Brown’s Last Chance to Address Climate Change and Avert the Carbon Bubble

Not only is there an ecological need to act on climate change there is a financial one too

Tomorrow tens of thousands of people are expected to march in San Francisco to demand that California Governor, Jerry Brown, take decisive action on climate change, including signaling an end to oil and gas drilling in the State. The march is set to coincide with the “Global Climate Action Summit” in San Francisco, which Jerry Brown is co-hosting.

Jerry Brownphoto by Steve RhodesWe need Brown to act on both — sign SB100 as well as signal and end to oil and gas drilling in the state — if we are to address climate change

The Summit boasts a varied list of speakers and conference chairs such as actor Alec Baldwin; Ex-Vice President Al Gore; Ex-Secretary of State John Kerry, Ex-Mayor of New York, Michael Bloomberg, Patricia Espinosa, Executive Secretary of the UN Framework Convention on Climate Change and Jane Goodall, world expert on primates, amongst others. And of course the star of the show, Jerry Brown himself.

As I wrote last week, Brown has been under pressure from a coalition of nearly 800 civil society groups — including Oil Change International — who argue that Brown cannot claim to be a climate leader on the one hand and carry on allowing drilling for oil and gas on the other. In the last few days, some have been also arguing that Brown could cement his legacy as a climate leader by also signing a bill called SB100, a bill sponsored by Californian state Senator Kevin de León, which has just been passed by the Californian state assembly.

There is no doubt that the bill is seen by some as ambitious as it sets a target of 100 percent renewable electricity by 2045. Supporters see this timescale as ambitious and setting a benchmark for other states and countries to follow. As Justin Gillis wrote in the New York Times this week, the message for Brown over SB100 is “For the sake of our children’s future and your own legacy as a climate champion, please sign the bill… This bill could well be the most important piece of climate legislation ever passed by any government.”

Critics argue, however, that it is not ambitious enough to avert a climate catastrophe and point out the fact that electricity generation is only responsible for some 20 percent of Californian emissions anyway. There are reports that Brown may even now veto SB100 in a perverse play of Californian politics.

We need Brown to act on both — sign SB100 as well as signal and end to oil and gas drilling in the state — if we are to address climate change. But there are other reasons to act. Not only is there an ecological need to act on climate change there is a financial one too. As the recent wildfires have shown, even in a wealthy state like California, climate change comes at a cost. There are now some 10,000 outstanding insurance claims relating to the fires.

Let’s join some dots. As a recent article in Truthout points out, this month marks the 10th anniversary of the global financial crisis, “providing the perfect context for a bold climate change approach.”

Many are seeing a parallel between what happened in the financial crash ten years ago and what is happening in the energy industry now. If we do not act against the oil industry, we could face another huge energy/ financial crash.

“The parallels between what led up to the financial crash then and the crisis building in the energy sector today is telling,” reports Truthout. It continues: “Like the financial industry, the fossil fuel industry has also created (and continues to expand) a toxic “bubble” inside the financial market.”

Groups like OCI and Carbon Tracker have long warned of the upcoming carbon bubbles and stranded assets. Even the new, so-called “money-making” fossil fuel industries are largely “loss-making”. For example, the US fracking industry has accumulated a loss of $280 billion since 2007. Others put the net debt of the American fracking industry at around $200 billion, a 300 percent increase from 2005.

The industry is basically burning money as well as the planet.

Bethany McLean, a contributing editor at Vanity Fair, who is the author of Saudi America: The Truth About Fracking and How It’s Changing the World, recently wrote an article in the New York Times along the same lines, arguing that the “next financial crisis lies underground.”. As she points out: “Some of fracking’s biggest skeptics are on Wall Street. They argue that the industry’s financial foundation is unstable: Frackers haven’t proven that they can make money.”

She quotes hedge fund manager, Jim Chanos, saying: “The industry has a very bad history of money going into it and never coming out.” McLean concludes that: “Fracking is such a fragile industry that it is not hard to make it go bust.”

Back in June this year, an academic peer-reviewed study, published in the journal Nature Climate Change, argued that “several major economies rely heavily on fossil fuel production and exports, yet current low-carbon technology diffusion, energy efficiency and climate policy may be substantially reducing global demand for fossil fuels.”

The impact of stranded fossil fuels could cost the global economy between US$1–4 trillion, with one of the biggest losers the United States, according to the paper.

We cannot carry on drilling for the sake of the climate and for the sake of the economy. So Jerry Brown has a choice. He can act to help tackle climate change, and take action against the impending carbon bubble. He could leave a lasting legacy of a climate champion. Or he could just be another politician who gave a great talk, but couldn’t walk the walk. This really is his last chance.

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