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We Are Going Backwards
And it could cause a climate and a financial catastrophe.
Here’s a question: Do you think we are doing enough to save the planet? After all, everyone seems to be buying Teslas, and solar and wind farms are starting to crop up everywhere. Well, the simple answer is no, we aren’t doing enough. But the blame for that doesn’t lie on your shoulders. Instead, it is the misguided and ignorant actions of governments, institutions and massive corporate entities. This is why, despite the science, economics and public pressure, plans for new oil- and gas-fired power plants actually grew by 13% last year, pushing us even closer to climate oblivion. But it turns out there is more at stake here than our precious climate.
So, where did that 13% figure come from? Well, the Global Energy Monitor (GEM) recently released their latest report. They found that in the year to July 2023, the capacity of oil- and gas-fired power stations under development around the world grew by a massive 90GW, which works out to a 13% growth. This means there are now 783 gigawatts (GW) of new oil- and gas-power capacity under development. Once completed, these projects will increase the global oil and gas power fleet by a third!
That is massive growth for an industry that should be winding down to save the planet.
This vast expansion will have some dramatic knock-on effects. GEM estimates that these new oil and gas projects will emit a whopping 41 billion tonnes of CO2 over their lifetime. That is the same as the US emits every six years, and they are the second most polluting nation on Earth!
This is why, in 2021, the IEA found that in order for us to meet our climate goal of limiting global warming to 1.5 degrees Celsius and avoiding the carnage and chaos of climate hell, fossil fuel expansion had to stop immediately. New fossil fuel infrastructure can lock in tens of billions of tonnes of emissions and easily tip us past the point of no return.
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What’s even more annoying is that renewables are as expensive or even cheaper than these new gas and oil power plants. They can even be built and connected to the grid quicker. So there is no real reason for this expansion other than just carrying on the way we used to. It is ignorant, misguided and plain dangerous.
It’s no wonder that the United Nations Secretary-General António Guterres issued a stark warning at a recent high-level climate summit by saying, “Humanity has opened the gates to hell.” He went on to say, “Horrendous heat is having horrendous effects. Distraught farmers watching crops carried away by floods. Sweltering temperatures spawning disease,” and “climate action is dwarfed by the scale of the challenge.” He ended his speech by proclaiming that if we didn’t dramatically change our ways soon, we would head “towards a dangerous and unstable world.” Out of context, this might seem like scaremongering, but when you look at the predictions of 3 degrees of global warming, which we are headed towards with our current progress (thanks to continued fossil fuel expansion), you can see he, if anything, is holding back here. If you thought 2023 had terrible weather and challenging times, just wait a few decades, and this year’s extreme weather will feel like a walk in the park. All thanks to the fact the fossil fuel industry seems unable to stop its expansion.
Now, you might think that this expansion is caused by billion-dollar oil companies being greedy, and you’d be right. But despite their vast wealth, they don’t spend their money to build these new sites. Why would they do that when governments, pension funds, and banks will happily invest billions of dollars into their projects? This has been the status quo for well over a hundred years, and our entire financial system is rigged to get stable and consistent returns from fossil fuels.
This is a major problem because these new projects are unlikely to be used for their entire lifespan, as they will last well past the point when we can’t use them without breaking our legal climate responsibilities. As such, they represent a significant risk of becoming stranded assets and losing their investors a heap of money.
For a sense of scale here, the 90GW of oil and gas plants currently being developed will require a capital expenditure of $611 billion! This money would have come from pension funds, government investment and bank loans, all on the basis that the plant would operate for the typical 40–50 years and make them a good return in the long run. But, as all these plants are built in countries that are a part of the Paris Agreement, they will need to be shut down in the 2030s or early 2040s, as the cost of their carbon emissions will render them financially useless.
About 15% of US bank debt and 10% of UK pension funds are invested in the fossil fuel industry in this way. This level of investment is relatively consistent around the globe. So when these new fossil fuel assets get closed prematurely, these financial institutions we rely on every day will have the rug pulled from underneath them.
So not only is this massive expansion of fossil fuel infrastructure environmentally and humanitarianly moronic, as it will wreck the planet and negatively impact us all, but it is also a potentially catastrophic economic move as well, as it threatens the very core of our financial world.
It’s time this blind, misguided and brainless use of resources stopped, and we actually make a decent effort to avert the absolute cataclysm waiting for us on the horizon. It’s like we’re floating in a river, with a roaring waterfall and certain death ahead of us, and rather than swimming upstream to save ourselves, we are swimming towards the waterfall! This inane mindset needs to stop now.
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