High Stakes Climate Poker
January 17, 2014
My friends and I get together once a month to play Texas HoldEm poker – great conversation, a few drinks, snacks and laughs. But I don’t like high-stakes poker. Gambling with high-value is not a wise choice, particularly if the pain of the loss translates beyond oneself.
The fossil fuel industry is bluffing society in a multi-trillion dollar high-stakes poker game. Current reserves of fossil fuels are five times morethan we can afford to burn if we want to keep global warming to less than 2°C; and we have to keep global warming below 2°C. The net worth of fossil fuel corporations, the value of their chip stack, is based on fully exploiting these reserves. Financial leaders are expressing great concerns about betting on fossil fuels. Forbes magazine says,
“Groups as diverse as Shell, Mercer, HSBC, prominent insurance companies and re-issuers, Standard & Poor’s and the International Energy Agency (IEA) have been giving clear warning signs about continuing to invest in fossil fuels.”
But fossil fuel-based corporations are still bluffing. They want expanded fossil fuel use; making massive investments in oil exploration, hydraulic fracturing for oil and natural gas, and the Canadian tar sands. The latter two are particularly bad bets given their large greenhouse gas footprints, water, soil and air pollution problems; and tar sands need 40 years to recover the costs of multi-billion dollar plants.
Why are fossil fuels a bad bet? (1) Continued use threatens our basic societal foundations through pollution, environmental disruption and growing health costs and infrastructure losses (fires, floods, droughts, heat waves, sea level rise, more violent weather, urban pollution and health); (2) the International Monetary Fund (IMF) says current fossil fuel subsidies are $1.9 trillion per year – these must be eliminated – that will make fossil fuels more expensive; (3) greater external costs of carbon taxes and emissions trading will be assigned to fossil fuels, make them more expensive; (4) renewable energy sources are competitive now and will be more so given fewer external costs than fossil fuels; and, (5) there is a growing fossil fuel divestment movement that major financial managers fear.
Who really has the big chip stacks? The 2006 Stern Report on the Economics of Climate Change put the annual costs of transitioning to a renewable energy economy at about 1% of global GDP; about $850 billion. Is that a big bet? Well, current annual global subsidies to fossil fuels are about $1.9 trillion. The Climate Vulnerable Forum Report in 2012 estimated that humanity is now incurring about $1.2 trillion in losses every year due to climate change, and rising. That is 1.6% of global GDP. Oil consuming nations would spend a record $2 trillion on oilin 2012, $500 billion on natural gas, and $500 billion on coal. So the annual costs to continue using fossil fuels is over $6 trillion, whereas we need to spend only $850 billion to switch to renewable energy and fix climate change.
The fossil fuel industry’s bluff takes balls: they are betting humanity will continue to pay over $6 trillion annually to burn fossil fuels rather than $850 billion to convert to renewable energy. Worse, they are betting humanity will pay trillions for increasing climate change adaptation costs while we pay trillions for fossil fuels. The fossil fuel industry is demanding humanity go on buying and burning unneeded fossil fuel reserves as the climate radically warms … all so these carbon kings can stay flush. Fossil fuel magnates and plutocrats are betting many billions more in a frenzied, massive exploration push to add to unneeded fossil fuel reserves.
There are other big chip stacks in the pot. We all know air pollution causes many diseases. The health care costs for treating fossil fuel pollution related disease are among the biggest chip stacks. A 2012 US EPA paper says the hidden health costs of pollution from fossil fuel electricity generation alone are 2–6% of US GDP – that is $300–900 billion! The USA has 4% of the global population and has reasonable pollution control technology. Global health cost equivalents must be many trillions of dollars.
Who is dying from fossil fuel pollution? Leading research agencies are debating the explicit numbers, but the best estimates are alarming. The World Health Organization estimated that climate change kills 150,000 people every year. The Climate Vulnerable Forum Report says the number of deaths is 400,000. The Canadian Medical Association Journal says 21,000 Canadians die prematurely due to fossil fuel pollution every year in Canada. The Lancet estimated that China suffers 1.2 million premature deaths due to fossil fuel pollution.
Canada has some of the best air pollution controls; China has some of the worst air pollution globally. But the death rate per million of population is similar: 700 in Canada, 900 in China. Extrapolating the Canada-China average death rate suggests 5.6 million people die every year due to fossil fuel pollution. We can debate the exact numbers; nevertheless, the magnitude is horrifying. Millions of people are dying every year due to fossil fuel air pollution, and deaths are increasing as the world burns more fossil fuels.
STOP this gamble. Fossil fuels are a losing hand for humanity. Clean, safe renewable energy wins for all of us. We can bet on it.
James Byrne is a climate scientist and Professor at the University of Lethbridge, Canada. He has published extensively on the impacts of climate change on water, ecosystems and society; served as an expert reviewer of many oil sands environmental impacts reports; was Program Committee Education Co-Representative, American Geophysical Union (AGU) Fall Meeting 2010-12; and co-convened the AGU Chapman Conference on Climate Communication and Education in June 2013.