Fossil Fuel Follies
Despite the urgency of climate change, governments continue not only to subsidize the fossil-fuel industry, but also to use scarce public resources to find new reserves. A new report shows why this has to change – and fast.
BERLIN – If the world is to avoid climate catastrophe, it will have to forego burning almost 90% of proven coal reserves, plus one-third of oil and half of natural-gas reserves. But instead of implementing policies aimed at realizing that objective, governments continue not only to subsidize the fossil-fuel industry, but also to use scarce public resources to find new reserves. That has to change – and fast.
In an effort to help spur that change, the Heinrich Böll Foundation and Friends of the Earth International have aggregated key data about the coal industry in the just-released Coal Atlas. The figures are striking.
According to the International Monetary Fund, post-tax subsidies for coal (including environmental damage) reached 3.9 % of global GDP this year. G-20 governments are estimated to spend $88 billion per year on exploration subsidies for new fossil fuels. And a recent report by the Natural Resources Defense Council, Oil Change International, and the World Wide Fund for Nature revealed that from 2007 to 2014, governments channeled more than $73 billion – or over $9 billion per year – of public money toward coal projects. Leading the way were Japan ($20 billion), China (around $15 billion), South Korea ($7 billion), and Germany ($6.8 billion).
This public investment augments already-substantial commercial funding for the coal sector. In 2013, 92 leading banks provided at least €66 billion ($71 billion) – over four times more than in 2005. All of this has gone to buttress an industry that produces a massive share of global emissions – and seems dead set on continuing to do so.
Since 1988, just 35 coal producers, both private and state-owned, have contributed one-third of total CO2 emissions. The damage their products are causing is no secret. And yet coal and other fossil-fuel companies have refused to adjust their business models. Instead, they have actively worked to block efforts to mitigate climate change at the national and international levels, including by funding climate-change deniers and lobbying against renewable-energy targets and successful instruments like feed-in tariffs.
Meanwhile, the coal industry argues that it plays an indispensable role in tackling “energy poverty” – that is, the lack of access to modern non-polluting forms of power, primarily electricity. It is true that energy poverty is a huge problem, affecting some 1.2 billion people worldwide. For farmers, who must rely on pumped water to irrigate their crops, this means lower efficiency and productivity. For households, which must burn firewood, cow dung, and kerosene to cook, it means indoor air pollution that can cause respiratory disease. For schoolchildren, poor lighting after dark means lost learning opportunities.
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But coal is not the solution. Just the health consequences of coal production and combustion are staggering. In 2013, Coal workers pneumoconiosis (“black lung disease”) resulted in more than 25,000 deaths globally. In the European Union, coal combustion is responsible for 18,200 premature deaths and 8,500 new cases of chronic bronchitis per year. In China, an estimated 250,000 people die prematurely because of coal combustion.
The physical toll carries large economic costs as well, from lost working days to pressure on health-care systems. Climate change, too, will impose enormous costs, even if strong mitigation and adaptation measures are taken. For the 48 least-developed countries, the costs of coal will soon amount to an estimated $50 billion per year.
Far from receiving subsidies, the fossil-fuel industry should be paying for climate change. After all, just last year, the top two fossil-fuel companies – Chevron and ExxonMobil – together pulled in more than $50 billion in profits.
If the world is to have any chance of capping the increase in global surface temperature at 2° Celsius above pre-industrial levels, without being forced to employ dangerous and risky technologies like Carbon Dioxide Capture and Storage or geo-engineering, its energy system must be transformed.
First and foremost, world leaders must commit to phasing out fossil fuels, with the explicit goal of leaving 90% of proven coal reserves, one-third of oil reserves, and half of gas reserves in the ground. They must also end public subsidies for coal as soon as possible, within the next few years, while ensuring that poor and vulnerable communities do not suffer from an increase in energy prices.
Moreover, governments worldwide must hold coal and other fossil-fuel producers accountable for the damage their products have caused, including through a levy on fossil-fuel extraction to fund the Warsaw Mechanism on Loss and Damage under the United Nations Framework Convention on Climate Change. Existing international law – in particular, the “polluter pays” principle, the “no-harm” rule, and the right to compensation – supports such a system.
Finally, to address energy poverty, world leaders must scale up funding for decentralized renewable-energy projects, including through a globally funded feed-in tariff for renewable energy mini-grids in developing countries.
The fossil-fuel industry’s success in safeguarding its own interests has come at the expense of the health of our planet and its people. It is time to reform our perverse global energy system – beginning by resolving to leave coal and other fossil fuels where they are.