THE CARBON WAR

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The Winning of The Carbon War
Second, many governments want zero net carbon in energy by 2050 –
essentially, a total phase out of fossil fuels – as a target at the climate talks, so
I am told. Others look persuadable. So why not adopt that as the end point,
given logic step 1, on the principle that strategy begins with an end in mind?
Third, then you plan in 7 five-year spans, the first of which has a name
like “Begin”.
Working the rest out would be a lot of fun. And with a 35-year timeframe,
what is there to be scared of really? We are talking about less than three percentage
points of change a year.
I try to underplay the problems they are experiencing that should be
driving them in this direction without being exhorted to change course by
heretics like me. There are so many to choose from.
The FT has majored recently on the “terrifying” skills shortages in the
oil industry. The older generation of geoscientists and petroleum engineers
who were hired before the mass lay-offs of the 1980s are now approaching
retirement age. What will happen to average levels of expertise in the world’s
oilfields and refineries when that happens? You can safely bet on more project
delays, like Kashagan, and more risk taking, like on the Deepwater Horizon
rig drilling on the Macondo field.
Then there is the carbon bubble. The Economist is the latest recruit to
the seriousness of this issue. An article on July 18 th referred to it as “the elephant
in the atmosphere”, as far as Shell and ExxonMobil are concerned. The
conservative economics weekly did not seem at all impressed with the letters
sent by the companies to their investors. “Are investors happy that – assuming
the firms are right – their shareholdings will make oodles of money whatever
happens to the climate? Of course not. Carbon Tracker has written to Shell
taking issue with practically all its arguments.”
The final thought in the article provided another of those pinch-yourself
moments for me, when I read it. “If Carbon Tracker is right, then they (investors)
will dump oil shares – which is what should happen if the firms are making a
huge gamble that will misfire.”
Carbon Tracker upped the pressure with its next move. We published a
set of fact sheets on capex showing that the oil majors are gambling $91 billion
on just twenty high-risk projects. Sixteen of the projects involve deep water
and the tar sands.
The bad news has been building up for the shale industry as well. The dire
drought in California’s Central Valley is heightening sensitivities to all aspects
of water policy, and in July state regulators halted injection of fracking waste