Energy Crunch – Businesses wake up to climate action

NOTE: Images in this archived article have been removed.

 

This week, the Queen’s speech assured us that the new government would “seek effective global collaboration to sustain economic recovery and to combat climate change”. Yet domestic measures were hardly encouraging: from the establishment of a new agency to maximise oil and gas recovery to plans to slash onshore wind subsidies, transferring responsibility for onshore wind farms to local authorities.

 

At the global level, the International Monetary Fund (IMF) drew attention to the scale of energy subsidies and uncosted damages that are currently benefitting the fossil fuel industry: worth a staggering $5.3 trillion per year, or $10 million per minute.

 

This focus on energy subsidies adds to mounting criticism of fossil fuel companies, particularly around global divestment campaigns. Shell CEO Ben van Beurden remains insistent that projected growth in world energy demand will make fossil fuels essential for the coming decades – essentially a bet against proper action on climate change – but commentators such as Lord Stern have questioned the wisdom of this approach.

 

But other news from the business community suggests that the momentum over divestment lies with Lord Stern and not with Shell. The divestment campaign celebrated as insurance company AXA pulled £350 million out of coal funds due to climate change risk, as well as coal divestment from Norway’s massive £600 billion oil fund. At the Business & Climate Summit in Paris last week, business leaders lent their support to climate action demanding “bold, clear and long-term climate policies to keep within the +2°C threshold”, with similar statements coming from the World Energy Council. Even other oil companies have specifically been asking for a carbon tax.

 

More and more businesses are recognising the need to act on climate change and the incentives that continue to push them in the wrong direction. With consensus for strong action from a broad coalition building, there are high hopes for the Paris Climate Summit later this year. Expect to see more announcements as the negotiations near.