By Sonny Atumah The transition from fossil fuels to renewable energy has become the issue. It is entirely the world of the authorities to f...
By Sonny Atumah
The transition from fossil fuels to renewable energy has become the issue. It is entirely the world of the authorities to fight carbon emissions and climate change.Canvassers at the World Economic Forum (WEF) that just ended last week in Davos, Switzerland, say renewable energy is the way to go. Climate change was one of the most important topics at the World Economic Forum.
It was evident that intense pressure is mounting not just on the oil industry, but also on major financial institutions to actualize the Paris Agreement.In December 2015, 196 member nations at the 21st Conference of Parties, COP21 to the United Nations Framework Convention on Climate Change, UNFCCC reached the Agreement to cut greenhouse gas emissions and set a global target of preventing the average global temperatures from rising by more than 2°C above pre-industrial levels. China, the United States, India, Iran and Saudi Arabia collectively account for over 50 percent of the world’s CO2 emissions.
The dimension it has taken by bringing in the issue of financial crisis is what we mayscrutinize.The new climate change narrative is the threat to global finance as espoused by the Bank of International Settlements, BIS. The BIS, which is a coalition of the world’s central banks based in Basel, also in Switzerland, said that climate change could lead to a financial crisis. Last week, it presented the book, titled “the Green Swan,” warning of the potentially seismic effects of climate change on the world’s financial system.It said that should extreme climate scenarios start to play out, central banks, having played a vital role in the previous financial crisis, they might step in as the “climate rescuer of last resort.”
The BIS painted a picture that the urgency about global warming comes as rising sea levels put swathes of major cities and coastal areas at risk of flooding while brutal droughts make other parts of the world increasingly uninhabitable. Of course, the European Central, ECB that may have hatched the climate change theory was on hand with a proposed review;integrating climate change in all economic and forecasting models, and overhauling the collateral framework to reflect climate-related risks. Indeed, the central banks are extending their spheres of influence from the “lender of last resort” to “climate rescuer of last resort.”As an earth scientist, one may help the BIS with more natural occurrence including earthquakes, tsunamis, wildfires etc. that they may intervene as rescuers of last resort, consistent with the goals of the Paris Agreement.
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The argument has been that the planned expansion in the oil and gas industry may not be compatible with global emission limits of 1.5°C temperature goal. Moreover, the global campaign has been to cut carbon emissions by ending the use of fossil fuels. The fossil fuels are coal, oil and gas. Many power plants in the industrial world are coal fired with efforts made to close them down and transit from coal to gas. For the oil and gas, the present campaign is that the world cannot afford and does not need more oil and gas development. What happens to oil dependent countries in OPEC?
A former Secretary General of OPEC, Abdalla Salem El Badri, in COP 16 in Cancun, Mexico in 2010, made OPEC members’ position clear that they should protect the cartel’s interests since they are vulnerable to volatilities. All of OPEC’s members are developing countries, all are parties to the convention, and all play a vital role in supplying energy that helps satisfy the world’s needs. They invest huge financial resources to ensure security of supply to consumers, including investing in spare capacity. That responsibility should be serious.
OPEC has been engaging positively and constructively these climate change negotiations, cognizant that the protection of the environment is an important pillar of sustainable development, along with economic growth and social progress. However, OPEC members are also heavily dependent on the production and export of an exhaustible, non-renewable natural resource. They are highly vulnerable not only to climate change, but also to the adverse impacts of response measures on their economies and on their citizens.
The BIS suggestion is one we should not ignore.There have been pressures to stop oil companies who use technology to find drillable oil faster. Major oil and gas exporters have good reason to worry about the future because state incomes will drastically decline. Is that the reason why most Gulf States are building economies that can survive the end of gas? Nigeria and other countries may brace up to the challenges of relying on oil and gas reserves for economic survival.
The BIS, have sounded a note of warning in spite of the whopping US$1.4 trillion expected to be sunk into production of oil and gas in the next five years. From this figure, 85 percent of this expanded production would come from the United States and Canada. The other countries that have planned expansions are Argentina, China, Norway, Australia, Mexico, UK, Brazil, and Nigeria. Ironically, some of the countries are at the forefront of campaigns against global warming.There are hopes that by 2050 natural gas, as the lowest emitter of greenhouse gases among the fossil fuels, may remain a key source of energy even if the global consumers eliminate the use of oil and coal.
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