2018 saw temperatures, natural disasters and CO2 emissions hit record highs. Meanwhile, our world leaders are procrastinating, says Michał Olszewski.
As delegates from around the world met in Katowice, Poland at the COP 24 Climate Summit, it’s clear that renewable energy is getting cheaper and being adopted faster than ever before. However, emissions continue to rise as investors keep pouring money into coal and other fossil fuels. L. Michael Buchsbaum takes a look.
Ahead of the conference, several studies were published that suggested global emissions were still on track to rise for a second year in a row. The Global Carbon Project’s report, titled “Global Energy Growth Is Outpacing Decarbonization,” appeared on Dec. 5 in the peer-reviewed Environmental Research Letters.
More detailed data was published simultaneously in Earth System Science Data. Led by Stanford University scientist Rob Jackson, it estimates that global carbon dioxide emissions, mainly from fossil fuel sources, will reach a record high of just over 37 billion tons in 2018, an increase of 2.7 percent over emissions output in 2017. That compares to 1.6 percent growth a year earlier. Moreover, emissions from non-fossil sources, such as deforestation, are projected to add another 4.5 billion tons of carbon emissions to the 2018 total.
While emissions could have been worse without the increases in renewables, energy demand is still outpacing growth in both renewables and energy efficiency.
Renewables growth strong in 2017, 2018
2017 was characterized by the largest ever increase in renewable power capacity, falling costs, increases in investment and advances in enabling technologies, according to REN21. Renewable power generating capacity saw its largest annual increase ever in 2017, raising total capacity by almost 9% over 2016. Overall, renewables accounted for an estimated 70% of net additions to global power capacity in 2017, due in large part to continued improvements in the cost-competitiveness of solar PV and wind power, and estimates show that number is sharply increasing through 2018.
Solar PV led the way, accounting for nearly 55% of newly installed renewable power capacity in 2017. More solar PV capacity was added than the net additions of fossil fuels and nuclear power combined. Wind (29%) and hydropower (11%) accounted for most of the remaining capacity additions. In many places, according to other studies, new wind farms are now cheaper to build than keeping an existing coal fired power plants running.
Institutions send signal for coal phase-out
Fearing the cost of inaction on climate change, a group of institutions managing $32 trillion issued a stark warning during COP24, demanding that governments make immediate steep cuts in carbon emissions while phasing out coal.
Without a major course correction, they warn the world will face a financial crash several times worse than the 2008 crisis. Including some of the world’s biggest pension funds, insurers and asset managers, they are calling on governments to end fossil fuel subsidies and introduce substantial taxes on carbon. S&P Global, historically an influential source for fossil fuel investors, also published a report looking “at the economic implications of climate change, why progress in reducing our emissions has been slow, and ways policymakers and markets can still act to mitigate global warming” while advocating for a more aggressive strategy going forward.
“The long-term nature of the challenge has, in our view, met a zombie-like response by many,” said Chris Newton, of IFM Investors that manages $80bn and is one of the 415 groups that has signed the Global Investor Statement. “This is a recipe for disaster as the impacts of climate change can be sudden, severe and catastrophic.”
Insurers are growing increasingly worried that they won’t be able to cover losses from increasingly worse climate change fuel events. Investment firm Schroders said there could be $23tn of global economic losses a year in the long term without rapid action. Put into perspective, this permanent economic damage would be almost four times the scale of the impact of the 2008 global financial crisis. Standard and Poor’s rating agency also warned leaders: “Climate change has already started to alter the functioning of our world.”
Another investor demand on governments is to introduce “economically meaningful” taxes on carbon. Most are below $10 per tons, but needed to rise to up to $100 in the next decade or two, the investors said.
Who is still investing in coal?
Other reports released in time for the UN summit show that several major US, Chinese and Japanese financial institutions are still unabatedly pouring money into new coal plants.
According to Coalexit.org, since the Paris agreement was signed in 2015, some $500 billion has been sunk into such investments helping put the IPCC’s target out of reach. Since then over 92,345MW of new coal power plants have started operating. This is as much as all of Japan’s and Russia’s coal plants put together (Coal Swarm). What is even more shocking, another 670,000 MW are currently in planning or already under construction in 59 countries.
Just this year, the research identifies 1,211 institutional investors with a total investment of US $139.4 billion in coal plant developers. These are investments held by pension funds, insurance companies, mutual funds, asset management companies, commercial banks, sovereign wealth funds and other types of institutional investors.
The research finds that the largest seven investors are responsible for 30% of the investments in the 120 coal plant development companies (as identified by urgewald in October 2018). The so-called“Dirty 30” institutional investors together account for 57% of investments in 120 fossil fuel companies. To search this year’s finance data click here.
The largest single offender is unsurprisingly the US-based BlackRock, which invested over $11 billion in coal and other dirty sources. Two other US-based groups, including Vanguard ($6.2 billion) and Capital Group ($4.2 billion) made the top 10. As emissions rose sharply in the U.S., it was no surprise that President Trump sent only a small delegation to Katowice, mainly to officiate a ludicrous “Clean Coal” side panel that was mostly attended and disrupted by protestors.
The UN Climate Summit kicks off today in Poland. These events are always full of promises and deals. Bentham Paulos takes a look back at the promises made at September’s summit in California to see what the Poland meetings will mean for future progress.
Poland has seen relatively low electricity prices in recent years. While prices have been growing for our neighbours (e.g. Germany), Poland has managed to keep them fairly flat. However, all the signs are that this state of affairs is about to end, writes Michał Olszewski.
Recent announcements by the Polish government are unambiguous: the Polish power industry will continue to be based on coal. But unless the energy industry transitions to renewables, Poland will face shortages, Michał Olszewski warns.
Poland’s energy and electricity markets are undergoing major changes. As costs fall in the offshore wind industry, it is becoming price-competitive with coal. Building offshore wind farms in the Baltic would provide energy security, fuel clean growth and create jobs.
Coal accounts for about a quarter of energy produced in Romania, which is a net electricity exporter. Compared to countries like Poland where coal dependency is much higher, discussions about a coal phaseout could be more advanced. Why aren’t they? asks Claudia Ciobanu.
Michał Olszewski sees the Polish hosts of the upcoming COP24 as afraid of open debate: new legislation gives the police broad powers, including surveillance of attendees.
Poland has some of the worst air quality in the European Union, and 2017 was marked by grassroot efforts to fight smog. It seems that the Polish government is slowly getting on board. Michał Olszewski asks: will Poland cut emissions in time, or will 2018 bring fines from the EU?
Nowhere in the EU is smog more suffocating than in southern Poland. This year, the polluted Polish mining city Katowice will host the COP24 climate conference. Ahead of that, change is in the air — and on the ground. Richard Fuchs takes a look.