THE CARBON WAR

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The Winning of The Carbon War
tar sands, but is now including oil and gas. They are doing it for both moral
and economic reasons, Steven Rockefeller, a son of Nelson A. Rockefeller and
a trustee of the fund, has told the New York Times. He says that he foresees
financial problems ahead for companies that have stockpiled more reserves
than they can burn without contributing significantly to climate damage.
This coup for the divestment movement brings the tally of institutions
divesting around the world to 180, and the total divested to $50 billion. This
is not a sum to shift dollar dials in capital markets investing more than $4
trillion in fossil fuels equities. But it is of enormous political significance: it
tarnishes fossil fuel companies in the way the anti-Apartheid’s divestment
campaign tarnished companies propping up South Africa’s Apartheid regime
ahead of its collapse.
The Rockefeller Brothers’ Fund’s president, Stephen Heintz, makes an
interesting comment to the FT about John D. Rockefeller’s likely response to all
this, were he alive today. The oilman who founded Standard Oil in 1870 would
approve and would be “leading the charge” into renewable energy, he suggests.
“He was an innovative, forward-looking businessman. He would recognise that
clean energy technology is the business of the future.”
I elect to believe that. Today, I have faith.
I watch the Carbon Tracker team at work from the back row, unable to
keep a smile off my face. Not everyone is as forward looking as the modern
Rockefellers. A few days ago the chief executive of the Minerals Council of
Australia, speaking for the embattled Australian coal industry, accused them
of being “activists. Not genuine analysts”.
Mark Fulton, who leads off on the analysis for us today, is privately outraged
by this. He opens with a quick reference to the grotesque smear by his
countryman, turns it into a joke, and then sets out to show why the coal boss
is wrong.
He, James Leaton, and their teams have been taking the same approach to
coal they did for oil: constructing a carbon supply cost curve from a standard
industry database. This time they have bought the data from Wood MacKenzie.
The results show clearly that high cost coal producers are gambling on survival
simply in the hope that prices will somehow recover. They are not likely to,
our team concludes. Tim Buckley, a draftee to Mark Fulton’s team for our coal
project – a former Citibank colleague of his – has led the work on demand,
with a sophisticated model he has developed. It shows that historical demand
assumptions in the markets are unravelling. The costs of renewable technologies
continue to drop at a pace faster than most experts have predicted. In parallel,