Flood water image via shutterstock. Reproduced at Resilience.org iwth permission.
This is the year the “dam of denial” will break and the momentum for climate action will become an unstoppable flood. It will be messy, confusing and endlessly debated but with historical hindsight, 2015 will be the year. The year the world turned, primarily because the market woke up to the economic threat posed by climate change and the economic opportunity in the inevitable decline of fossil fuels. That shift will in turn unlock government policy and public opinion because the previous resistance to action argued on economic grounds, will reverse to favour action on economic grounds.
Before I argue for this conclusion, let me explain what I mean by the “dam of denial” and why the concept is so important to understanding what’s underway.
- The US China Climate deal – how change really occurs
- Collapse in oil prices
- Solar price falls set to continue
- Market prices reflect economic disruption
- Some pure coal companies like Peabody have lost over 75% of their value in the last three years. Their carbon bubble has well and truly burst. And while prices will vary over time, the coal industry is not coming back and we should politely bid farewell. To quote a recent Goldman Sachs analysis: “Just as a worker celebrating their 65th birthday can settle into a more sedate lifestyle while they look back on past achievements, we argue that thermal coal has reached its retirement age.”
- The European Utility sector lost half a trillion Euros by misreading the influence of renewables and energy efficiency. There were other factors as well, as always, but it was renewables that meant, like coal, this is not cyclical but existential. The Economist again: “Renewables have not just put pressure on margins. They have transformed the established business model for utilities.”
- Tesla, which produced just 30,000 cars in 2013 is valued at nearly half of GM which produced around 9 million cars. And the oil price slide seems to have had no material impact. With Tesla’s likely move into home storage for solar and rumours of an Apple/Tesla tie up, the future is looking very interesting. In response, the market has looked at history and concluded that old companies like GM mostly won’t get it; they’ll just be replaced.
- The political power of big business starts to shift sides
- Physical impacts accelerating and driving economic and security impact