by restricting loans for particular projects, and then by ending general corporate lending and banning the underwriting of new debt and equity for fossil-fuel companies? â€œWells Fargo and Citi would follow within days,â€ according to Tim Buckley, a former managing director at Citi, who now serves as the director of energy-finance studies for Australasia at the Institute for Energy Economics and Financial Analysis (I.E.E.F.A.), a Cleveland-based nonprofit research group. In fact, â€œtheyâ€™d look to go one step further, so as to pretend they werenâ€™t really sheep. And this would have global ramificationsâ€”the music would stop, very suddenly.â€ Wall Street, Buckley said, â€œcan be very deaf to warnings for years, but the financial-market lemmings will suddenly act in unisonâ€ once the biggest players send a signal. Everyone knows that the fossil-fuel era will come to an end sooner or later; a giant bank pulling back would send an unmistakable signal that it will be sooner. The biggest oil companies might still be able to self-finance their continuing operations, but â€œthe pure-play frackers will find finance impossible,â€ Buckley said. â€œCoal-dependent rail carriers and port owners and coal-mine contracting firms will all be hit.â€
The prospect is appealing and seems to hold promise. It’s also interesting from the perspective of liberal versus anti-capitalist environmentalism. If the global banking industry provides substantial help in pushing the world economy off fossil fuels, what would that imply for analyses that hold capitalism itself to be the root cause of climate change?
If anything, we seem less well prepared than ever to respond. Instead of a brave experiment in cooperation and moving beyond narrow notions of national sovereignty, the EU is fracturing into bickering sub units. The United States is run by incompetents. Canada’s government is scrupulously committed to fighting climate change, just as long as that doesn’t actually require reducing domestic or global GHG pollution. And meanwhile Indian and Chinese fossil fuel demand keeps galloping upward.
There’s the increasingly abstract hope that as global conditions continue to worsen somehow governments will get seriously, and then there is the sealed envelope hope/fear that we will contain the worst via geoengineering.
In the midst of all the recent colourful political events south of the border, you might have easily missed an irony that Alberta would be wise to pay attention to. Even as the U.S. administration promised to roll back environmental regulations and climate commitments, U.S. coal plants continued to shut down. In fact, on the same day the U.S. pulled out of the Paris Agreement, three coal-fired plants were shut down. In 2016 alone, U.S. utilities retired more than twice the total coal capacity of Alberta.
Coal plants are shutting down across the globe because of their negative health impacts and low profitability. Coal has a hard time competing with cheap gas generation and increasingly cheap renewable energy. It is why financiers and utilities are stepping away from coal in all OECD countries. In growing economies, the investment in renewables is far exceeding that in coal power; and coal usage has peaked in countries such as China. As the full cost of electricity production (including the impacts of emissions) is accounted for, coal plants will only become more expensive.
The weight of the evidence is against those, such as Robin Campbell, who blame regulations and government policy for coal shut downs. However, Mr. Campbell is right in pointing out the need for a rhetoric-free transition plan that is sensitive to the needs of the workers and the communities. But such a plan must also be free of rhetoric about the future of coal; the phase-out is inevitable.
Jeyakumar goes on to stress the importance of retraining, which I agree is crucial both ethically and pragmatically. It’s a hard sell to tell a community that the good of the world requires them to rapidly transition away from an industry which has been an important economic driver. It’s callous and counterproductive not to offer material assistance for doing so.
First â€” any expectation that ‘business as usual’ in the sense of rapid growth in production will return is ill-founded. Most importantly, this is because an effective global transition to low-carbon energy requires countries like Canada to stop investing in new fossil fuel infrastructure as well as to develop serious plans to phase out fossil fuel production that already exists. Combined with volatile fossil fuel prices, the very high per-barrel cost of production in the bitumen sands, and the heavy environmental impact there is no reason to expect a return to the rapid growth projections which were once do dominant in Canada.
Second â€” the fact that any political jurisdiction happens to own coal, oil, and gas doesn’t grant a right to exploit these resources regardless of the impact on others. Based on what we have learned about the harm caused by climate change, it’s ethically and politically imperative that the arbitrary use of the atmosphere as a dumping ground for carbon pollution comes to an end.
By all means we should be providing support to individuals and communities that want to transition away from the fossil fuel industry. What we need to collectively reject is the idea that any jurisdiction has the right to impose climate change on the rest of the world and future generations. People deserve support in transitioning away from fossil fuel dependence, but there is every reason for Canada as a whole to reject new fossil fuel export infrastructure, particularly bitumen sands pipelines and coal ports.
Contributors to original brief: Milan Ilnyckyj, Emily Barrette, Stuart Basden, Tim Berk, Tamara Brown- stone, Mie Inouye, Neal Lantela, Amy Luo, Monica Resendes, Jessica Vogt, Miriam Wilson, Cameron Woloshyn, and Jon Yazer
Contributors to update: Milan Ilnyckyj, Anne Ahrens-Embleton, Jacqueline Allain, Lila Asher, Jody Chan, Ben Donato-Woodger, Joanna Dowdell, Rosemary Frei, Graham Henry, Katie Krelove, Amanda Lewis, Ariel Martz-Oberlander, and Monica Resendes
“The dominant reason for acting on climate change is not that it would make us better off. It is that not acting involves taking advantage of the poor, the future, and nature. We can hope that refraining from such exploitation is good (or at least not too bad) for us, especially in terms of current lifestyles and those to which we aspire. But such hope is and should not be our primary ground for acting. After all, morally speaking, we must act in any case. If it turns out that we can do so and still do well ourselves, then this is to be welcomes as a fortunate empirical fact, and no more. Given this, incessant hand-wringing about whether, how, and to what extent we might benefit from action is at best a side issue, and at worse just another vehicle for procrastination and moral corruption.”