$1 trillion… a solution to climate change?

Posted on December 5, 2012 //

My 10 year old son and I were talking the other night and he asked me: “Dad, what would you do with $1 billion?”. What followed was a conversation about how we’d try to invest the money in ways that had social impact (climate, child poverty, cancer were high on his list), while also saving just enough for our family to be secure. But then he asked me, “What about $1 trillion?” That’s a big number. Only two countries – China and the United States – each have a gross domestic product (GDP) of more than $7 trillion.  Add Japan and Germany if you’re talking over $3 trillion, with just 15 countries in total with more than $1 trillion in GDP.

And then we stumbled upon an idea. Could we address one of his concerns – climate change – if we bought up oil companies and then figured out a way to shut them down without major social, economic and political disruption? A little bit of back of the envelope calculation and we figured out that $1 trillion could buy you ExxonMobil ($400 billion market cap and world’s 4th largest oil company) and #6 BP ($130 billion), $210 billion for #7 Royal Dutch Shell and #8 Chevron ($200 billion), with room to spare. If half of the world’s 7 billion people could invest $200 to a general fund that would get you most of the way. If one-fifth of the world’s population invested $700 that would be more than enough.

But what would the climate impact be to take four of the top 10 oil producers in the world offline? Not totally precise (but close enough), let’s assume daily oil production of the four companies of 2.5 million barrels per day, or a total of 10 million per day, or 3.65 billion barrels per year. Assuming 430 kilograms of CO2 per barrel of oil burned, that’s about 1.6 trillion kg of CO2, or 1.6 billion tonnes. Total CO2 emissions in 2011 were 34 billion tonnes. So the net result would be a 4% decrease in CO2 emissions if the four oil companies stopped producing oil tomorrow.

Worth a $1 trillion? Not sure, but an interesting exercise in the power of crowdsourced impact investment. And given the current international talks on climate, perhaps no less feasible in achieving emission reduction goals.

 

Filed Under: carbon, climate, consumer, energy, oil, Uncategorized // Tagged: , , ,

Human Health: the Cure for Climate Insanity?

Posted on February 7, 2012 //

While reading Bryan Walsh’s thoughtful review of a new book The Conundrum by David Owen, I noticed that the review was posted under TIME.com’s “health” section. The book is about energy efficiency.  What does energy efficiency have to do with health? The seeming disconnect between the two, plus a number of other things I’ve seen in the past week, prompted me to revisit an idea that I’ve been meaning to address for a while: Is is possible that humanity’s selfish concern for its own health will be the ultimate road block to inevitable ecological destruction?

I’m not sure. But I’m pretty sure that the answer will likely come from China (or India).

My old friend Bill Bishop, a long-time Beijing resident, posted a recent photo of his air filter after a couple of months removing coal dust and other harmful particulates. Scary. He is not alone, with a recent rush on indoor air filters reported by the Chinese media.  But as those reports point out, most people cannot afford the costly systems.

A lot of China-watchers tend to discount the impact of environmental pollution on the country’s development, preferring instead to debate the possibility of a hard landing due to loose bank lending, housing bubbles or other economic causes.

Clearly, health concerns can help drive change. The oil company-backed Prop 23 campaign in California – which sought to overturn the state’s progressive climate policy – was in part successful because of the support of the American Lung Association, and its ad campaign.

In China, where three decades of double-digit economi growth has resulted in a water crisis, unprecedented air pollution, the toll on human health is just starting to be quantified. But it doesn’t take data for people to know that something in China is wrong, and there is growing social unrest because of pollution.

Social unrest is the boogey-man for China’s rulers. It will be interesting to watch as the dynamic between continued growth and continued deterioration of public health plays out.

Here’s hoping health wins.

Filed Under: carbon, china, cleantech, climate, energy efficiency, water // Tagged: , , , ,

GHG: regulation vs. legislation?

Posted on May 25, 2010 //

I asked my friend Graham Noyes, attorney at renewable energy law firm Stoel Rives focused on bioenergy projects, federal energy incentives and carbon monetization, for his thoughts on the Kerry Lieberman bill.

Q: What was your main takeaway from the bill?
A: Some context first. There’s a massive potential hammer out there on GHG emitters in terms of the risk of regulation under the Clean Air Act (CAA) by the EPA, which has already issued an endangerment finding that found GHGs to be a danger to public health and welfare, thereby making the EPA obligated to regulate GHG’s under the CAA. So the wheels are turning forward at the EPA to regulate GHG. That’s what the EPA will do if nothing else happens. So it’s really surprising that Kerry Lieberman imposes what I think to be much stricter limitations on the EPA than the status quo.

In that sense the bill is very favorable to those industries that have the most to lose from GHG regulation, because it essentially weakens the regulatory landscape for GHG intensive industry when compared to what the EPA is likely to do. That’s why we have the strong industry support lined up for the bill. What’s odd is that we have universal Republication opposition (from a party known for its pro-business stance), and near universal Democratic support (from a party known to support more environmental protections). That is a fundamental disconnect.

The 800 lb gorilla in the room is the EPA’s ability to utilize the CAA if the Kerry-Lieberman bill stalls. That’s a really interesting regulatory and political landscape for this thing to play out.

Q: Can you be more specific on how Kerry Lieberman is easier on emitters?
A: We don’t know what the EPA will do precisely in order to get its targets in the endangerment finding. Emissions levels, cost implications for regulated industries – we don’t know. But it’s easy to imagine a scenario in which the EPA ratchets down harder and harder on these emissions to get the problem under control, specifically the PPM concentration of CO2 in the atmosphere. By contrast, Kerry Lieberman has a slow front-end phase-in (with only some industries included in the first years), price collars and very substantial offset programs to lower the economic impact, none of which the EPA would necessarily do. Most people expect the EPA would be more onerous than Kerry Lieberman.

Q: Is legislation or regulation better at the end of the day?
A: The Clean Air Act was not designed for GHGs, but for what we usually think of as pollutants – emissions that are directly unhealthy. CO2 is not something people worry about breathing, it’s the indirect risk of global warming caused by the escalating CO2 levels that triggered the finding. CO2 is also more ubiquitous than other pollutants hence the tailoring rule actually reduces scope of CAA enforcement.

The EPA would regulate by mandate, not by consensus. If we can’t get legislation passed and the EPA begins enforcement, there will be a lot of criticism about over-reaching and strangling industry. EPA would take a lot of heat for this.

Q: Some argue that EPA will take much longer to regulate than legislation.
A: I don’t necessarily think so. This legislation requires extensive rule-making that will take a long time to happen, consider the RFS2 delay. And the EPA won’t build in phase-in limits like Kerry Lieberman. If EPA moves ahead on its present course, I think it would have a faster impact on emissions than the bill. Ultimately, I think this landscape will spur a deal with a surprising alliance.

Q: What are the top three ramifications on business from this bill?
A: The bill would establish a long-term value to CO2e reductions. This will benefit all renewable energy projects andsupport US offset projects in methane capture, agriculture and forestry that make good GHG sense.

Filed Under: agriculture, carbon, climate, energy, policy // Tagged: , , , , ,