This blog first appeared in Business Green


BP energy outlook to 2035
















Sheikh Yamani, a former Saudi oil minister, is famous for having pointed out that the stone age did not end because we ran out of stones. He was responding to a debate at the end of the last century about whether the world would run out of oil. He went on to say something else, now forgotten. Speaking to the Daily Telegraph in 2000 he said: “Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground.”

We are half way there. So, was Yamani right? Few in today’s oil industry think so. In January, Exxon predicted that oil, gas, and coal will still meet 80% of the planet’s energy needs in 2040 and beyond. This view is shared throughout the industry and most of the energy commentariat. Reassurance is as abundant as oil.

The boundaries of the oil industry’s comfort zone are being clearly marked. The sharp fall in oil prices in nothing to worry about. As investment in new production falls – $400 billion less than a year ago – supply will be constrained. Inventories will be run down, Prices will rise again. The market will come back into balance and life will go on as before. There may be some fall out among smaller producers but the big guys will tough it out.

This comforting view is shared by everyone from BP and Shell to the International Energy Agency. If they are right, then Sheikh Yamani will have been wrong, not about the oil in the ground, but about the buyers. They will be there in 2030 just as they are now.

The international oil companies regularly publish their projections of how global energy demand will evolve over the next thirty years. Their brightly coloured charts all show pretty much the same picture as do those of public bodies such as the International Energy Agency.

Global primary energy demand is projected to reach about 17 billion tonnes of oil equivalent (btoe) by 2035. Of this, about 13 btoe will come in roughly equal proportions from coal, oil and gas. Renewables and hydro will provide about 1.5 btoe each and nuclear 1.0 btoe. This data is the foundation of the fossil industries’ argument that it is unrealistic to imagine that renewables can be scaled up fast enough to decarbonise the economy. Their contribution would need to increase 800% in thirty years. Impossible.

Expressing energy demand data as btoe handily allows you to compare each of the different energy sources on the same basis. Using a common metric means you can quickly judge the relative importance of each of the energy sources. This lets you to get a realistic view of the scale of the decarbonisation challenge.

Except that it doesn’t. It actually conceals more than it reveals. These charts are responsible for serious misjudgments by policy makers and investors. They greatly overstate the difficulty of keeping the climate safe while maintaining energy security. Different energy sources deliver energy services to consumers in very different ways and with very different efficiency.

Almost all of the renewable primary energy ends up providing consumers with useful energy services. This is not true for fossil fuels. Much of their primary energy ends up as waste heat. The amount varies depending on whether it is coal, oil or gas. Oil, for example, is primarily used for transport, about 80% of its energy content ends up as waste heat. Overall, only about 40% of the primary energy from fossil fuels ends up delivering useful energy services to consumers.

This makes the scale of the decarbonisation challenge look rather different. The actual amount of energy services that renewables need to deliver to eliminate fossil fuels is the equivalent of some 5.2 btoe.  That is an increase of only 350% – less than half of what the fossil industry would have you believe. Much more achievable.

In the real energy world you cannot convert barrels of oil, tonnes of coal or cubic feet of gas into anything other than useful energy services and waste heat. Manipulating numbers is not the same as manipulating real commodities. As Bertrand Russell pointed out, logical operations that are valid at one level of reality may not be valid at another. You learn as a child that you cannot add apples and oranges even though you can add the pence that you pay for them.

I do not know the reason why the fossil fuel industries choose to present their data in this form. I do know that it is giving them a false sense of security about their future. To a growing range of businesses in this digital age the waste heat looks like a massive opportunity. As the leaders of the fossil industries, and their shareholders, think about the outcome of COP21 they may not be looking in the right direction to see the coming disruption.


Tom Burke


January 31st 2016





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The End of Oil? – BBC World Service – Newshour Extra – 8 Jan16








end of oil



The drop in oil price is not doing something that a lot of people thought that it would do, when it fell that low, which is to create a big stimulus to economic growth. So it’s not succeeded in doing that, and I think that has surprised a lot of people. Nor is it undermining renewables, investment in renewables is continuing to grow. So two things that people expected to happen, haven’t happened. What I think is happening is that the revenues of a lot of countries that are already in quite unstable, difficult positions, are declining very rapidly, so we are going to see an increase in political tensions as the revenues that were essentially holding states together begin to diminish.

It’s not just the action of governments that will make the transition happen, it is also what is happening in the rest of the energy technology world. The fundamental equation is changing. The risks to governments of failing to act on climate change are going up as events happen, as extreme weather events kick in. The risks to governments of acting to do something about climate change are going down as the cost of renewables and the alternative low-carbon technologies goes down. So that fundamental equation was changing long before Paris. What Paris is going to do is accelerate that change quite a lot. And you must always remember that there are very powerful constituencies in every country in the world, that want their governments to act. So the idea that you’re in some zero sum game of prisoner’s dilemmas and government will or won’t choose, as if they had complete freedom of action to decide, just misunderstands what’s actually going on in every country in the world, as people start to experience the impacts of a changing climate themselves.

What is actually beginning to happen, and I think one of the most significant things that happened in Paris, which perhaps didn’t even get reported by anybody, was the president of Renault Nissan publishing a letter with thirteen of his peers, saying that they expected the growth in vehicles around the world to go from its current half a billion, to two billion by 2050. But that there was no way that there were going to be two billion cars on the planet fuelled by fossil fuels, so they thought they would be in electric vehicles in the next two to three decades. That takes out the top end of the barrel, it takes out the high value end of the barrel of oil. Investment in renewables has delivered far more than any of the forecasters thought that it would, far faster and far cheaper, and that’s not going to stop.

I think the core of our problems are political. They are not technological and they are not economic. They are how do you go about on the one hand coping with the dependence on fossil fuels, and on the other hand the fact that all of those instabilities are multiplied by a changing climate. You have to solve both of the problems together, and I don’t have a lot of confidence, frankly, that governments will do it. I do have a lot of confidence that there is a tremendous drive in the market place to actually reduce those tensions. I do have a lot of confidence that there is a tremendous amount of pressure from publics everywhere to do things. Whether they can add up to enough to get governments into the right place? I think is as uncertain as the oil price.

It is very important to look at these problems in a way that is integrated, not to separate them. Climate change isn’t an environmental problem, it’s not about the environment or the economy. Climate change is a major threat to global security. Just as the failure to deal with our dependence on oil is a major threat to global security. So we need to take a much more integrated approach. There is both a strong environmental signal to get out of oil, and there is a very strong economic and political signal to reduce our dependence, our addiction to oil. The question is how do we make an orderly transition, or do we just have a very disorderly transition, driven by economic and political tensions or driven by a changing climate, which will exacerbate another very big issue in the Middle East which is the availability of water.

We have a very accurate idea of what a world without oil revenues might be like. But the point is that you might not get those revenues anyway, so to continue to depend on those revenues for stability and security is a very dangerous approach to your future. You need to start thinking about how you make and orderly transition out of this dependence on oil.

If you just look at the UK, which I know the numbers for very well, first of all, about 65 billion pounds per year is revenue either from the fossil fuels, or from the corporations in the oil and gas industry. On top of that 65 billion per year which might dry up, you have also got 20% of all the pension fund revenues in Britain that come from the oil and gas industry. So you’re not just talking about a problem in developing countries, it is also a problem in the developed world.

What I think is important to remember is that most of the fossil fuels in the world are produced by state owned companies, who are not exposed to the same sort of pressure on the valuation. So for the international oil companies problem arise, but actually the capitalist system is quite good at working those problems out, and working through the decline in value. It won’t happen overnight. They won’t fall over like dead bodies. They will just decline in value. The real problem is for the national oil companies, who are state owned, because they have a much more difficult problem, and no easy way, or no obvious way to make a transition.

There is one politician who is making a serious step in the right direction and that is Obama. He has made a serious step against enormous internal opposition to say we have to deal with this problem, or this combination of problems, as we have said it’s not just one problem. We have got to deal with it and that’s going to take political leadership, and at least he has stood up to the plate. And in Europe I think to some extent Merkel has stood up to the plate. But there aren’t a lot of people on this stage.

The single biggest impact of ending our addiction to oil is that we will be in a world that is much less vulnerable economically and much less vulnerable in security terms to the kind of pressures that we have been describing. So we will be in a safer and more prosperous world than we would otherwise be.







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The extraordinary weather that the country is experiencing – Sky News – 19 December 15

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Sky News: Well let’s stay with that story about this extraordinary weather that the country is experiencing. We are joined now by Tom Burke, the chairman and founding director of the environmental think tank E3G. Tom thanks very much indeed for joining us. There’s this thing that we are having to live with now, isn’t there, where the weather is strange, and people say it might be climate change, and other people say no, no it’s just El Nino it’s something that happens in the south, and the jet stream changes, and it might not necessarily be the same next year. We’re stuck again with that decision aren’t we?

Tom Burke: Clearly climate change is playing a part. You have natural variability, and then what’s driving the base of that natural variability up is a changing climate, and it’s not just in Britain, it’s all over the world. We have had an extraordinary year, not just here, we have had flood in the Atacama desert, which is the driest part of the planet. We had the highest temperatures ever recorded in Antarctica. We have had the most extraordinary storms in the Indian Ocean and the Pacific Ocean. So there is a whole series of things that can’t just be explained as the natural variability of the weather. 

Sky News: People put forward the thesis of climate change, and then the discussion was had, and it’s been being had for the last 20 years, have always been said that it’s not just going to get warmer, the weather patterns are going to change. And yet climate change deniers still feel comfortable about saying, look this isn’t the kind of evidence that I can change my mind about yet. 

Tom Burke: Well that’s true about the deniers, but then some people still think that the earth is flat, there is nothing you can do about that. What I think is really important that’s happening to people now is there own experience, year on year, is in fact endorsing what the science has been saying for some time. People, whether it’s birdwatchers noticing birds arriving earlier in the year, or whether it’s people taking care of their own gardens. Or in a much more unpleasant way whether its floods like we have just seen here up in Cumbria. What you’ve had is a one in a hundred year event happening three times in the last decade. So I think that the message is getting through as experience not just as the facts.

Sky News: Now meteorologists can explain the situation we are in at the moment, simply put I suppose we are stuck in a certain holding pattern, with weather that is more at home in North Africa than it is up here, unable to find itself being pushed southwards as it normally would be by a jet stream coming over the top of it. Does that mean that this is going to happen next year or the year afterwards, or perhaps just in a couple of years time and then two years after that. 

Tom Burke: I think that what we are going to see is more variability, It’s quite clear that the climate is beginning to influence the jet stream, as it slows down it is gets lazier, and so you get these periods where you have either a prolonged warm spell or a prolonged cold spell as you’ve seen in other parts of the world, and in a sense what you’ve got is a bit like a pendulum, and as the earth warms, it’s like putting more energy into a pendulum, so it swings more violently and of course it comes back across the middle every time, but the extremes are further and further out. 

Sky News: One of the things that people are noticing particularly in rural parts now, is that flowers are blossoming when they should be coming out in February, and trees aren’t shedding with the confidence they should and they’re looking a bit healthier than they should in winter. That is real evidence of and upset, and it’s hard to predict how you manage those kinds of upsets, because we do rely on the seasons very much don’t we?   

Tom Burke: Well if what we are seeing now is caused by quite early climate change, it’s like the prelude to the full movie, we really don’t want to experience the full thing, and that’s what the scientists have been warning about, that we must stay below two degrees, because as we edge up toward two, life becomes more unpleasant, in the way that you have described, and more unpredictable. So what scientist have advised governments is that going above two takes us into the area where the climate may become unmanageable. I think that is why we saw such a pulling together of the world at the Climate Summit in Paris last week, because I think this is now getting to the point where the politicians realize that the public is experiencing, as it were, the early onset of a changing climate.

Sky News: If you think back to the first Earth Summit in Rio, in 1992, the Marshall Islands and the Solomon Islands these were were the guys who were always pushed to the front to explain the dilemma, they were seen as being on the front line, the water levels rising would be our first indicator. But now we’ve probably got no end of volunteers coming forward and saying our country also is starting to experience strange weather patterns. 

Tom Burke: I think you’re right about that. For a long time it was thought of as a problem that was over there, somewhere far off, and it was not really thought about, and I think that it is beginning to get through now that this is a problem that effects everybody. That’s why I think that we saw such a coming together in Paris. Nobody escapes the consequences of a changing climate. Not everybody has conflict, not everybody has illness, or ill health, or poor education, or a bad government, but everybody deals with a changing climate.

Sky News: Looking then at this Christmas for us, we can see people hovering, whether we are in Northern Ireland, or Scotland, or Wales and we are getting more wet weather on the west side but largely we are hovering around 12 to 15 degrees, it would take the jet stream to push that Saharan weather to the south. Do you think that will happen this year? and would it be quite sudden? Would we go to bed with 12 degrees and wake up with a fresh 5? 

Tom Burke: Well to get a really good answer to that I think that you would have to ask a meteorologist, and that’s not what I do. But I think the question is can you get quite sudden changes in the weather? And the answer is yes you can. It is like a pendulum swinging and is you put more energy into that pendulum swinging it swings faster and so the change that takes place is faster.

Sky News: And just briefly, just you idea on what type of weather pattern might the UK have to get used to over the next 10 to 15 years? I guess that wind and rain would be headlines?

Tom Burke: Well I think that depends on where you are. So I think we’ve seen wind and rain, but I also think that part of the outcome of a changing climate is that dry areas tend to get drier. So I think that we are beginning to see more periods, not of drought, but prolonged dry periods in the South East of the country. We see very visibly this difference between different parts of the country.



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Why are we so bad at responding to floods? – Tom Burke – LBC – 28 Dec 15










LBC: Lets speak to Tom Burke, he’s an environmentalist, and a former government adviser on the environment. Good morning Tom. Do you think that the government was warned about this or not?

Tom Burke: Well I think that its very interesting that the Prime Minister said the day yesterday that we have to expect more of these events. And I think that there is no doubt that we have known that these kind of weather events were coming for a long time. So there is a real question about whether our preparations have been adequate, we certainly haven’t thought through far enough in advance, which means that we are still building houses on flood plains, which means that they are at high risk of being flooded in events like this.

LBC: when you say we are still building on flood plains, are we doing that right now?

Tom Burke: Yes, still.

LBC: Do we have to do that?

Tom Burke: Well that’s what the argument is we don’t have to do that, there are lots of other opportunities but they are not ones that the government seems keen on taking. You need the flood plains as a place in which you can let the water go when you have these extreme events. The whole point of a flood plain is that it absorbs the water and it slows the water down, it means that the water can flow down the river more slowly. If you have built over your flood plains you have two problems, one is that you have nowhere else for the water to go, but rush further downstream even faster, and secondly you flood the houses you have built on the flood plains. Si it’s a really bad idea not to be thinking through more carefully where we put our houses. That’s certainly one of the things we need to think about in the long run.

LBC: Do you think that the government knew that it was actually going to be this bad, or could no one have predicted this?

Tom Burke: I don’t think that you can predict the exact nature of a particular event, but what you do know, and what the government has been told about repeatedly, is that as the climate changes as the temperature goes up, warm air hold more moisture and when it lets it go, it lets it go all at once, and so you are going to get  more frequent and more aggressive events like this, but exactly when each event will happen I think is as difficult to predict as any other bit of the weather. So you can’t blame the government for not being ready for exactly what happened this time, you have to take a much more strategic approach to dealing with these issues.

LBC: Are you amazed about reports of a flood barrier, in York, which was opened because the barrier and the building itself was flooded.

Tom Burke: Well all equipment from time to time goes wrong and you can’t predict everything. So I wouldn’t focus too much on that one event, obviously it attracts attention, but I don’t think that would have been done without a good cause for it so I wouldn’t focus on that. The really important thing now apart from the strategic view of what we do in the future, is what do we do in the short term to help people, and all those businesses, a lot of small businesses don’t have business continuity insurance, so there’s a real problem about making sure that they can get back on their feet, as well as helping householders. So there is a real money issue here in the immediate future. And then there is a real issue for householders, which is how are they going to get insurance in the future. The government has got a scheme to help them to get insurance but it’s not going to be adequate for the kind of future that we can expect.

LBC: And just a final point Tom, Tom is an environmentalist and a former government adviser on the environment.  Tom do believe that climate change is the cause of all of this?

Tom Burke: It’s part of the responsibility for it, for the reason I said. You’ve got these storms coming over water that’s warmer than it used to be, and more of it gets picked up as those storms come through and it gets dumped on us. The reason the water is warmer and the reason the air is warmer is because of a changing climate. We are about one degree above where we were in pre-industrial times, so that’s a significant difference. The thing people need to worry about is at the moment our temperature is going to keep on going up, so we are going to see more of these events.

LBC: There’s going to be more flooding you’re saying?

Tom Burke: Yes, there will be more extreme weather events of all kinds, it’s not just floods. You look at what’s happening in other parts of the world, you have wildfires in Australia that are destroying peoples houses. You have the same going on in California. So you have floods, you have mudslides and avalanches that are caused by rain. So you’ve got a whole load of extreme weather events. You’ve got a drought that has been going on for four years in California. These are exactly the things that scientists have been telling us would happen if we don’t control climate change.







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Are extreme weather events becoming the norm? Tom Burke – Sky News – 30 Dec 15


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Sky News: Now let’s return to the floods now and find out what is causing all of this? Let’s talk to environmentalist and former government adviser Tom Burke, who is in central London, Good morning to you. Are these extreme weather conditions becoming the norm?

Tom Burke: I think they are, you heard the Prime Minister saying the other day that these events are happening more frequently. It’s exactly what scientists have been telling us for a very long time is going to be one of the consequences of climate change. So I think that we are seeing more extreme weather events, not just here in Britain but actually all over the world.

Sky News: Which begs the question, what can we do about it?

Tom Burke: Well, you’ve certainly got to follow through on the Summit that took place in Paris and join in with the rest of the world in stopping this problem from getting any worse. But in the mean time you have got to get much better at dealing with these events which you know are going to happen more frequently.

Sky News: That sounds great Mr Burke, but what does it actually mean?

Tom Burke: Well first and foremost, I think that you’ve got to stop building homes on flood plains, so that you don’t create more exposure to these problems. You’ve also got to make sure that the recovery afterwards is better. A lot of the business that are affected by floods don’t come back. So we need a much more effective, probably government supported, insurance scheme to make sure that the businesses that are affected can come back. We need better long term planning to make sure that the water doesn’t come down the rivers so fast when you have more of these events. So probably planting more trees in uplands will be a very important part of helping to slow down the rate at which the water ends up in our cities.

Sky News: I was going to ask about the deforestation issue is this a time that we need to look at getting the trees back in our environment, to have an impact on this? I mean, even something as environmentally friendly as that is going to take a long time before it has the required impact.

Tom Burke: I think that your right about that. So I think the faster we get on with doing those things the better. Remember that agencies like the Environment Agency, the Climate Change Committee, and the Met Office have been warning for years that these things were going to happen, and by enlarge governments have been very slow to react to foreseeable events. So we have lost a lot of time, and we need to catch that up pretty quickly. We need to concentrate also not just on building engineered flood defenses, but also on maintaining the flood defenses that we’ve got, so that they don’t get overwhelmed when you have these extreme events.

Sky News: Are there any countries that we can take lessons from?

Tom Burke: Not that I know of. I think everywhere all over the world, and Sky News brings us pictures of them, everybody is having real problems dealing with extreme weather events whether they are wildfires, whether they are droughts, whether they are floods, these events are happening everywhere, and governments everywhere are having real problems coping with them. I think that the key thing is to focus on is making sure that this problem doesn’t get worse as the climate changes, and so the faster we reduce our emissions of carbon at least in the long term it will help to reduce our exposure to these events.

Sky News: Tom Burke thanks for your time this morning.








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Even if the global warming scare were a hoax, we would still need it – The Telegraph


This article was first published in The Telegraph


China is the low-carbon superpower and will be the ultimate enforcer of the COP21 climate deal in Paris






Chinese scientists have published two alarming reports in a matter of weeks. Both conclude that the Himalayan glaciers and the Tibetan permafrost are succumbing to catastrophic climate change, threatening the water systems of the Yellow River, the Yangtze and the Mekong.

The Tibetan plateau is the world’s “third pole”, the biggest reservoir of fresh water outside the Arctic and Antarctica. The area is warming at twice the global pace, making it the epicentre of global climate risk.

One report was by the Chinese Academy of Sciences. The other was a 900-page door-stopper from the science ministry, called the “Third National Assessment Report on Climate Change”.

The latter is the official line of the Communist Party. It states that China has already warmed by 0.9-1.5 degrees over the past century – higher than the global average – and may warm by a further five degrees by 2100, with effects that would overwhelm the coastal cities of Shanghai, Tianjin and Guangzhou. The message is that China faces a civilizational threat.




Whether or not you accept the hypothesis of man-made global warming is irrelevant. The Chinese Academy and the Politburo do accept it. So does President Xi Jinping, who spent his Cultural Revolution carting coal in the mining region of Shaanxi. This political fact is tectonic for the global fossil industry and the economics of energy.

Until last Saturday, it was an article of faith among Western climate sceptics and some in the fossil industry that China would never sign up to the COP21 accord in Paris or accept the “ratchet” of five-year reviews.

They have since fallen back to a second argument, claiming that the deal is meaningless because China will not sacrifice coal-driven growth to please the West, and without China the accord unravels since it now emits as much CO2 as the US and Europe combined.

This political judgment was perhaps plausible three or four years ago in the dying days of the Hu Jintao era. Today it is clutching at straws.
















Eight of the world’s biggest solar companies are Chinese. So is the second biggest wind power group, GoldWind. China invested $90bn in renewable energy last year and is already the superpower of low-carbon industries. It installed more solar in the first quarter than currently exists in France.

The Chinese plan to build six to eight nuclear plants every year, reaching 110 by 2030. They intend to lever this into worldwide nuclear dominance, as we glimpsed from the Hinkley Point saga.

Home-grown energy is central to Xi Jinping’s drive for strategic security. China’s leaders know what happened to Japan under Roosevelt’s energy embargo in the late 1930s, and they don’t trust the sea lanes for supplies of coal and liquefied natural gas. Nor do they relish reliance on Russian gas.

Isabel Hilton from China Dialogue says the energy shift has reached a point where Beijing has a vested commercial interest in holding the world to the Paris deal. “The Chinese think they can dominate low-carbon technologies,” she said.





This is why they feel confident enough to forge ahead with a cap-and-trade system for carbon emissions in 2017, covering more CO2 than all of the world’s 40 existing schemes put together.

China is changing fast. The energy intensity of Chinese GDP is in freefall as Xi Jinping tries to wean the economy off primitive metal-bashing and move up the technology ladder.

The “tertiary sector” has jumped from 42pc to 51pc of the economy since 2007, taking the baton as the Party starts to tackle vast swathes of excess capacity in steel, cement and shipbuilding.

It comes at a time when the cost curve for renewables has fallen far enough to make the post-carbon switch economically painless. “The average cost of global solar was $400 a megawatt/hour worldwide in 2010. It fell to $130 in 2014, and now it has fallen below $60 in the best locations. Almost nobody could have imagined this six years ago,” said Mark Lewis from Barclays.














China installed a record 23 gigawatts (GW) of windpower in 2014. It did so because wind is quick and cheap. Lazard calculates that the “levelized cost” of unsubsidized onshore wind has dropped 61pc globally, thanks to smart software, better blades and higher turbines that catch the sweet spot. It thinks wind now undercuts coal and gas, and by a wide margin in optimal spots.

Specifically, the levelized cost has fallen “well below” coal in Jilin, Jiangsu and Zhejiang with new turbines, according to a study by the North China Electric Power University.

Whether China’s coal use has already peaked is a hotly disputed subject. The country’s coal association says consumption dropped 4.7pc in the 12 months to October, but this may be a blip.

The economy has just been through a recession. It is now recovering. Car output jumped from 1.3m in July to 2.2m in November. Infrastructure spending is up 18pc as fiscal stimulus kicks in.













Yet peak coal is in sight and it is a fair bet that the country will achieve peak CO2 emissions long before the target date of 2030.

The key point is that only 60pc of China’s coal is used for power plants, compared with 90pc in the US. The rest is burned in gruesomely toxic home boilers or in small workshops, and this where the sledgehammer is falling. Beijing is phasing out coal boilers within the city limits.

Greenpeace says China has shut down 18GW of old coal plants, and is likely to shut another 60GW by 2020. These are the worst polluters, mostly “subcritical” plants below 50 megawatts. Cleaner ones are being built. The latest “high efficiency low emission” (HELE) facilities cut CO2 by 25pc-33pc.

It is true that regional governments took advantage of newly-devolved powers to approve another 155 plants for 123GW this year, alone equal to Brazil’s annual use. Horrified officials in Beijing are trying to reverse course. The expansion makes no sense since coal thermal plants are already running at below 50pc of capacity.













Greenpeace, which first revealed this planning frenzy, doubts that many of these plants will ever be built, and if they are built, up to $110bn will go up in smoke on stranded assets. There will never be enough demand for their electricity. It will be a repeat of the steel fiasco. The Communist Party has surely learned its lesson by now.

Coal, oil and gas companies and their investors should assume that China’s leaders meant what they said in Paris, and therefore that the balance of political power in the world has swung towards drastic reductions in fossil fuel use, and that negative net CO2 emissions by 2070 is on the cards.

Hedge funds and finance houses are already acting on this inference. Goldman Sachs thinks the mix of tougher rules and vaulting technology is so potent that global emissions will peak in 2020, much earlier than widely supposed.

One front-runner is the LED lightbulb, which cuts power use by 85pc compared win incandescent lights. Goldman expects it to win 95pc of the global market by 2025.

Electric and hybrid vehicles will reach sales of 25m by then, driven by plunging battery costs and tightening car emission rules in China, Europe and the US. Goldman says these curbs are nearing the point where car producers will stop investing in the internal combustion engine. That is when the switch to electrification will become a stampede.













In the end, the sums are dizzying. Abyd Karmali from Bank of America says the low-carbon economy is worth $5.5 trillion a year and the Paris deal will now “turbocharge” an investment blitz.

Barclays has told clients to prepare for a ratchet of tougher climate rules needed to stay within the “carbon budget” of 2,900 gigatonnes and stop global temperatures rising more than two degrees by 2100. This implies a carbon price of $140 a tonne by 2040.

It also implies $45 trillion of spending on decarbonisation over the next quarter century, with forfeited revenues to match for coal, gas and coal companies, many doomed to slow run-off. Barclays estimates that crude oil demand will fall to 72m barrels a day by then, half Opec assumptions.

This switch will not “cost” anything in macro economic terms. Such a zero-sum thinking overlooks the catalytic effects of technology leaps, and it overlooks the paradox of destruction.

The Second World War lifted the global economy out of a low-growth liquidity trap by flattening excess industrial capacity and harnessing a glut of static savings. This was the launchpad for the rebuilding boom of the 1950s and 1960s.

We are in a similar 1930s low-growth trap today. The world savings rate is a record 25pc of GDP. It is the root cause of our malaise. So even if global warming were a hoax, we would need it to make our great economic escape.

The German philosopher Hegel had a term for such historical twists. He called it the Cunning of Reason.










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What Paris means for fossil fuels




As the dust settles after the historic adoption of the Paris 2015 agreement, E3G shares a short blog series exploring what Paris means to different sectors, regions and constituencies.

For a long time the fossil fuel industries have lived in a comfort zone. It was built on three key beliefs: the world would always need their products; energy technologies change slowly; governments will not act decisively to tackle climate change. Even before the climate summit in Paris there were signs that this zone was crumbling. Paris has blown it down completely.

The central political equation on which their comfortable house had been built has been changing for some time. The politics of climate change is increasingly driven by events. Things happen, and this year extreme weather events have happened across the world.

Facts can be argued with, but it is much harder to argue with the experiences people have. As these events have proliferated, creating compelling images of the human misery they cause and increasingly contributing to the flow of refugees, so the political risk of failing to act on climate change has increased.

Meanwhile the economic cost of climate action has fallen far more rapidly than was forecast. Because of this, renewable energy technologies for power last year attracted more investment globally than fossil fuels for the first time. This means they are also penetrating more rapidly into energy markets previously dominated by the fossil fuel industries.

This combination of the falling economic costs of action and the rising political costs of inaction was already changing the core equation on which the fossil fuel industries have counted for comfort. The agreement reached in Paris was better than expected. Unusually for any international treaty, as negotiations came down to the wire ambition on some key issues increased.

Although much attention will focus on the detail of the text, the real significance of the Paris Agreement for the fossil fuel industries is the strength of the political signal that has been sent. As President Obama and many other leaders said, this marks a turning point. The world has come together and agreed to chart a pathway to a low carbon energy system.

The change already occurring in the core political equation of climate change will now accelerate. But it will be easy for the leaders of the  fossil fuel industries to lull themselves into a false sense of security. Although there are measures in the Agreement to make countries more transparently accountable for meeting their commitments, there is no formal mechanism for enforcement.

The temptation for the fossil fuel industries will be to believe that once the media spotlight moves away the desire of governments to fulfil their commitments will decline – ‘reality’ will reasserts itself. There are three big problems with this view: one political, one commercial and one financial.

The political problem is that in every country in the world there are large constituencies, in cities, in businesses and in civil society who are threatened by climate change. The Paris Agreement has strengthened their hand. As the impacts of climate change continue to grow they will continue to hold their national governments to account.

The commercial problem  is that it may not be action by governments that makes the most difference. Another feature of Paris was the emergence of a much more diverse business voice. Until very recently public debate on climate change was dominated those businesses keen to stick to business as usual.

Now we are hearing more from those businesses who want governments to move faster not slower to tackle climate change. Companies like Unilever with extended supply chains are already feeling the costs of a changing climate on products grown abroad such as tea. Other companies such as those making clean energy technologies see huge opportunities in a decarbonising world.

But perhaps most significantly for the oil companies, 13 CEOs, from the car industry, led by Renault, chose the Paris weekend to commit themselves to decarbonising transport over the next ‘two to three decades’. They anticipate 2 billion vehicles on the road by 2050 but are clear that ‘We cannot continue to rely on fossil fuels to power those vehicles…’ This commitment is a dagger pointing right at the heart of the most valuable part of a barrel of oil.

This changing landscape has not escaped the attention of the financial community. Global capital markets had already become wary about new investment in the coal industry prior to Paris following the impact of the debate on stranded assets. The insurance industry has recognised the scale of the threat a changing climate poses to its business for some time.

These anxieties were reinforced when the Governor of the Bank of England, and Chairman of the world’s Financial Stability Board made a speech recently pointing out the climate change posed a threat to the stability of the world financial system. Oil and gas investments are already high risk and returns on investment have fallen with the oil price. As investors’ perceptions of the relative risks of fossil fuels and low carbon technologies change so the ability of fossil fuels companies to raise capital will decline.

So, has the Paris Agreement buried the fossil fuel industries. No, but I can hear the sound of shovels digging.



Tom Burke


December 15th 2015.





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What were the key factors in getting a deal in Paris? – BBC News – 13 Dec 15






BBC: With us now is Tom Burke who is Chairman of the Environmental Think Tank E3G, and a former government advisor on climate change. Tom thanks very much for coming in. What were your first thoughts when you heard the green gavel go down and they had got the deal?

Tom Burke: I was really excited, and in a way surprised, because it’s a better deal than, even at the beginning of the week, people thought was possible.

BBC: What was key, in your mind, to getting that deal?

Tom Burke: I think two things were key: The first thing that was key, was that it really was a triumph to French diplomacy. They just played a blinder, in handling all the difficult political and organisational processes. And I think that helped to create a really positive mood. The second thing that was key, is that we are already beginning to see the political equation change. The political cost of doing nothing about the climate is now going up, as events become more and more difficult to deal with. Meanwhile, the political cost of dealing with climate change is going down, as renewables and the alternative low-carbon options get cheaper. So what we have seen with this agreement is that it is just pushing that equation further.

BBC: But in the minds of some commentators the language was terribly woolly, and politicians come and go, those who signed this deal won’t necessarily be in office in a few years time.

Tom Burke: Yes that’s absolutely true, and I understand that uncertainty, but the reality is that there are massive constituencies in every country of the world, that want not only to make sure that those promises are fulfilled, but that actually people go further. So the idea that somehow most countries are going to back off, and cheat, and not do what they have said they will do is just a misunderstanding of how these processes work. At the end of the day, every government is tried in the court of public opinion in its own country for promises that it has made.

BBC: It is going to take a change in emphasis thought isn’t it? Away from the old forms of producing energy, to something new, and I supposed the markets and the investors need a very clear signal that their money will be safe there.

Tom Burke: Yes, I think that you are absolutely right about the signal, and I think that they have got the signal that the world is now on a course to a low-carbon economy. The big losers from this are the existing energy industries: The oil and gas companies and the existing big utilities. Because what we’ve seen from governments now is a pretty big political impetus to move in a very different direction for our energy.





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Conservative government facing heavy criticism for cutting green subsidies and investment – Sky News – 13 Dec 15


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Sky News: The government’s energy policy has come under fire and has been described as illegal, just a day after world leaders agreed a historic plan to tackle climate change. David Cameron was among many who praised the deal made in Paris as a huge step forward in helping to secure the future of the planet, but now the Conservative government is facing heavy criticism for cutting green subsidies, and investment in green technologies.

COP21 has been described as a landmark deal, a major leap forward in cutting greenhouse gases and protecting our planet. The UK may in principal have signed up to this more sustainable way of life, but the government’s record on green issues is now under attack. With critics claiming that ministers, rather than showing commitment, have simply been cutting back…

The Climate Change Act means that the UK already has legally binding limits on greenhouse gas emissions, called carbon budgets. We are on course to hit these targets, up until 2022 but after that we are set to miss them. Reducing fossil fuels is a key priority; the government is phasing out coal power stations and shifting to low-carbon energy like wind, solar and nuclear power. Badly insulated homes are another problem, but the government has been criticised for scrapping the Green Deal, which helped people to pay for insulation and replace old boilers. And we are being encouraged to use our cars less or take more green forms of transport. But again ministers have come under attack for raising taxes on smaller cleaner cars.

Tom Burke: I think that the public has actually understood for a long time that the climate is changing, partly because they have got gardens and there are seeing changes in the gardens.

Sky News: Tom Burke previously advised the government on environmental issues…

Tom Burke: I think that the real problem for this country is a real danger of being left behind. The Chancellor has just taken a sledgehammer to the green economy in Britain. Now that was the fastest growing bit of the economy. It employs four hundred and fifty thousand people, and it was growing at 10 percent a year, and the Chancellor took a sledgehammer to it. So it’s going to mean that as the race to low-carbon goes on, we will be left behind.

Sky News: Despite recent cuts in subsidies the government insists that the UK is still leading the way…






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COP21 agreement makes it makes it really clear that we are at a turning point – BBC News – 12 Dec 15










BBC: Tom Burke you have advised the British government on climate change for lots of difficult decisions, balancing both the needs of industry and the effect on ordinary people. What do you make of the draft.

Tom Burke: I think that what’s really important about this draft, much more than the specifics or the text, is the direction of travel that it outlines, it now makes it really clear that we are at a turning point. We are moving away from a world that depended on high carbon energy for its energy supplies, and is now moving, and is going to move further and faster than anybody would have thought of before this agreement, toward a low-carbon economy based on energy efficiency and more use of renewables. So I am quite positive about where we have got to.

If after the disaster at Copenhagen, which was the last big climate summit, you had said that within five years China was going to have agreed to peak its emissions and the G7 countries were going to have agreed to decarbonise their economies by the end of the century, people would have thought that you were mad. Well if that’s the result you got from a failure, what do you think you are going to get from a success. I think people everywhere now are beginning to see this as a success.





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