Crude oil continues its downward slide while divestment from fossil fuels increased 50-fold over the past year; US-China accord on climate change gathers momentum, triggering a slew of new pledges to reduce carbon emission, renewables are booming and poised to deliver climate solutions for a successful climate summit in Paris this December Dr. Mae-Wan Ho
At the beginning of 2015, oil prices plummeted to a five-year low and sparked a wave of downsizing in an industry desperate to rid itself of stranded assets while renewable energy markets have been booming and civil society winning major campaigns to divest mega-investments form fossil fuels (see  Age of Oil Ending, SiS 65). Since then, crude oil has continued its downward slide.
Oil giant Shell has abandoned its drilling operations in the Arctic for the “foreseeable future”, after having spent over US$7 bn in the hunt for oil, which critics had pointed out, could only endanger one of the world’s last pristine environments to produce fossil fuels no longer needed .
After continuing to produce oil during the year-long crash, even the most efficient US companies are bowing out . There are now 65 % fewer rigs in the country; falling from a peak of 1 609 in October 2014 to 564 by 20 November 2015 .
As of 22 September 2015, US movie star Leonardo DiCaprio and over 2 000 individuals and 400 institutions are committed to divesting their money from fossil fuel companies. Altogether, they represent US$2.6 trillion investment funds . A new analysis indicates that the value of funds committed to selling off their investments in coal, oil and gas companies has increased 50-fold, while the number of institutions committed to divestment rose from 181 in September 2014 to 436. The institutions include local government, health and education bodies representing 646 million individuals around the world. Major pension funds and insurance companies have joined the universities and churches that have founded the divestment movement. Among the largest divesters are the world’s biggest sovereign fund held by Norway and two of the world’s biggest pension funds in California. Pension funds and private companies now represent 95 % of the assets committed to divestment; but university commitments have also tripled in the past year, including notably the universities of California, Oxford, and Syracuse.
The Guardian newspaper, whose parent group has committed to divest its £800 m fund, launched a campaign in March calling on the world’s biggest medical charities, the Bill and Melinda Gate’s Foundation and the Wellcome Trust to divest from fossil fuels. The Wellcome Trust has lost an estimated £175 m on its fossil fuel investments in the past year by failing to divest.
The divestment campaign is now in 43 countries and backed by UN’s climate chief Christiana Figueres, who will lead negotiations for a global climate deal at the summit in Paris in December 2015. She called for a shift of investment from fossil fuels to meet the $1 tn a year needed for investment into clean technologies.
Scientists agree that most existing fossil reserves have to be left in the ground if global warming is to be kept below the internationally-agreed limit of 2 ˚C. This should be a major focus for the summit.
It started in November 2014, when Presidents Barack Obama and Xi Jinping made a historic US-China Joint Announcement on Climate Change in Beijing (see  Can the US-China Agreement Save the Climate? SiS 65). During Xi’s state visit to Washington in September 2015, the two presidents reaffirmed their determination to implement their climate policies, to strengthen bilateral coordination and cooperation, and to promote sustainable development and the transition to green, low-carbon and climate-resilient economies .
They also set out their joint vision for a successful Paris Climate Conference that “furthers the implementation of the objection of the Convention [on Climate Change] mindful of the below 2 degree C global temperature goal.”
Since the Joint Announcement, the US has taken major steps to reduce its carbon emissions (though still limited). In August 2015, the Clean Power Plan was finalized, which will reduce CO2 emissions from the power sector to 32 % below 2005 levels by 2030. In 2016, the US will finalize a federal plan to implement carbon emission standards for power plants in states that do not choose to design their own implementation plans under the Clean Power Plan. The US is also to finalize its next stage, world-class fuel efficiency standards for heavy-duty vehicles in 2016 and implement them in 2019. Also in August 2015, separate standards were proposed for methane emissions from landfills and the oil and gas sector, both to be finalized in 2016. In July 2015 significant new measures were finalized to reduce use and emissions of HFCs through the Significant New Alternative Policy (SNAP) program. In the buildings sector, over 20 efficiency standards for appliances and equipment will be finalized by the end of 2016.
China for its part, will lower CO2 emissions per unit of GDP 60 % to 65 % from the 2005 level and increase the forest stock volume by around 4.5 billion cubic metres on the 2005 level, both by 2030. Increasing forest stock and protecting existing one is most important, not just for sequestering carbon, but especially for regenerating atmospheric oxygen, which is depletion much faster than CO2 is increasing, and now estimated to reach the danger point within a thousand years (see  O2 Diving Towards Danger Point, SiS 67). There is an urgent need for oxygen accounting in assessing technologies, including those that are supposed to reduce CO2 emissions.
China will also promote green power by giving priority in distribution and dispatching to renewable power generation and fossil fuel power generation of higher efficiency and lower emission levels . China plans to start its national emission trading system in 2017, covering key industry sectors such as iron and steel, power generation, chemicals, building materials, paper-making, and nonferrous metals. China is committed to promoting low-carbon buildings and transportation, with the share of green buildings reaching 50 % in new buildings in cities and towns, and the share of public transport in motorized travel reaching 30 % in big- and medium-sized cities by 2020. It will finalize next-stage fuel efficiency standards for heavy-duty vehicles in 2016 and implement them in 2019. Actions on HFCs continue to be supported and accelerated, including effectively controlling HFC-23 emissions by 2020.
The United States reaffirmed its $3 billion pledge to the Green Climate Fund (GCF) to help developing nations cope with climate change, and China announced that it will make available ¥20 billion for setting up the China South-South Climate Cooperation Fund to support other developing countries to combat climate change, including to enhance their capacity to access GCF funds (see  China Commits $5.1 Billion to South-South Cooperation on Climate Change and Development, SiS 69). China’s major boost to South-South cooperation on climate change and sustainable development could be a real game changer in the upcoming negotiations.
In 2014, renewable represented ~58.5 % of net additions to global power capacity, with significant growth in all regions. By year’s end, renewables comprised an estimated 27.7 % of world’s power generating capacity, enough to supply an estimated 22.8 % of global electricity .
A new report released by the International Energy Agency (IEA)  predicts that renewables will replace coal as the largest source of power across the globe by 2030. The Paris summit has triggered many new pledges from the world’s major polluters – known as the ‘Intended Nationally Determined Contributions’ or INDCs - which, IEA says will result in a boom in renewables at the expense of coal and cutting CO2 emissions. The pledges amount to a 50 % rise in subsidies for renewables as support for fossil fuel use and extraction is cut back.
At the same time, the costs of extracting oil rises while costs of renewables continue to fall, the economic balance shifting in favour of renewables. The IEA report says  “cost reductions are the norm for more efficient equipment and appliance as well as for wind power and solar PV, where technology gains are proceeding apace and there are plentiful suitable sites for their deployment.”
The report goes on to note that fossil fuel consumption continues to benefit from large subsidies, estimated at around $490 billion in 2014, compared to subsidies to aid the deployment of renewable energy technologies in the power sector, which amounted to $112 billion.
Renewables will be the world’s largest source of electricity by 2030 regardless of whether we succeed in stopping run-away climate change, says the report. It predicts renewables-based power generation reaching 50 % in the EU by 2040, ~30 % in China and Japan, and >25 % in the US and India.
Despite the shift in policy intentions catalysed by Paris summit, more is needed to avoid the worst effects of climate change. Among the IEA’s recommendations are:
To this list we should add
(See  Green Energies 100 Percent Renewables by 2050, and  Food Futures Now *Organic *Sustainable *Fossil Fuel Free , ISIS/TWN special reports for further details.)
All the elements and conditions are in place for a favourable outcome of the Paris climate summit. Our political representatives need only to remind themselves that climate change is global and has no national boundaries. What benefits one country benefits the whole world.
As anticipated, the Paris summit (30 November – 12 December 2015) did result in a favourable and many would say revolutionary outcome  Climate Change Revolution in Paris away from Fossil Fuels (SiS 69). Meanwhile the price of crude oil has continued its downward trajectory to below $30 a barrel, resulting in further bankruptcies in the fossil fuel industry, while renewables received record investment. These are further signs that the age of oil may be truly ending .
Research from Bloomberg New Energy Finance (BNEF) showed that the slump in oil prices that devastated the traditional energy industry has brought prosperity to renewables such as solar and wind, which attracted a record $329.3 bn investment in 2015 . This 4 % increase in spending over 2014 was attributed to tumbling prices for photovoltaics and wind turbines as well as several big financings for offshore wind farms. Wind and solar added ~121 GW capacity in 2015.
Apart from cutting jobs and curbing capital spending, oil companies have been delaying $380 bn worth of investment. According to analysis by industry consultant Wood Mackenzie Ltd, companies are “going into survival mode” in 2016, with more projects delayed and budgets cut.
Brent crude oil traded near $30 a barrel in January 2016, down from more than $110 in 2014. Coal and natural gas prices have followed, pushing several producers into bankruptcy.
BNEF chief editor Angus McCrone forecasts another strong year for renewables in 2015.
China remained the biggest market for renewables, having increased investment 17 % over 2014 to $110.5 bn, almost double the $56 bn invested in the US.
Around 64 gigawatts of new wind power and 57 gigawatts of new photovoltaics were added, representing an increase of 30 % from to 2014. The UK’s 580 megawatt Race Bank offshore wind farm was the largest project financed last year, attracting $2.9 billion, followed by the $2.3 billion Galloper offshore wind farm, also in the UK.
Since the start of 2015, 42 North American oil companies have filed for bankruptcy . According to Standard & Poor, 50 % of all energy junk bonds are “distressed” at this point . Some 95 000 jobs were lost in the energy sector by US based companied in 2015, according to consulting firm Challenger, Gray & Christmas, up from 14 000 the year before . Russia, Venezuela and Gulf states like Saudi Arabia are seeing state coffers empty at an alarming pace, forcing them to make cost cuts that affect the wider population.
Among the Gulf states, Saudi Arabia, Bahrain and Oman are reducing subsidies on gasoline. In Bahrain, gas prices at the pump rose by as much as 60 %. Saudi Arabia is considering selling a part of its state-owned company, the world’s largest producer, in a public offering.
Group layoffs in Alberta Canada in 2015 totalled 17 000, an increase of 134 % from 2014 . Meanwhile UK oil firm BP said it would cut 4 000 jobs globally (~5 % of its total workforce), 600 of which from its North Sea operation . BP employs ~3 000 in the UK. Brazil’s oil giant Petrobas announced it will reduce investment by $32 bn (25 %) over the next four years, its third cut in six months.
There is little or no sign that the price of crude oil will recover quickly. BP boss Bob Dudley told the BBC that it was “not impossible” the price of oil could fall to $10 a barrel, a forecast made in January 2016 by emerging-market lender Standard Chartered .
Article first published 25/11/15 (Updated 22 January 2016)
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