CALGARY, AB/ Troy Media/ – Let’s do a thought experiment. Pretend you’re a shareholder in an oil and gas, or coal, company. At the annual general meeting, the treasurer cheerfully states the impressive net present value of the company’s reserves, while the CEO announces a multi-million dollar exploration budget for the coming year.
But you’re nervous. Recently you read the International Energy Agency’s announcement that two-thirds of presently known fossil fuel reserves can never be burned if the world is to avoid catastrophic climate change. In fact, the notoriously conservative IEA predicts an intolerable rise in global temperatures of up to six degrees Celsius if we carry on business as usual. You also know that virtually every serious scientist on Earth agrees with the IEA, even though debate continues on some details. Major cuts in greenhouse gas emissions are essential.
Has your company radically overstated the value of reserves which may never be burned? Is it not risky to spend more money exploring for more?
What should you do? You’re not an expert. But maybe you’ll stand up and ask if the board of directors is risking the company by assuming the future will be like the past.
On May 9, Dr. Tom Rand, a brilliant venture capitalist and policy analyst, gave a powerful presentation at the University of Calgary, where he argued that IF a carbon fee is used to end the free dumping of greenhouse gas emissions into our atmosphere, renewable energy will be cheaper than all but the lowest-cost fossil fuels. (This fee will also spur significant energy conservation.) His only question is whether we can scale up the huge conversion to renewable energy fast enough.
We voters have to tell governments to set a proper fee on carbon. If we do, clean, renewable energy will displace the highest cost fossil fuels (oil sands and coal) because of market economics, “the most powerful tool we have at our disposal”.
In his book, Waking the Frog (whose title refers to the well-known metaphor of a cold-blooded frog in a pot adjusting to incremental temperature increases until it dies in boiling water), Dr. Rand argues that: “The good news is that we can solve the climate problem. The capital we need sits in our pension funds and money markets, the policy tools we need to unlock it are well understood (if politically problematic), and existing clean technology and emerging innovations are fully capable of powering our civilization. Aggressive action is nowhere near as expensive as opponents claim.”
Rand argues that a carbon fee of $50 or $60 per tonne would so accelerate the scale-up of clean tech renewable energy that we would be on the path toward reducing carbon emissions by the necessary 80 per cent by 2050. “A price on carbon is not a left-wing conspiracy to control the world. It is the best tool in our arsenal to unleash the might of our industry, capital and entrepreneurs.”
Another important point he makes is that there is no “us”, the good renewable guys, and “them”, the reactionary coal-burning utilities and oil sands operators. We are all immersed in the pot of hot water. If we help each other, everybody can climb out.
– Phil Elder is Emeritus Professor of Environmental and Planning Law with the Faculty of Environmental Design at the University of Calgary.
