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Week 49: The climate emergency
In this issue: ▸ A climate emergency has been declared ▸ It’s good for awareness, but action must follow ▸ Declarations and subsidies ▸ Introducing climate laws ▸ The state-owned oil companies
I hope everyone is well and ready for this edition of ‘ESG on a Sunday’.
A climate emergency has been declared
This week is all about emergency. But why, you might ask. Well, last week it was about new economic narratives, and part of the new narrative is to understand why so many countries have begun issuing “climate emergency declarations”.
Are governments in these countries really trying to tell their citizens something, or are they just trying to win next elections?
We need to start by understanding what an emergency is. When you're in government, I mean. Is it a time when extra resources are mobilised, from contingency funds? A time when the national guard is mobilised and police leave is cancelled? When laws are suspended? When martial law and a curfew is imposed?
We need to find out, because an emergency has been declared. A “climate emergency”.
It’s good for awareness, but action must follow
Declaring a climate change emergency is great for increasing awareness of the issue among those who have the power to make the necessary changes, and for giving urgency to the current environmental situation.
But it will only have real effects if concrete plans are set into place. It shouldn’t be empty words without any tangible action. Similar to greenwashing, if you declare a climate emergency, but then continue to implement policies which enforce fossil fuel use, the declaration is useless.
There is no single definition of a climate emergency, but the very use of the word “emergency” indicates a clear sense of urgency and a call to action.
Many places were prompted to declare emergencies after feeling the effects of climate change: intensified storms, higher temperatures, droughts, and natural disasters in their area. Often led by local councils, politicians or civil society movements, the actions of these entities, cities and even whole countries are driven by what they feel is the urgency of the situation.
Announcing new climate goals
Climate emergencies are also a good stage for announcing radical new climate goals.
When Hoboken, New Jersey, became the first city in the U.S. to declare a climate emergency back in 2017, the city also officially endorsed a citywide mobilisation to attempt carbon-neutrality by 2027 and initiate an effort to reduce and remove greenhouse gas emissions.
And when MPs in the UK called a climate emergency, they also called on the country's government to make changes that included setting a new target of reaching net zero emissions before 2050.
When Sydney joined the movement, lawmakers announced their goal to pursue a carbon tax and help workers currently employed in fossil fuel industries successfully transition to sustainable jobs.
A punch in the stomach
Yes, we are moving in right direction. Public engagement around the world is increasing. We have young generations who are protesting. We have corporate sectors which are reinventing products and services. Business models are changing.
But then this comes along. It’s the UN’s Production Gap Report 2019, assessing the gap between the targets of the Paris Agreement and countries’ planned production of coal, oil and gas.
It’s like of a punch just below the diaphragm. For a moment all air is gone.
Governments are planning to produce about 50% more fossil fuels by 2030 than would be consistent with a 2°C pathway. And 120% more than would be consistent with a 1.5°C pathway.
In aggregate, countries’ planned fossil fuel production by 2030 will lead to the emission of 39 billion tonnes (gigatonnes) of carbon dioxide (GtCO2). That is 13 GtCO2, or 53%, more than would be consistent with a 2°C pathway, and 21 GtCO2 (120%) more than would be consistent with a 1.5°C pathway.
Declaring emergency AND subsidising fossil fuel
This gap widens significantly by 2040. The UK, Ireland, Canada and France have all declared climate emergencies. But between them they give billions of dollars to support the fossil fuel industry at home and abroad. These fossil fuel subsidies come in the form of tax breaks, financial incentives and support for companies exporting abroad.
The UK, which was the first country in the world to declare a climate emergency following declarations by Scotland and Wales, spent an annual average of $11 billion in fossil fuel subsidies between 2015 and 2016.
The same data shows that France, which enshrined the climate and ecological emergency as part of draft legislation that could see the country agree to reach carbon neutrality by 2050, spent an average $8.02 billion a year in fossil fuel subsidies during the same period.
And if you really want to find out how this works, I suggest you read this report (or at least the executive summary).
Introducing climate laws
As you may know, EU at least has tried to tackle some of this, by introducing a Climate Law. Why? Because a law speaks louder than a thousand promises.
The pace and the scope of the transition needed to get to net-zero emissions present a formidable challenge for governments. How can countries manage to trigger the required changes?
In short, governments need an overarching framework that aligns governmental structures and actions with long-term goals and facilitates the involvement of a wide range of actors. Enshrining such a framework in a dedicated law not only reflects a government’s resolve to achieve its climate objectives but can also facilitate planning, improve investment security, increase buy-in and heighten transparency.
National climate laws are also emerging. They are key governance tools to help manage the low-carbon transformation of our societies towards net-zero emissions.
Nearly half of all EU Member States have already adopted such laws – with cross-party support – or are preparing one, while more are considering doing so. In addition, an EU climate law is currently under debate.
While no two climate laws are the same, the frameworks tend to draw on a set of common elements, such as targets, planning, measures, monitoring, public participation and scientific advisory bodies. There are many examples of good practices to inform national climate laws and the debate on an EU climate law.
Here you can learn everything about climate laws in the EU. And I mean all of it.
And if you want to know what declaring a climate emergency may mean in law, this is a good start.
Kept hostage by state-owned oil companies
Do you fully understand the dynamics of our challenge? Truly understand who pulls the climate strings and why it’s so complex to move forward?
The businesses controlling the future of the global climate are names most people have never heard of. State-owned companies with rights over the exploitation of national fossil fuel reserves now account for a majority of oil and gas produced around the world, overtaking publicly listed companies such as ExxonMobil, BP and Shell.
Of the world’s 20 biggest emitters, according to Richard Heede’s research, 12 are national oil companies (NOCs): state-owned or state-controlled entities set up to exploit a country’s fossil fuels, mostly oil but also gas and coal.
Three of the five biggest emitters are NOCs: Saudi Arabia’s Aramco is the biggest of all, Russia’s Gazprom is in third place, and the National Iranian Oil Company fifth.
According to the International Energy Agency, the biggest NOCs last year produced 84m barrels a day of oil and gas. That compares with 21m from the seven biggest publicly listed oil companies and 67m from other sources, including smaller independent oil companies and specialists.
So, in conclusion, yes, we have a climate emergency on our hands. And it makes sense for governments to declare climate emergency.
However, words without action are useless, and what we really need is climate law.
But it’s complex. In many, many cases we are also dealing with two-tongued governments who declare climate emergency while continuing to subsidising fossil fuel.
And, in some appalling cases, the fossil fuel production is even owned by the state – and show no sign of slowing down.
That’s all for this week.
Best regards, Sasja