What happens when climate activism is becoming a new normal, and protesters are tired of not being heard? Sophisticated methods of sounding the alarm and pushing for change are appearing, and new tools such as finance and the law are being explored in full. But what happens when the battlefield moves into the courtroom? ONS asks the questions, and Nick Butler, energy economist and visiting professor at Kings College, shares his insight.
2022 is proving to be a year of disappointment for those who believed that with COP26 the world had taken a major step forward in combatting climate change. The meeting in Glasgow, however successful in its own terms, did not alter the inconvenient facts about the world’s use of energy or halt the growth in emissions from the use of hydrocarbons. By the end of 2021 emissions had resumed the upward trend interrupted by the pandemic and were back above the levels of 2019. 2022 is likely to see emissions rise again.
This year emissions are being pushed up by the increased use of coal in Asia as economic activity recovered after the pandemic. Growth this year has been further increased by a switch from natural gas to coal driven by the sharp increases in global gas prices. Sanctions on Russia will further increase prices over the next year as Europe fulfills its commitment to reduce imports of Russian oil and gas and is forced to compete for supplies in a market which is already tight with only limited spare capacity. Fears of a shortage of supply coupled with high prices is encouraging new development of both oil and gas around with Governments in Europe and North America pushing companies to increase investment. Around the world from the Eastern Mediterranean to East Africa to the US shale producing regions such as Texas and North Dakota additional production of hydrocarbons is likely to be brought onstream in the near future.
The age of hydrocarbons is far from over
Climate Change remains an unresolved challenge
The challenge to the energy industry
The new dimensions of climate activism
The financial challenge to the fossil fuel sector has grown steadily in both scope and scale over the last decade. The challenge consists of both a carrot and a stick. The positive side is exemplified by the offer of access to capital for decarbonisation as set out in the Glasgow Financial Alliance for Net Zero which brought together over 250 financial institutions responsible for $ 80 trillion dollars in assets.
The stick is based on the work of the Task Force on Climate Related Financial Disclosures established after the Paris meeting in 2015. Seven years on in the words of Mark Carney ‘virtually the entire financial sector demands TCFD disclosures and over 2000 major companies around the world are responding’.
The legal challenges
Alongside these financial steps an increasingly active legal campaign has been established over the last few years. According to the authoritative analysis produced by the Sabin Centre for Climate Law at Colombia University over two thousand cases are being pursued through courts around the world on different aspects of climate change, over 1300 of which are in the United States at federal and state level. In Europe the case which has attracted most attention was the judgment of the district court in May 2020 in The Hague which ordered Royal Dutch Shell to reduce its global carbon emissions by 45 per cent from the 1990 level by 2030 and insisted that the company was responsible for emissions from its suppliers and customers.
[ ...] over two thousand cases are being pursued through courts around the world on different aspects of climate change
The possibility of new legal action
Investors in particular will be more wary if the possibility of a successful legal claim has to be factored into corporate valuations.
The risks involved have served to demonstrate the value and importance of the energy businesses, particularly the oil and gas majors who alone have the capacity to deliver supplies from multiple sources. Their role and function as agents of energy security has been re-emphasised echoing the history which saw many of the companies develop in the 20th century as extensions of the national interests of their home states. In the UK in 1914 Churchill, as First Lord of the Admiralty bought a crucial stake in BP six weeks before beginning of the First World War to secure oil supplies for the Royal Navy. In the 1970s Statoil – now Equinor – was created by the Norwegian government to ensure that the resources of the North Sea would be treated as a national asset.
Now in the 2020s the reality is that the oil and gas industry is needed but not wanted.