The Oil Bear Growleth

Among the myriad challenges facing the human species in the early years of this century there is one that shows up on every political and business agenda from Pretoria to Paris, Lusaka to London, and Windhoek to Washington: how to sustain economic growth.  So dominant is this discourse that those who dare to question it can be readily dismissed as lunatics, so far outside the mainstream as to appear out of touch with reality.  Can’t they see?  We need to create jobs!  

Yet deep down we all know that our home planet – and the non-renewable resources upon which our economies are based – is finite, meaning that nothing can grow indefinitely without violating immutable laws of nature.  This is a scary thought.  So, to insulate our preferred mental models of the world from uncomfortable physical truths, we invent oxymoronic terms like “sustainable growth” that evade all attempts to assign a coherent definition.  Most worryingly, we render ourselves unable to recognise and confront a profound blind spot: the pivotal role that energy plays in the human project. 

To comprehend why we are where we are, and what it means for our future, we must first appreciate that not a cent of economic activity happens without energy being transformed from one form into another.  Through trillions of daily conversion processes – some of which happen inside our bodies as we consume food which also required energy to produce – we benefit from a range of useful services such as heating, cooling, mobility, communications, etc.  In so doing, laws of physics dictate that we must throw some energy away as waste heat; we can (and should aim to) improve the efficiency of our conversion steps, but we can never break even. 

A deeper understanding of our predicament is revealed in the workings of our pre-industrial world.  Then, as today, our economic system was based entirely on the movement of people and things.  Prior to the Industrial Revolution, however, all of that movement was driven by solar energy, whether it was harvested as food for people, feed for draught animals – then converted into motion via muscles – or wind caught in the sails of ships and windmills, or rivers turning watermills.  For simplicity, we can think of this kinetic energy sub-system as the 'Wheel'.  It was constrained by our 'solar income', which is the quantity of incident sunlight we could capture (in a relatively short timeframe) and usefully deploy. 

Sure, we had for many centuries also been making good use of stored sunlight.  By burning wood, peat and coal (the last of these in miniscule quantities by today’s standards), we were able to use the liberated heat to cook our food, warm our homes, and drive an impressive host of manufacturing processes.  We can call this thermal energy sub-system 'Fire', and it ran on the 'hydrocarbon battery' – sunlight captured by plant and animal life over millions of years before being locked away in fossil fuel deposits – to which we increasingly turned as our supplies of firewood became exhausted.  But, just as today, our ability to bring the hydrocarbon battery into service was constrained by the rate at which we could move these combustible fuels from where they were found to where they were needed. 

This year marks the 300^th anniversary of an event that altered the course of human history profoundly.  In 1712, Thomas Newcomen’s first steam engine became operational in the English Midlands town of Dudley.  By converting heat into motion, it united humanity’s two most important discoveries: Fire and the Wheel.  From that moment on, our scope for mobility – in the first instance, to shift water from a flooded coal mine – was no longer bound by the limits of solar income, by human and animal muscle or sailing ships. 

Once we’d hooked ourselves up to the hydrocarbon battery, we began to mechanise our world.  Fewer draught animals were required, which liberated not only the paddocks on which they were kept, but also the large tracts of arable land which fed them.  In concert with advances in agriculture, fewer farmhands were able to produce greater quantities of food, which in turn boosted population growth.  More of us were free to swap rural for urban landscapes that were melting pots of knowledge-sharing and innovation, fostering further advances in science and medicine that allowed us to lead longer, more productive – and more consumptive – lives.  Later, steam ships and locomotives allowed us to move more things (including food) faster over greater distances, enabling ever higher levels of consumption.  For the better part of three centuries, we hardly looked back as we ascended this upward spiral, propelled by ancient solar energy released from fossil fuels. 

A crucial enhancement of the Fire/Wheel axis arrived towards the end of the 19^th Century with the invention of the automobile.  If fossil fuels are the Earth’s hydrocarbon battery, then crude oil is their ultimate expression: its liquid state provides unmatched energy density and ease of transport, making oil the reference fuel for moving people and things, far superior to coal and natural gas.  Its role in underpinning our economic system cannot be overstated and it seems impossible to dislodge.  No wonder we are prepared to go to war over the stuff – we are fighting for nothing less than our ability to sustain economic growth as we know it. 

A ready supply of cheap liquid transport fuels subsequently enabled us to do all sorts of clever things, such as create globalised supply chains and just-in-time delivery systems, and we congratulate ourselves for the perceived efficiency gains that we created.  The trouble is it all unravels spectacularly when fuel becomes expensive or scarce, even fleetingly.  Keen to avoid cold-turkey convulsions on a societal scale, governments intervene by any means necessary and order is maintained.  This is precisely how South Africa ended up with the world’s single largest point source of CO₂ emissions, thanks to its apartheid-era coal liquefaction programme, a response to constricted oil supplies. 

All the most prized attributes of advanced economies – proud beacons of human progress to which many developing nations aspire – are based upon the marriage of Fire and the Wheel.  That is, we achieve and maintain our pinnacle of civilisation by relentlessly digging fossil fuels out of the ground and setting them on fire in order to move people and things from place to place in motor vehicles.  High-tech, indeed!  But lurking in the dark recesses of our minds is the realisation that consuming any resource faster than its rate of formation is, by definition, unsustainable.  Fully aware that our hydrocarbon battery is draining fast and will not be re-charged in the conceivable future, that using it has a deleterious effect on the natural systems that sustain all life on Earth, and that meanwhile the economic system through which we aim to deliver societal needs is utterly dependent on it, what are we to do?  We surely can’t return to a pre-industrial existence where most people struggled on the very edge of survival.  At least, we won’t take this lying down. 

There is a glimmer of hope around which to galvanise our collective imagination.  About the time of the automotive revolution, another energy technology was born that also came to shape modern life: electricity.  Just as the steam engine created a pathway for turning heat into motion, so electricity can reverse the process.  Via electrons, we can take solar income – either directly by capturing sunlight or indirectly by harnessing wind – and transform it into every imaginable energy service of benefit to society, including the mobility which underpins all economic activity.  

Crucially, modern electrical devices – and transportation modes in particular – just happen to be supremely energy efficient, meaning that we can enjoy more services with less energy expenditure.  And electricity is unique among energy carriers because it can also convey information.  This introduces the prospect of discarding the current 'dumb' energy system and replacing it with one that is 'smart'.  Since all of the energy arrives for free and its source will never expire as long as our solar system persists (if it doesn’t, human concerns will be a thing of the past!), what’s not to like?  

We are exhibiting all the symptoms of addiction, including compulsive behaviour and denial in the face of mounting evidence that we have a serious problem.  We even resort to theft in order to feed our increasingly expensive habit, either from weaker nations and communities, or from generations as yet unborn.  As civilised adults we need to confront and treat this addiction, unhook ourselves from the hydrocarbon battery, creating in its place a new economic paradigm that provides societal needs equitably within solar income constraints.  

Does this mean the end of growth, at least as the term is currently understood?  That is inevitable anyway; we cannot negotiate with hard biophysical limits.  The best we can hope for is what economists might call a 'soft landing'.  The 21^st Century project – both hugely challenging and incredibly exciting – is to create the ultimate just-in-time delivery system, powered by energy that arrives every day from the sun, not by setting fire to millions of years of ancient sunlight in the blink of an eye.  All other species on Earth manage just fine like this.  For now, we are the 0.0001% that attempt to live by rules of our own making and it is silly to imagine that we can continue as we are with impunity.  

“That’s my new house” – my Chinese tour guide gestured toward a row of featureless apartment blocks beneath our vantage point overlooking the river – “and that’s where I used to live.”  She showed me a photograph of a modest two-storey structure within the walls of the ancient city of Fengjie.  It presumably remains intact, albeit more than 150 metres underwater. 

This stretch of the Yangtze – roughly 660km from Chongqing to Sandouping – is much less a river than a lake these days, thanks to the mind-blowing Three Gorges Dam.  My guide for the shore excursion of neighbouring Baidi Cheng – the White Emperor City, at the mouth of the still awesome Qutang Gorge – was among more than a million Chinese citizens forced to relocate prior to their homes being submerged by the rising waters.  If she was remotely bitter, it certainly didn’t show. 

Over many return visits since my two years living in Beijing from 2004, the Middle Kingdom has always left a deep impression or two.  It's hard to grasp the scale and pace of development underway in China without experiencing it for oneself, but while still fresh – if that’s the word – from my most recent trip, I'd like to share some reflections that I hope will provide a glimpse of some of the changes in progress.  

I have just returned from two weeks travelling overland in one of the country’s industrial heartlands.  Starting in Chengdu, Sichuan, the home Province of my travelling companion, we journeyed by rail to Chongqing before boarding a tourist ship that cruised down the now broad and peaceful Yangtze to Yichang, a few kilometres downstream of the infamous hydroelectric power station. 

The relentless intensity of river traffic brought home that electricity generation was but one of the intended outcomes of this stunning engineering endeavour.  It may not even have been the most important one.  Previously, this was a notoriously difficult stretch of inland waterway, evoking the Symplegades – or Clashing Rocks – successfully navigated in Greek legend by Jason and the Argonauts.  Now, an endless stream of gigantic barges piled high with cargoes – notably mountains of coal – ply the becalmed waters.  Setting aside the grave environmental and social concerns related to the Three Gorges development – including landslides caused by increased physical pressure on surroundings and loss of agricultural land – one wonders about the net carbon impact of what is ostensibly a renewable energy project, given the enhanced flows of coal that have been made possible. 

Countless factories and construction projects dot the river banks.  This region of China is well-known for its winter fogs, though it is easy to imagine that the precession of chimney stacks and their attendant columns of smoke – added to the sooty exhaust fumes of river traffic – contribute significantly to the dismal visibility, all the more disheartening in an area of exceptional natural beauty.  It struck me: this is what implausibly cheap consumer goods look like upstream in the supply chain, far beyond the horizon of cost-conscious consumers.  The juxtaposition of local fishermen in tiny sampans bobbing around in the slip-stream of industry lends a Dickensian flavour to the scene – A Tale of Two Rivers – and a vivid reminder, were it needed, of the inequality challenge confronting not only the developing world but many advanced economies, too.  As if to compensate for those dark satanic mills, dozens of new bridges that span the water have been designed with an aesthetical flourish rather than stolid functionality in mind. 

As for the dam itself, which we reached at midnight on the third day and passed in four hours via a sequence of enormous locks, the audacity it expresses can have few equals in the world.  As an aside, en route to China I met one of the challengers for the title of “world’s most audacious construction project” when stopping in Dubai for the weekend.  On arrival, I made immediately for the top of the Burj Khalifa, at 828m and 160 stories the world’s tallest building by some considerable distance.  Appropriately enough, it features prominently in the latest Mission Impossible movie.  The eye-watering extravagance shouts engineering hubris, but it is no less beautiful for that. 

In defence of Three Gorges Dam, unlike the Burj Khalifa it is hard to label it as nothing more than a vanity project.  For starters, it is devastatingly ugly.  A few key facts: (1) Mao Zedong visualised the dam in a poem penned in 1956, titled “Swimming”; (2) its 18GW of hydroelectric power capacity is roughly equivalent to nine Hoover Dams; (3) were it operating in 1994 when construction began, it would have supplied around 12% of China’s power needs – but due to explosive demand growth it today represents less than 4% and is obviously declining each year; (4) the submerged area includes 13 cities, 140 towns, 1,352 villages, 657 factories & 30,000 hectares of cultivated land.  Construction is ongoing: the latest addition to the scheme is a ship elevator into which the “smaller” vessels (typically passenger ships of up to 3,000 tons – everything is relative) will be lowered or raised the full length of the drop that separates upstream and downstream waters, thereby shortening the crossing time from four hours to thirty minutes and debottlenecking the main lock system. 

Another hour downstream from the dam we disembarked at nondescript Yichang, from where a four hour white-knuckle bus ride whisked us to Wuhan, the most important city in Hubei Province.  Together with Chongqing and Nanjing, Wuhan is one of China’s so-called “Furnaces” due to the sweltering summer climate endured by its 10 million residents.  Its location at the confluence of the Yangtze and the Han rivers, dividing the city into three parts – Wuchang, Hankou, and Hanyang (hence the composite name) – brought to mind Pittsburgh, with which I later learned Wuhan is officially twinned.  From Hankou to Wuchang on the short commuter ferry, I was impressed by the dozens of electric-powered bicycles and scooters crammed on board.  A recent estimate placed China’s e-bike population at 120 million; I briefly imagined the scene were all of those zippy two-wheelers powered by noisy two-stroke petrol engines.

Moving on from Wuhan, the world’s fastest train south to Guangzhou averages 328km/h on the 968km journey, which annihilates comparable high-speed routes elsewhere in the world.  The new Wuhan Station embarrasses many modern airports in terms of scale, passenger facilities, and physical beauty.  A comparison with airports is apposite, since the station is situated some 50km from the city centre, thereby demanding close to an hour’s taxi ride in light traffic.  This came as a surprise – and a disappointment – to a European brought up to believe that the great advantage of rail over air travel is the convenience of journeying from one urban centre to another.  Still, I retain a conviction that rail travel is vastly less stressful and more enjoyable than flying.

Guangzhou, formerly known in the West as Canton, is regarded as China’s third city after Beijing and Shanghai.  If this status gives Guangzhou an inferiority complex, you wouldn’t know it.  The city’s proximity to Shenzhen and Hong Kong – soon to be connected with yet another high-speed rail line – give it a significant competitive advantage.  A stunning array of outlandish buildings have sprung up, including a striking waterfront opera house, all serviced by a spanking new – and already insanely busy – underground metro system.  Beijing’s development received an additional kick from the 2008 Olympics, while Guangzhou experienced a similar stimulus from the 2010 Asian Games, recognised as the second largest multi-sport event after the Olympics. 

On leaving China from Guangzhou’s spotless - if mildly confusing - Baiyun International Airport, my overriding impression was that, despite everything I have read and experienced previously, it remains impossible to do justice in words to the sense of sheer momentum that exudes from this vast country of nearly 1.4 billion citizens, undertaking in two or three decades a transformation for which human history offers no precedent.  The industrial development that took more than a century in the US and Europe – with only a few hundred million citizens to consider – can offer some useful pointers, but direct analogies quickly break down due to the vastly different context in which humanity finds itself today.  For one thing, when E.L. Drake struck oil in Titusville, Pennsylvania in 1859, we hadn’t the faintest idea of the full consequences of embarking on a socio-economic development trajectory underpinned by two of our most primitive discoveries: fire and the wheel. 

Where does it all lead?  Whether we like it or not, China’s future is our future.  My colleague Dirk Visser at CSPL South Africa begins his excellent systems pressures overview by referring to the movie The Dark Knight, in which the Joker sums up his relationship with Batman: “This is what happens when an unstoppable force meets an immovable object”.  China creates an overwhelming illusion of the proverbial unstoppable force.  Is nature – or the hard, non-negotiable biophysical limits that nature imposes on all earthly life – the immovable object?  Apparently not, yet. 

This blog first appeared on the website of think tank and strategy consultancy SustainAbility

Another year, another COP, another step closer to the brink. It must seem to the casual observer that the UN climate negotiations are an exercise designed explicitly to create gridlock and failure. Judging by many of the blogs, comments and tweets I’ve been reading since bleary-eyed delegates stumbled out of the Durban ICC on Sunday, the most recent episode has provoked some strong but mixed reactions: politicians claiming a triumph of multilateralism, NGOs decrying the lack of progress on issues of substance. Both views hold some merit. As someone who was present in Durban for the regulation fortnight – but missed the 36 hours of injury-time – I’d like to weigh in with my personal reflections.

Before that, a confession: I’ve always had a ‘thing’ for prime numbers. I find their indivisibility immensely satisfying, suggestive of an eternal significance which shows up in unexpected places. For instance, I could never quite put my finger on why the game of rugby is such a dire spectacle, until I realised: there are 15 players on each side! The prime numbered 11-a-side codes of football and cricket are self-evidently superior. In a similar vein, when a football club wins five European Cups (as my Liverpool did in 2005) it gets to keep the trophy in perpetuity and UEFA commissions a new one, to be tossed around cheaply among subsequent winners of the tournament… until that magical prime number is reached once more.

Back to climate change. A brief review of previous UNFCCC COPs reveals a curious pattern in which significant moments of progress are marked by prime numbers. At COP3 in Kyoto, negotiators hammered out the eponymous Protocol, which to date remains the only legally-binding international climate treaty ever brokered (although as I write this, news filters through that Canada has withdrawn due to its failure to meet commitments – a bit like skiving off your final exams the day before because you didn’t show up at any lectures). In Marrakech, COP7 reached an agreement on how to implement the Kyoto Protocol among 193 of the 194 signatories of the UNFCCC, the sole absentee being the nation that is by far the largest historic contributor of GHGs to the atmosphere. Montreal’s climate summit in 2005 was significant for being the first meeting of the Parties to Kyoto, namely COP11/MOP1 – two prime numbers in one conference! Two years later, in another prime double-header, it was at COP13/CMP3 in Bali where the intransigent US was famously shamed by Papua New Guinea’s Kevin Conrad, who issued the challenge to either lead, or “get out of the way”. The US backed down, opening the way for the Bali Roadmap that was intended to deliver a “Kyoto 2” in Copenhagen.

I won’t lay the blame for COP15’s failure to deliver entirely at the door of composite numbering. At least the signature text of the summit went as far as to declare – for the first time at a UNFCCC conference – what was meant by the Convention’s ultimate objective to “avoid dangerous anthropogenic interference with the climate system”. By introducing the 2°C threshold – with deep emissions cuts guided by science and on the basis of equity – the Copenhagen Accord (PDF) was not entirely useless, setting the tone for the Cancun Agreements issued at the low-key COP16. As for the rest of the even-numbered COPs, they were undoubtedly necessary staging posts on the way to the prime events, but honestly, who remembers what happened at COP14 in Poznan? Anyone? How about COP12 in Nairobi? Like the World Cup group stages, there’d be no knock-out phase without them, but barring the occasional seven-goal thriller they’re generally pretty tedious affairs.

So what of COP17? Despite hosts South Africa receiving widespread and deserved praise for saving the talks from total collapse, many have correctly asserted that the Durban Platform contains nothing of substance that helps steer the world from its catastrophic business-as-usual 4°C trajectory. No international legal framework has been agreed (yet), national voluntary pledges made in the wake of Copenhagen have not been tightened, business leaders may still claim paralysis owing to a lack of regulatory certainty. On the flip side, the most complex political negotiations ever attempted remain intact, with all 194 Parties – including the world’s largest absolute emitter, the world’s fastest growing emitter, the world’s largest per capita emitter, and the world’s largest historical emitter – committed to negotiating by 2015 a legally-binding deal to cut emissions that will enter into force by 2020. Perhaps it will take the IPCC’s Fifth Assessment Report (PDF), due towards the end of 2014, to provide the fresh impetus to the negotiations.

Meanwhile, national governments continue to enact domestic laws to penalise GHG emissions, irrespective of the perceived failure of the international negotiations. The UK’s landmark Climate Change Act set the ball rolling in 2008, but now even carbon-intensive emerging economies like South Africa are on the verge of introducing carbon taxes, hot on the heels of Australia’s recent legislation. From a business perspective, surely the drums are now beating loud enough for companies to start planning for success rather than failure in humanity’s collective efforts to address climate change. If we think mitigation for 2°C is expensive and complex, just wait until we start adapting for 4°C. As one observer wrote in the aftermath of Durban, “It’s not a choice between a climate change deal and economic development; it’s really a choice of both or neither.”

Durban may not have been the emphatic breakthrough that most of us wished for, but I’m convinced future historians will judge it to have been an historic COP: the one at which the pump was primed.

A year ago, I asked a middle manager at a multi-national liquid fuels company why its sustainability report didn't contain any discussion of peak oil.  He shot back with a withering "I think we've got beyond that."  I believe he was right, though not in the way he intended.  

Amidst all the outcry and outrage provoked by the prospect of fracking natural gas from the Karoo, insufficient thought has been given to how the fossil fuel resource is intended to be used.  What's the real motivation behind Big Oil's attempts to get its hands on those methane molecules?

Energy, of course!  You know, the Energy Dilemma?  The world needs more energy with less CO2, so "we are producing more cleaner-burning natural gas and using advanced technologies to develop new resources" - it says it right there in Shell's 2010 Sustainability Report.

But let's examine that statement carefully.  There's nothing factually incorrect in what Shell says.  Natural gas is the cleanest-burning fossil fuel, and Shell (and many of its Big Oil brethren) is producing more of it year after year.  However, there's something about the choice of language that might be opportunist at best, disingenuous at worst.

First, it's hard to take at face value the notion that Shell's steady drift into natural gas is the result of a deliberate strategic decision to turn away from dirtier fossil fuels.  Consider that the company's relative growth in gas has occurred over the same period of time that it was investing heavily in the Albertan tar sands.  Far easier to swallow is the idea that Shell has simply not been very successful at finding conventional oil resources - recall the reserves scandal of 2004 - so that over time its portfolio has diversified in both directions: simultaneously growing in cleaner-burning natural gas and filthy bituminous hydrocarbon deposits.  The next time you meet a Shell executive, ask the question: when was the last time your company (or any other oil major, for that matter) walked away from economically-recoverable conventional oil resources because of a strategic decision to focus on natural gas?  They would have a job explaining that one to their shareholders who focus on replacement of reserves as a key indicator of company performance.  

Second - here is the crunch - what do Shell (and Sasol) have in mind for all that Karoo shale gas?  The clue lies in Qatar.  It's based on an elegant piece of chemical process engineering whereby carbon atoms are stitched together to synthesise the longer hydrocarbon chains that comprise petrol and diesel.  The really neat thing is that, technically, you can use anything containing carbon, including cleaner-burning natural gas, filthy dirty lumps of coal, wood chips, my mother's bathroom curtains, or even the finest Persian carpet.  The choice of feedstock informs the economics of the process - rug-to-liquids being at the high end of the cost spectrum - as well as the energy required in the conversion steps.  So flexible is this technology platform Shell gave it the label XTL, where X = any source of carbon atoms.  When X = natural gas, it's called GTL.  Which brings us back to the Karoo.

Why does this matter?  Because in the context of our global Energy Dilemma, what's important is maximising the energy services - heating, cooling, lighting, mobility, communications - delivered to society while minimising the associated CO2 emissions.  This is where the term "cleaner-burning" appears disingenuous.  True enough, GTL diesel fuel burns with lower sulphur dioxide, lower nitrous oxides, and lower particulate matter than conventional oil-based diesel (based on current fuel quality standards).  This is directionally beneficial in terms of improving urban air quality.  However, exactly the same is true of coal-to-liquids diesel, or rug-to-liquids diesel; the "cleaner-burning" character of natural gas has precisely nothing to do with it.

In terms of CO2 - the most important form of pollution wrapped up in this Energy Dilemma - GTL is essentially no better than regular fuel.  Which is to say: it's considerably worse, because by far the most rational use of natural gas in addressing the more-energy-with-less-CO2 conundrum is using it to displace carbon-intensive coal to generate lower-CO2 electricity.  In parallel, by investing in electromobility, we simultaneously do away with those nasty tailpipe emissions at a stroke.  If instead we allow natural gas molecules to enter the liquid transport fuel supply via GTL plants, we pointlessly fritter away all the carbon advantage inherent in the resource.  From a climate change mitigation perspective any decision to follow the GTL path is nothing less than irresponsible.

Then again, the potential use of natural gas as a lower carbon bridging fuel in the struggle against rising CO2 emissions was never the driving force behind Big Oil's attempts to open up the Karoo.  They are not in the electricity business, they are in the liquid transport fuels business.  All forms of energy are not the same.  For them, the Energy Dilemma is about securing more hydrocarbon resources and leveraging their enormous chemistry sets to create synthetic petrol and diesel that will be set on fire in desperately inefficient motor vehicles.  I think we've got beyond that.  

This blog first appeared on the Mail & Guardian Thought Leader website

Last week saw the launch of BP’s Statistical Review of World Energy, a rich seam of energy industry stats that journalists, analysts and academics will spend many hours mining for nuggets of data that support their chosen narratives.  The Financial Times led with “China becomes leading user of energy” – hardly a revelation to even the most casual industry observer, though undoubtedly a pleasing melody to those in the US who point to the rise of the Middle Kingdom as a reason to forestall domestic action on climate change.  

Noteworthy in BP’s latest tome is that crude oil remains the number one source of energy, contributing just over one-third of the global total.  In terms of growth, China again leads the way, increasing its consumption by 860 000 barrels a day, or 10.4% over the previous year.  Of course, in per capita terms, China’s oil consumption pales in comparison to the world’s largest economy: at 2.5 barrels per person a year, the average Chinese citizen consumes nine times less oil than its American counterpart.  Nevertheless, China’s growing thirst for oil represents a direct threat to US economic supremacy.  America may have been the first – and remains by far the largest – oil addict in the global village, but as others increase their appetite for the drug – the supply of which is increasingly concentrating in the hands of a relatively few volatile countries – the US must eventually face the prospect of weaning itself.  The only plausible alternative is to brace for military conflict.  

An urban legend goes that early in 2003 while Bush, Cheney and Rumsfeld fumbled around the Oval Office for a catchy moniker with which to rally the nation ahead of their planned invasion, they came up with “Operation Iraqi Liberation” – an obvious riff on the Iraq Liberation Act signed into law by Clinton in 1998.  Just in time, one sharp-eyed White House aide piped up that the initials spelled “OIL”, which was possibly too brazen even for the Bush administration.  With that, “Liberation” was dropped in favour of “Freedom”.  Mission accomplished.

As a thought experiment, let us suspend our voices of cynicism for a moment and imagine – as the urban legend would have us do – that the US-led invasion of Iraq was chiefly concerned with securing oil, specifically the world’s third largest reserves after those sitting beneath the deserts of Saudi Arabia (uncomfortable allies) and Iran (sworn enemies).  Indeed, the number one oil-consuming nation on Earth – reliant on imports for roughly two-thirds of its annual demand – has a strong vested interest in the affairs of the Middle East petrostates.  The Carter Doctrine leaves little room for doubt: the Persian Gulf region is vital to the interests of the US and will be protected “by any means necessary, including military force”.  Put simply, without cheap transport fuels moving people and goods across the urban sprawl and vast interstate network – themselves products of the nation’s now dwindling domestic petroleum bounty – the American economy grinds to a halt.  

Perhaps Jimmy Carter’s 1980 State of the Union speech was nothing more than Cold War posturing, designed to make the Soviets think twice before extending their Afghanistan incursion further westwards to the oil fields of the Gulf.  Taking Carter’s words out of their historical context is unfair; America wouldn’t really go to war over another nation’s natural resources, would it?  Dick Cheney provides a clue when, during his stint as chief executive of Halliburton – shortly before assuming the vice-presidency under Bush Jnr – he addressed an Institute of Petroleum conference in London: “Oil is unique in that it is so strategic in nature. We are not talking about soapflakes or leisurewear here. Energy is truly fundamental to the world’s economy. The [first] Gulf War was a reflection of that reality.”

As the occupation of Iraq winds down (US troops are supposed to withdraw by the end of this year) we might well ask ourselves: was it worth it?  In 2008, economist Joseph Stiglitz put the true cost of the Iraq war to the US at about $3 trillion; more recently he concluded this figure was probably too low.  For the sake of the exercise, we will avoid hyperbole and assume the original estimate of $3 trillion puts us in the right ball park.  Is that a lot?  To provide a sense of scale, consider that since the invasion kicked off in March 2003, the US has burned through roughly 60 billion barrels of oil at a cumulative cost of about $3.5 trillion.  That’s an extraordinary amount of money literally going up in smoke – it’s remarkably close to Stiglitz’s estimated cost of the war – but we are no closer to assessing whether the US will get a decent payback.  

Donald Trump’s recent suggestion to simply take the oil as compensation for the cost of the invasion makes sense from a narrowly-defined financial perspective.  According to BP’s latest data, Iraq’s oil reserves measure 115 billion barrels, which would keep the US ticking over for 16 years at current rates of consumption.  Translated into dollars at today’s oil price, Iraqi reserves are worth some $12 trillion, not including the cost of development. Now it starts to look more interesting: that represents a four-fold return on the investment!  Except of course that Trump’s proposition – a bit like a burglar justifying the theft of your home cinema system as recompense for the outlay on his crowbar, eye-mask, striped T-shirt, and hessian sack bearing the word “Swag” – is morally reprehensible to any right-minded human being.  

Setting aside grand larceny, perhaps another way to think about it is this: how else could the US have spent $3 trillion to address its eye-watering dependence on oil, simultaneously the cause and the result of decades of foreign policy negligence?  It is remarkable to ponder that for every man, woman and child in the US a whopping $10 000 could have been invested in measures to avoid oil consumption, such as developing the type of safe, clean, efficient and effective mass transit solutions that many European and Asian citizens enjoy, or investing – as China has – to establish a world-leading electric vehicle industry that by its nature is independent of oil, and by its far-sightedness will probably eat America’s lunch in the coming decades.  

Instead, during the 8 years of the war, US citizens set fire to some 1.15 trillion gallons of motor gasoline, much of it in obese “sports utility vehicles” with fuel economy ratings that should be a source of national embarrassment and would have finished Detroit were it not for the federal bailouts of 2008.  It was only fair: Washington was complicit in the predicament that Motown found itself in after years of profiting from feeble business-as-usual energy policy, while Beijing was busy plotting a domestic automotive industry based on electricity.  The astounding fact is that while it remains political suicide for a US administration to consider a meaningful tax on gasoline – thereby encouraging more frugal driving habits – it is politically acceptable to place at risk the lives of young American soldiers in the Middle East in order to secure flows of the very oil that it is impossible to tax back home.  

Impossible to tax transparently, that is.  The $3 trillion cost to the American taxpayer of projecting military force in Iraq translates to a phantom tax of $2.69 on every gallon of gasoline consumed in the US since 2003 – effectively doubling the average pump price to more than $5 a gallon over the period of the war.  To put it another way, if instead of agreeing to invade a sovereign state Congress had slapped a 100% tax on gasoline back in 2003, its citizens would be no worse off financially and the federal coffers would have been boosted rather than drained to the tune of $3 trillion.  With most Europeans already paying north of $8 a gallon of petrol and diesel, it is both difficult to sympathise with the American motorist and easy to appreciate why Europe’s automotive fleet is twice as efficient as that on the other side of the North Atlantic.  

Of course, all of this is simply a thought experiment based on the notion that Operation Iraqi Freedom was all about the oil.  To swallow that, you would have to believe the words of every US president since Lyndon Johnson, one by one gravely warning of the national security implications of dependence on foreign oil, while successively failing to offer any plausible means of addressing it beyond securing more resources at home and abroad.  

For the majority of global citizens living in the developing world, a straightforward question demands a straightforward answer: should we seek to emulate the oil-drenched model of economic development pursued by America and its allies for the last century and a half, thereby embracing a doctrine of expensive military interference in faraway desert lands?  Or might China – for all its shortcomings and pressing development challenges – offer a less dystopian vision of the future?  Returning to the BP Statistical Review we discover that not only has China surpassed the US in total energy consumption, it is also now the world’s leading generator of carbon-free electricity from wind turbines.  With its planned 45,000 km of high speed rail by 2015, burgeoning renewable energy sector and more than 120 million electric bicycles plying Chinese roads today, it is for good reasons that we are increasingly refocusing our attention from west to east.  

This article first appeared in the South African business newspaper Business Day on 7th April 2011

History doesn’t repeat itself, but it does rhyme.  A little less than three years ago, within the space of a few weeks, oil prices hit a record $147/bbl, Lehman Brothers collapsed into the largest bankruptcy in history, and the global economy fell into a ravine from which it has scarcely emerged.  A recent article by Jacob Weisberg in Slate magazine discussed the cause of the economic crisis by examining “the 15 best explanations for the Great Recession”.  Surprisingly, the price of oil did not feature in that long list of persuasive explanations.  It’s surprising because in the prevailing economic system oil is the economy.  

As unrest in North Africa and the Middle East enters a fifth month since the first sparks of the Tunisian Revolution last December, oil prices are starting to dominate the political discourse.  In the UK, Energy Secretary Chris Huhne warned of a 1970s-style oil shock that could cost the UK economy £45 billion over two years.  Closer to home, last week’s Financial Mail cover story on oil – the three letters that threaten economic growth – argued that a sustained high oil price threatens to completely stall the global recovery.  

Until quite recently, many economists and the mainstream financial media didn’t seem to ‘get’ the profound significance of oil.  True, it was widely acknowledged that economic slowdowns – particularly in the United States, the largest oil consumer on earth – tended to be preceded by spikes in the oil price.  But the clear correlation between high oil prices and recessions did not, in itself, prove any causal relationship.  As far as 2008 was concerned, surely Wall Street’s wizardry and former US Federal Reserve chairman Alan Greenspan’s laissez-faire approach to regulation were the real culprits.  Surely the rising oil price was just another ‘derivative’ of the bewildering world of credit default swaps and collateralised debt obligations.  Better still, by pinning it on these suspects we could even appear to be clever by pretending to comprehend the unintended consequences of ‘innovative financial products’.  

Though we live in an increasingly fast-moving, interconnected and complex world, it remains a truism that the simplest explanations are often the best ones.  First, consider that the economy is ultimately about the movement of people and stuff.  Expressed as GDP – the market value of goods and services produced – it is difficult to envisage economic activity taking place to any great extent without people and things moving around.  Whether it’s raw materials being hauled from the point of extraction to a processing plant, or from there being distributed onwards to retailers, whether it’s customers accessing goods, or employees getting to and from their places of work, very little of our globalised economic system functions without motorised transport.  

Second – and here’s the rub – worldwide, 95% of the primary energy that moves people and stuff from place to place – in cars, vans, trucks, buses, trains, boats, and aeroplanes – comes from a single source.  Transport is uniquely dependent on oil, meaning the economy is uniquely dependent on oil, or rather on the liquid transport fuels – such as diesel, petrol (or gasoline), kerosene – that we obtain from oil refineries.  So when the oil price goes up, the price of transport fuels increases and virtually everything that counts towards economic activity is impacted, either directly or indirectly.  Of course, in the case of oil companies, rising oil prices have a beneficial effect, at least in the short term… more of which later.  

Intuitively it’s easier to understand this effect on the cost of physical goods that actually get shipped around.  But why should high oil prices impact the service economy, and aren’t advanced economies more service-oriented than ever?  Again, the simple answer may be sufficient for our needs.  As household transportation costs increase – and, crucially, they are inelastic because most of us cannot or will not change our abode or place of work according to the forecourt price of petrol – all discretionary expenses experience downward pressure.  Food bills climb as oil-dependent agricultural commodities track the price of crude, an effect exacerbated by the gasoline substitution potential of corn-based ethanol in the US.  Debt repayments are more or less fixed, give or take fluctuating interest rates.  What remains is a shrinking domestic budget: quieter shopping malls, fewer evenings at the restaurant, one less trip to the hair salon.  Economic activity experiences a general slowdown – this is the very definition of recession, and not an ‘innovative financial product’ in sight.  

Anyone doubting the importance of liquid transport fuel to the health of the prevailing economic system – and therefore to maintaining social cohesion and political stability – need only recall what happened in the UK in September 2000.  Truckers and farmers protesting the relatively high pump price of diesel staged blockades of refineries and fuel terminals.  Diesel and petrol supplies slowed to a trickle as the public queued at forecourts to top up their tanks “just in case”.  Within a few days, 90% of filling stations were bone dry, just-in-time supply chains unravelled and people were fighting over loaves of bread among bare supermarket shelves.  The UK had staged a compelling if entirely accidental social experiment.  

Conclusion: five days of petroleum separate an advanced civilisation from savagery.  Note that we didn’t even run out of oil, we merely panicked!  

Returning to the companies that maintain our oil flows: perhaps uniquely in the global economic village, they do rather well when oil prices are on the up.  For instance, in 2008 – the year in which oil spiked to $147/bbl – ExxonMobil posted an annual profit of $45 billion, the largest in corporate history.  That same year, oil companies accounted for six of the seven largest global corporations, as measured by revenues.  (The outlier was Wal-Mart, an enterprise utterly symbolic of the economy’s dependency on relatively cheap and free-flowing transport fuel.)  

In this context, it should not surprise anyone that oil companies are somewhat reluctant to allow the Oil Age to draw to a graceful conclusion, as the transport system inevitably electrifies to become several times more energy efficient and compatible with the full range of sustainable renewable energy sources.  Not vested in the electricity generation game, oil companies continue to lead us astray.  BP recently argued that biofuels are “the only game in town”, the only major way to decarbonise road fuel, possibly contributing around 12% of the road transport fuel mix by 2030.  Or to put it another way, within twenty years if BP have their way the transport sector will be only 88% dependent on oil.  

BP is missing the point, of course.  The question is not only how we can decarbonise the transport sector, rather it is how we can achieve this while meeting the primary objective: gaining independence from oil.  How can we divest ourselves of turmoil in the politically fragile oil exporting regions of the world, and insulate our economic and social stability from events over which we exercise no control?  Ultimately, independence from oil means getting off liquid transport fuels, which won’t be achieved by shifting to 12% biofuels over the next two decades.  

To paraphrase BP, electricity is the only game in town.

This blog first appeared on the website of think tank and strategy consultancy SustainAbility

History may record Monday 29th November 2010 as a date of uncommon significance.  Not because the UNFCCC COP-16 opened in Cancun with barely a murmur, in stark contrast to the media circus that engulfed Copenhagen twelve months previously.  Not because of the embarrassing disclosure of the US embassy cables, and their broader implications for international diplomacy.  And not because – in a deliciously ironic twist of fate – the USA was drawn to open its campaign against North Korea in next year’s football World Cup (women’s edition).  

On Monday 29th November 2010, the European motoring press announced its Car of Year for 2011.  The Nissan LEAF is a family-sized battery electric car that will travel 100 miles on a charge.  It goes on sale early next year, and is billed as the world’s first affordable, mass produced zero emission car.  The LEAF – a jumbled acronym meaning “Leading Environmentally Friendly Affordable” – beat forty internal combustion engined vehicles to claim the annual accolade, the first time in 46 years that an electric car has won the award.  Previous winners include the Porsche 928 – hardly a paragon of fuel efficiency – and in more recent years the more frugal Toyota Prius.  

A pivotal moment in the 100+ year history of the automotive industry?  Time will tell.  At the Detroit Auto Show in January, the winner of the North American Car of the Year will be announced.  On the short list is the eagerly-awaited Chevrolet Volt, an extended range electric vehicle with the potential to transform Motown and the notoriously inefficient US market.  If it wins, it could spark the revolution.  

This blog first appeared on the website of think tank and strategy consultancy SustainAbility

I made a resolution recently, one that I had to break within a matter of days.

Quick digression: in my former life on the Mobil Oil graduate programme, we used to enjoy a game called Buzzword Bingo (there are some rather more colourful names for it).  I’m sure it’s familiar across the corporate world – a quick Google search for “buzzword+bingo” returns more than 90,000 hits.  For the uninitiated, each player starts with a grid consisting of words and phrases that sound thoughtful but tend to be vacuous – things like “synergy”, “low-hanging fruit”, or “hit the ground running”.  Each time a particular word or phrase is used, players will strike it off their grid until all have been eliminated – HOUSE! – following which the maverick will stride confidently out of the room and into the dole queue.  

Back to my resolution.  Having attended and participated in countless sustainability-related conferences over the last 5 years, it struck me that too many words and phrases are parroted without a second thought for their true meaning, much less their plausibility.  So I resolved that the next time I’m attending a conference and I hear someone assert with confidence “the world will have 9 billion people by 2050”, I’d shout HOUSE! and then head for the fire escape.

Foolish of me, in retrospect.  Within days, at the World 50 sustainability forum in London, I heard both Patrick Dixon and Nick Stern trot out the “9 billion people” assumption-masquerading-as-fact, yet I couldn’t bring myself to walk out on either of them.  They’re both utterly brilliant and it was a real privilege to listen to them outline their views of the human development challenges facing us over the next forty years.  I’d have been cutting off my nose to spite my face.

But it did concern me that two great minds would have us accept this projection as pretty much inevitable.  Why has it become such a resilient piece of conventional wisdom, unchallenged and unchallengeable?  Is it because it comes from the United Nations?  I decided to check the assumptions that underpin the UN’s population projection.  From the website of the UN’s Department of Economic and Social Affairs, I found this revealing statement: 

 To project the population until 2050, the United Nations Population Division uses assumptions regarding future trends in fertility, mortality and international migration.

Three trends – fertility, mortality, migration – play out over the next four decades to deliver 9 billion people by 2050.  But what are the other implicit assumptions that underlie this projection?  For instance, that oil supply will continue to expand to meet rising demand?  

I’ve yet to see any business plan that starts with the assumption: the sun rises in the morning and sets in the evening.  That would be silly – that’s just the way the world is.  And for the last 150 years since E. L. Drake struck oil in Titusville, Pennsylvania, oil supplies have risen more or less continuously (barring the odd political intervention) to meet growing demand.  That’s just the way the world is.  Along the way, agriculture has mechanised, delivering humanity a huge endowment of arable land for food production rather than husbanding of draft animals.  In parallel, this has liberated millions from back-breaking manual labour – we can leave all that to our personal “ghost slaves”, or barrels of oil – enabling rapid urbanisation and the associated social complexity that characterises modern civilisation.  And, of course, a human population that has grown more than six-fold from just over one billion in 1850 to almost seven billion today.  

The global population will be 9 billion by 2050, and oil supplies will continue to grow to satisfy rising demand.

HOUSE!

This blog first appeared on the website of think tank and consultancy SustainAbility

On Monday 5th October, I was introduced to a new and slightly disorientating experience: I attended the UK Conservative Party Conference in Birmingham.  It was disorientating for three reasons.  First, there were generous swathes of BLUE – a colour I usually associate with unpleasant football stadia – all over the place.  Second, the majority of delegates were speaking a dialect of my mother tongue that might be described as Hugh-Grantglish.  Third, as I scanned the agenda – the Conservative Party Conference agenda! – I picked out several plenary sessions and fringe events that suggested “sustainable development”.  A whole day dedicated to Green Growth?  In the UK, on the surface at least, it seems blue is the new green.  

 One such sustainability-related seminar that I managed to attend was titled “Keeping The Lights On: Energy in the 2010s”.  As a series of panellists fixated on our various energy supply options, I found myself wondering why we were sitting in this conference room – drenched in sunlight via a huge pyramidal glass ceiling – with all of the lights on.  Ah, but they were all energy efficient light bulbs!  During the Q&A session, I suggested that one of the better ways to safeguard the UK’s ability to keep the lights on might be knowing when to switch them off.  Or alternatively, to put the “conserve” back into Conservative, rather than Labour-ing under the fallacy that we can close the energy gap by increasing supply.  

Switching the lights off

Minister of State for Energy & Climate Change Charles Hendry presented a view of what the next decade holds in store as the UK faces the prospect of retiring several GW of nuclear and coal-fired electricity generating capacity.  His answer?  A mix of new nukes (with no government subsidy), coal/CCS and offshore wind (the UK holds 40% of Europe’s offshore wind resource, yet currently sits an embarrassing 25th out of 27 Member States in terms of percentage of energy derived from renewable sources, ahead of mighty Malta and Luxembourg).  And given the long lead times involved – particularly for nukes and coal/CCS, neither of which will make significant contributions before 2018 – we will also need to further increase our dependency on imported natural gas.  It’s not the most inspiring picture, but it’s certainly pragmatic.

If you believe, they put a man on the Moon…

But who needs pragmatism from our political leaders?  Whatever happened to vision and ambition?  During the closing plenary at the Carbon Show in London the next day, I argued that it wasn’t always like this – certainly not on 26th May 1961: 

 I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.  No single space project in this period will be more impressive to mankind, or more important in the long-range exploration of space; and none will be so difficult or expensive to accomplish. 

 When John F Kennedy spoke those words, he didn’t present a pragmatic proposal for how his vision might be accomplished by leveraging the power of competitive deregulated markets.  In fact, at the time you’d have been very hard-pressed to argue it was a realistic ambition.  But it was certainly inspirational, it captured the imagination of a country, and it led to arguably the greatest human achievement ever.  Why have we grown content to settle for realism, when all evidence indicates that something absolutely extraordinary needs to happen?  

Imagine a contemporary politician taking JFK’s place for that 1961 speech: "I believe that, in the long-term, this nation should probably put a man on another celestial body.  But as politicians we need to be careful not to pick winners – perhaps it’s the Moon, or maybe Mars is the right destination – the truth is we don’t know.  In any case, there’s plenty to be done in the short-term: we need to gain altitude cost-effectively, and that means we’ve got to harvest the low-hanging fruit by climbing Mount Everest.  We’re confident we can do it because some Kiwi and a Nepalese bloke managed it a few years back."  Doesn’t it just make the hairs stand up on the back of your neck?!

A Giant Leap For Mankind?

JFK chose a different way to shape history.  He followed up his 1961 call to action with these words at Rice University in September the following year: 

We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win…

According to the IPCC’s 4th Assessment Report, to stand an evens chance of staying below the critical 2°C theshold, we’ll need to engineer a zero carbon energy system by 2050, with all the interim steps this implies.  It won’t be easy and it won’t be cheap, but it’s what the science tells us is necessary if we’re to avoid the worst effects of climate change.  Are we ready to accept this challenge clear in the knowledge that it will be hard, or will we continue to postpone?  Make no mistake: decarbonising the global economy in 40 years is our Moon Shot.  Conservation >> Efficiency >> Decarbonisation, all on a scale for which history has no precedent.  

Before Apollo 11 and Niel Armstrong’s giant leap for mankind came Apollos 1 thru 10 – as mankind’s baby steps grew into confident strides – all of them laser focused on achieving the ultimate ambition.  So it is with our Moon Shot: we won’t manage this in one “giant leap”, no doubt we’ll trip along the way, but we will learn with every step we dare to take towards our zero carbon economy by 2050.  

The Blue Planet

In considering whether this daunting challenge is one we should be willing to embrace, we might pause to recall the words of astronaut Thomas Stafford – from the Apollo 10 mission that preceded Armstrong’s lunar landing by two months – as he recalled looking down on his home: 

The white twisted clouds and the endless shades of blue in the ocean make the hum of the spacecraft systems, the radio chatter, even your own breathing disappear.  There is no cold or wind or smell to tell you that you are connected to Earth.  You have an almost dispassionate platform – remote, Olympian and yet so moving that you can hardly believe how emotionally attached you are to those rough patterns shifting steadily below.

Put like that, our dear old planet sounds worth looking after, doesn’t it?  Perhaps it’s fitting that blue is the new green – we all live on a Pale Blue Dot, after all.

This blog first appeared on the website of think tank and strategy consultancy SustainAbility

I have just shaken off the biggest hangover of my entire life.  It lasted for about 9 months, triggered by spending 3.5 days living a feral existence, sleeping rough outside a Gentleman’s convenience, with no change of clothes, no shower and – as the BBC’s World Service broadcast to my mother’s chagrin – not even a toothbrush.  As the end drew near, I even caught myself foraging in bins behind the kitchen for an out-of-date pre-packaged salad (bliss!).  Juxtapose this tragic image with the likes of Sarkozy, Merkel, Zapatero and Rudd swishing past me in a melée of advisors and journalists, and you could be forgiven for assuming that my hangover was chemically-induced.  Alas, no.  It was an apparently normal reaction to the debacle that was COP 15.  

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way.

Charles Dickens, “A Tale of Two Cities”

They tried to make me go to rehab…

At Chatham House last week, I found myself in the company of numerous COP veterans girding their loins, preparing to once again contemplate the UNFCCC process.  Everyone I spoke to had also experienced the post-COP tremors, and decided – consciously or sub-consciously – in favour of maintaining their grip on sanity by taking a break from the circus.  As with everything else in life, a football analogy is never far away.  The vast majority of match-going supporters reach the end of every season thoroughly exhausted, looking forward to a well-earned rest to lick the wounds inflicted by another disappointing season.  Yet magically, as July turns to August, that familiar but inexplicable sense of optimism triumphs over common sense, and we simply can’t wait to get back on that emotional roller-coaster!

So it is with the UNFCCC, now heading for its 16th Conference of the Parties to be held in Cancun towards the end of this year.  We listened with renewed intensity as an impressive array of speakers and panellists from the worlds of politics, business, academia, and civil society outlined their hopes, fears, and realistic expectations for COP 16 and beyond.  And here’s the rub: if Copenhagen did nothing else, it injected a healthy dose of realism into those who yearned for a global, comprehensive, legally binding climate treaty for the post-2012 era.  Plenty of clichés were trotted out – Rome wasn’t built in a day, we lost the battle not the war, focus on the doable – but I was left with a sense that this was more than empty rhetoric: there was a tangible appetite among the Chatham House delegates to roll up sleeves and get stuck into what remains an unprecedented political, economic, social, and environmental challenge.

Sweet Sixteen?

Admittedly, the broader context for COP 16 is not good: the euphoria of Obamania has well and truly subsided and the US remains unable to enact any meaningful climate legislation – what can we expect from BRICS in response?  European governments are slashing public expenditure to a degree unseen for generations – the UK’s Department of Energy & Climate Change is under budgetary pressure despite not having been in existence when the government’s spending baseline was set.  Citizens everywhere are understandably more concerned about covering rents and mortgages than paying more for someone else to reduce their carbon footprint.

On the other side, Climategate paradoxically helped strengthen the scientific case for human-induced climate change: complacency in the field of climate science has rightly given way to the highest standards of rigour and discipline, and the outlook remains bleak.  A hard core of climate dissenters persist, but their numbers are vanishingly small.  “Natural” disasters this summer in Russia, Pakistan and China – within days of one another – dominated the world’s media.  As ever, it is difficult to attribute a single extreme weather event to climate change, but the rising frequency and severity are persuasive indicators that we are on an alarming trajectory.  It is still possible to keep the rise in average temperatures below the 2°C threshold, but only just.

China continues to invest in renewable energy at a breathtaking pace.  We all know the legend of the “coal-fired power station every week”, but are we equally aware that China builds as much wind capacity each year as the entire UK?  Indications that China is already contemplating domestic CO2 cap-and-trade legislation should be an object of shame for the US, Canada, Australia, and a source of optimism for those convinced that a price on carbon is the best way to mobilise the clean energy revolution.

Success is a journey, not a destination

Realistically, then, what can be achieved in Cancun?  With last week’s Climate Change 2010 conference operating under Chatham House’s eponymous “rule”, I’m not able to attribute quotes directly to sources, but what I can do is distil what I heard into a few key deliverables against which we might judge COP 16 as a success, or failure.  

1. Overarching need is to re-establish trust among Parties through transparency on financing, and transparency on actions/progress
2. Agree a long-term global goal under the UNFCCC – building on the Copenhagen Accord’s 2°C threshold – and a establish a process to review progress
3. Formalise mitigation pledges submitted in the aftermath of COP 15 and give clear direction on measures needed to realise them
4. Put in place mechanism for measurement, reporting, and verification (MRV) of mitigation actions
5. Agree a framework for adaptation and establish a new global finance fund to ensure oversight of financial flows
6. Create infrastructure needed to deliver funds to the point of action on adaptation and mitigation, and establish a global registry
7. Establish a robust framework for reducing emissions from deforestation and degradation (REDD)

Ultimately, Cancun will be judged a success according to progress in each of the above areas, and not on the delivery or otherwise of a single, comprehensive, legally-binding global treaty (or perhaps worse: the “promise” of such a treaty at South Africa’s COP 17 next year, thereby raising expectations and pressure to pre-COP 15 levels).  As for carbon markets collapsing if we don’t get a treaty in place for 1st Jan 2013, this is patent nonsense.  The EU’s emissions trading scheme (EU-ETS) is the key to carbon market continuity – it will continue in a strengthened form regardless what happens under the auspices of the UNFCCC.  

Me, I’m going to take a year off from COP attendance.  I can’t face the UN accreditation process, draconian entry procedures and secondary pass system, the fact that most non-governmental observers will be kept well away from the action, presumably to save government delegates from the awful sight of rough sleepers in the conference centre.  And anyway, we’ve got Aston Villa that week, and I think this could yet be our season.