Food, Fossil Fuels and Filthy Finance

By Bryan Walker 23/10/2014


droughtIt is depressingly apparent that powerful forces in the global economy are set to carry on with the exploration for and use of fossil fuels as a primary source of energy for decades to come. Oxfam has produced a report identifying the confluence of fossil fuel companies, governments and investors which givers momentum to the disastrous course along which we are being impelled.

Food, Fossil Fuels and Filthy Finance pulls no punches. It points to the evidence from the Tyndall Centre that, in the absence of an unprecedented change in the global use of fossil fuels, we are heading for a global temperature rise of 4 to 6 degrees by century’s end.

Warming at this rate would leave hundreds of millions of the world’s poorest people at risk of severe hunger and drought by 2060. Even 2 degrees is going to have widespread human impacts and cause serious setbacks to development. The ‘hunger costs’ of fossil fuels are set to be the most savage impacts of climate change for millions globally. Farmers in many African countries are likely to see decreases in yield decade by decade, in spite of adaptation measures. The report details much more by way of cascading adverse impacts on populations least equipped to cope with them. It also points to severe economic and business risks in store for the developed countries as climate change begins to bite in their regions.

The need to turn away from fossil fuels is obvious, and there are signs that some governments may be waking up to this reality. However such steps as are being taken are far from adequate and some large historic emitters including Canada, Russia, Japan and Australia are actually reneging on existing commitments and embracing the dirtiest and riskiest of fossil fuels, from coal to tar sands and fracking.

At this point the report produces startling financial figures. In the absence of robust climate legislation, finance continues to flow unabated into the fossil fuel industry. In 2012 alone, fossil fuel companies spent $674bn on exploration and development projects. At the current rate of capital expenditure, the next decade will see over $6 trillion allocated to developing the fossil fuel industry.

This private finance is facilitated by public finance, incentives and tax breaks at an extraordinary level. The report estimates $1.9 trillion of subsidies assist the fossil fuel sector globally every year, including the costs of paying for its widespread damage.

Fossil fuel interests spend millions of dollars annually lobbying to stave off ambitious climate regulation. In 2013, fossil fuel industries spent an estimated $213m lobbying US and EU decision makers.

‘Toxic triangle’ is the term the report uses to describe the combination of political inertia, financial short-termism and vested fossil fuel interests which blocks the needed transition away from fossil fuel energy.

“The lack of necessary government ambition to shift away from fossil fuels results in continued investment by the global financial sector based on an assumption that fossil fuels are here to stay – buoyed by the rhetoric of the fossil fuel industry itself.”

All this despite the fact that a low-carbon future is both desirable and possible globally. It is governments who could tip the balance in favour of this future, and the report goes on to urge them to do so, with a series of rational and well-recognised recommendations. The report also addresses how fossil fuel companies could plan to redirect and diversify their operations and how investors could shift their investments to low-carbon development.

There is bite in the comment of Oxfam’s executive director in releasing the report:

“This is all about big profits for the few with little care for the rest of us – particularly the world’s poorest people who are already being made hungry by climate change.”

It’s a justifiable judgment, and one which the members of the toxic triangle ought to be required to face. I found myself often thinking of our New Zealand government when reading the report. We are actively and unreservedly encouraging companies to come and search for oil and gas. Statoil, the giant company soon to begin surveying the waters off Northland, has commented on how attractive the government has made it for them to come here. It sounded like an offer too good to ignore.

We know what the consequences of continued fossil fuel burning will be for some of our Pacific neighbours facing disastrous sea level rise. But there is no hint of acknowledgment of such consequences in the whole-hearted enthusiasm with which the Government pursues the possibility of major wealth in yet undiscovered oil and gas reserves, to say nothing of coal deposits yet to be mined. For that matter there is no acknowledgment of the threats to our own population. The dereliction is wide ranging.

An Oxfam report is hardly likely to attract even cursory attention from such governments as ours, however much it will be welcomed by those who already see their future gravely threatened by rising greenhouse gas emissions. But it matters that the truth continues to be told and who better to tell it than an NGO which works in close proximity to the populations first and most seriously affected. I admire their perseverance.