Are we screwed, p.17
Are We Screwed?, page 17
For Chloe and other student activists, the irony was hard to miss. The Harvard administration had argued for years that divesting from fossil fuels would threaten financial returns. But in the spring of 2015 an investment firm called Trillium Asset Management determined that the reverse was true. Plunging oil prices had wiped an estimated $21 million from the school’s endowment. “Harvard’s continued investment in fossil fuels … has diminished the financial strength of the endowment,” said Trillium’s Matt Patsky. “This staggering potential loss is only half of the story. Opportunity cost is the other half. If Harvard had sold off its fossil fuel holdings, it would have reinvested the proceeds, presumably with broad market exposure.”51
Instead of distancing itself from fossil fuels, however, Harvard decided to get even closer to them. In April the school appointed Thomas Hollister, a former oil industry and banking executive, to oversee its financial endowment. A spokesperson for the school defended the decision by stating that “Harvard remains deeply committed to confronting climate change.” But to the members of Divest Harvard, administration leaders seemed more committed to doing the opposite. “This university continues to uphold the status quo that enables climate change and condones the fossil fuel industry,” Chloe told a Bloomberg reporter. “This action is inconsistent with the morals that we are taught in the classrooms of this university every day.”52
Several weeks later she graduated from Harvard. As the frenzy of schoolwork and activism that had defined her last four years there gave way to the long hot days of summer, she reflected on what she had achieved. Despite everything she’d done, Harvard’s administration still refused to divest from oil, coal, and gas. Yet at home on her family farm in Maine, that didn’t trouble her as much as it could have. When she looked back at a movement that began on twenty-nine campuses in the fall of 2012, then spread around the world to more than four hundred, she was inclined to think that in one important way the Divest Harvard activists had already won. By forcing one of the most prestigious schools in the world into a moral debate on fossil fuels, they’d created “a cultural stigma around business-as-usual,” she wrote. “We have won in symbolic ways, and we will soon win when Harvard commits to divestment.”53
In the meantime, divestment continued to gain global momentum. In late May the University of Oxford announced it would “avoid any future direct investments in coal and oil sands” companies.54 That was followed in June by the largest divestment action in the movement’s history: Norway’s parliament approved a plan to sell off over $8 billion of investments in 122 coal companies from its $900 billion sovereign wealth fund. A panel tasked with exploring the feasibility of divestment concluded that “good long-term returns are dependent on sustainable development.”55 Dropping coal simply made financial sense. “The significance of the Norway decision is that, because of their size and reach, this will act as a major signal for other investors to follow,” said Carbon Tracker Initiative founder Mark Campanale. “This will certainly create a wave.”56
It surged even higher in the lead-up to the international climate talks in Paris that December (which we’ll be looking at in depth in the next chapter). In early fall the state of California passed legislation requiring its two largest pension funds to sell off investments in coal mining firms. A month later the London School of Economics divested its $140 million endowment from coal and oil sands. Halfway through the climate talks, 350.org calculated the value of these commitments. Since divestment began, institutions worth $3.4 trillion had joined the movement (a number that’s now surpassed $5 trillion). Though it represented only a fraction of global economic activity (about 3 percent), 350.org believed “investors are reading the writing on the wall and dramatically shifting capital away from fossil fuels.”57 A new status quo was quickly emerging. The Swiss bank UBS agreed. This was “a social movement with legs,” it argued. “Time, youthful energy and stamina are on the side of the fossil fuel divestment campaign.”58
Chloe was at the Paris climate talks when the $3.4 trillion figure was released. As a key leader of the divestment movement, she should have been overjoyed. But when the climate negotiations ended a week and half later, she found herself alone on a Paris side street at one A.M. with tears in her eyes. All she could think of was how the system that she wanted, one where the survival of her home in Maine was worth as much on a balance sheet as the latest profits, felt so far away. “My heart broke at the thought of all that I love most falling prey to the chaos of … climate change,” she wrote in the Nation.59 But in that moment she vowed to keep fighting. She wouldn’t stop until she lived in a world that cared about more than just financial returns. Only then would her home be safe. “We have to break free from the systems that created this crisis,” she explained. “We need something different.”
At that moment a new status quo was rapidly emerging. In the three years since people like Chloe Maxmin launched the divestment movement, it had become impossible to ignore. In many ways it was being driven by simple economics. It was the realization that the old way of generating wealth, whereby we extract as many resources from the Earth as possible and ignore the long-term consequences, was inefficient. That lessening humankind’s impact on the natural world can also create massive returns. And that the technologies that are enabling this shift, particularly new forms of energy like wind and solar, are becoming less expensive all the time. Not long ago I was invited to a three-day gathering of global elites in New York who are trying to build this new economic system. They believe it can be done with the right combination of market forces and government incentives. By the end of summit, though, I realized it would never succeed without people like Chloe.
The summit was hosted by Bloomberg New Energy Finance, one of the world’s top trackers of our transition to a less destructive economy. Over its three days more than 1,033 world leaders, CEOs, investors, academics, activists, journalists, and other delegates from over forty countries gathered in the dimly lit ballrooms of New York’s Grand Hyatt hotel. Its A-list included Secretary of Energy Ernest Moniz, General Electric chairman Jeff Immelt, former New York mayor Michael Bloomberg, and European climate commissioner Connie Hedegaard. The men and women who I saw streaming into the Hyatt were for the most part wealthy and privileged. Some had even made fortunes in fossil fuels. But these weren’t your typical one-percenters. For one reason or another, they’d come to the conclusion that our current means of generating wealth was hurtling us toward destruction. While fossil fuel CEOs and Republicans denied that there was a crisis, they wanted to profit from solving it.
If this movement had a guru, it was Bloomberg New Energy Finance chairman Michael Liebreich, who’d made a career out of translating the moral imperative of climate change into language that could make investors salivate. He bounded onto stage to the musical accompaniment of Bruno Mars. “The structure of the future will be different from the past,” he said. Wind and solar energy is getting “unthinkably” cheap, he explained. So cheap, in fact, that it may soon provide more economic value to society than fossil fuels. If this persists, Liebreich and many of the delegates were convinced, it will allow us to dismantle the fossil fuel industry’s monopoly control over the global economy. In doing so we can create a safer and more prosperous future. Though the specifics of that future are “very difficult to predict,” Liebreich said, “what we do know is that it’s going to be built by the people in this room.”60
Everyone in the room seemed to share in common a belief that market forces would be the main driver of this transition. They were aware of the immense political and economic power invested in the fossil fuel industry. They knew that it was worth $5 trillion. They knew that 90 percent of the planet’s electricity came from it, as well as the fuel for almost every vehicle, boat, and plane. Yet they believed the fossil fuel industry would ultimately wither and die, because the new economic system they were building was more profitable in the long run. “[It] will require an enormous amount of investment” to shift off oil, coal, and gas, said Maria van der Hoeven, executive director of the International Energy Agency. “But it is precisely that … an investment, and one that will pay out.”61
The financial data seemed to back her up. Ever since Germany and China started pumping out wind turbines and solar panels on a massive commercial scale in the mid-2000s, the price of renewable energy has plummeted. It’s now over one hundred times cheaper to produce a solar panel than it was in the 1970s—and it continues to get cheaper all the time. In the United States solar prices have dropped more than 70 percent since 2009. Those market forces, along with generous federal tax credits, have caused new U.S. solar installations to expand tenfold from 2011 to 2015. The solar industry expects that growth to double in 2016. If these trends continue, it’s plausible that clean energy by 2050 will provide over 80 percent of America’s electricity, a Department of Energy–funded study recently predicted.62
But what Liebreich didn’t mention was that the fossil fuel industry has fought this new economic system every step of the way. As solar power exploded across America, it ate into the profits of coal- and gas-burning utilities and posed a threat to the entire fossil fuel business model. And so some utilities, along with groups funded by the billionaire Koch brothers and Exxon, decided to lead “a fierce, rear-guard resistance at the state level,” according to Rolling Stone. “Their efforts have darkened green-energy prospects in could-be solar superpowers like Arizona and Nevada.”63 A similar resistance was growing in Europe. After regulators there decided to phase out subsidies for clean energy by 2017, the Guardian revealed that “the policy decisions were … requested by BP, Shell, Statoil and Total, and by trade associations representing a plethora of oil and gas majors.”64
The fossil fuel industry is fighting for its survival. Though it may not look like it—especially with Donald Trump in power—it is starting to lose. In Europe that process is further advanced than North America. As wind and solar accelerated over the past decade, Europe’s top twenty coal- and gas-burning utilities lost over half a trillion dollars in value. According to the Economist, those utilities are now faced with “an existential threat.”65 At the Bloomberg summit, clean energy mogul Jigar Shah told me it was only a matter of time before the same thing happened in the United States. He predicted that within a decade or so “90 percent of all [fossil fuel] utility companies will go out of business.” If that happens, it will be because of people like him. “I’m working to destroy [their] business model,” Shah told a packed breakout session.
These trends are playing out across the globe. The first fossil fuel to fall victim to them will likely be coal. After surging over the past decade, global coal demand is now in a precipitous free fall, thanks in part to cleaner and cheaper alternatives like wind and solar. Worldwide consumption declined by up to 180 million tons in the first nine months of 2015 alone. Greenpeace deemed it “the largest drop on record.”66 It wasn’t long before Wall Street took notice. In September, Goldman Sachs advised its clients that “peak coal is coming sooner than expected.” And Moody’s Investors Service later estimated that in North America the coal industry’s earnings fell 25 percent in 2015.67 So when Peabody, the largest and oldest U.S. coal company, filed for bankruptcy in 2016, many took it as a sign that the end of coal was near.
But the same market forces that are killing coal may also lead to a dangerous resurgence of it. This is due to the “green paradox”: that as coal’s demise gets nearer, producers could decide to sell off their reserves as quickly as possible at rock-bottom prices. “It’s the difference between having no profits and having some profitability,” explained Fergus Green, an energy and climate change researcher at the London School of Economics.68 Australia, for instance, currently plans to double its coal exports to places like India, which is right now deciding whether to overtake China as the world’s largest coal consumer or to develop its economy with renewable energy instead. “Coal or the sun,” read a recent Wired story. “The power source India chooses may decide the fate of the planet.”69
Even retired fossil fuel executives now believe the sun makes more financial sense. At the Bloomberg summit, James Rogers, the former CEO and chairman of the coal-burning utility Duke Energy, explained that small-scale clean energy is rapidly becoming more efficient, reliable, and affordable than fossil fuels. In a ballroom full of investors, journalists, world leaders, and CEOs, Rogers mused that if he could reenter the power industry as an idealistic twenty-five-year-old, he’d do it as an “attacker” of the fossil fuel model he used to run. Today’s large incumbents “tend to be resistant to anything that attacks their core business,” he said. “There’s always an instinct to hoping all these new technologies go away. But the reality is, that won’t happen.”
Rogers and everyone else at the summit had good reason to think so. Beginning in 2013, the world began adding more renewable energy each year than every other coal-, gas-, or oil-based power source combined. “Fossil fuels just lost the race against renewables,” read a story in Bloomberg at the time. “And there’s no going back.”70 Deutsche Bank, for one, predicts that solar energy will soon become cost-competitive with coal and gas power across the entire world. In 2015 investment in clean energy reached a record high of $328.9 billion. All this is starting to finally have an impact on our climate. The International Energy Agency (IEA) has calculated that global emissions have stayed flat for the past two years while the economy has grown. “This is yet another boost to the global fight against climate change,” said IEA executive director Fatih Birol.71
But the simple fact remains that unless 80 percent of the planet’s oil, coal, and gas reserves stay in the ground, none of it will make any difference. That was the warning that McKibben delivered midway through the Bloomberg New Energy Finance summit. “There’s no way to finesse the future,” he said. The Arctic is melting, sea levels are rising, and oceans are acidifying. “We’re producing the beginning of real chaos,” he said. Either the Exxons of the world stop extracting fossil fuels immediately, “or the planet burns up.” Beside me several delegates shifted uncomfortably in their seats. This was the brutal reality of our economic system: that even as a safe, stable, and prosperous future is taking shape, the status quo still threatens to destroy it.
At that moment I realized that market forces alone can’t ensure the survival of my generation. The elites gathered in this Hyatt ballroom lent deep financial credibility to an economic system where protecting the planet was just as important as earning profits. But they couldn’t offer the moral urgency needed to defend it. The same market forces that are making this new system economically viable are also making it vulnerable to fossil fuel industry attacks. That is why this new system will never succeed without the shift in generational values expressed by people like Chloe Maxmin. We need them to remind us that a status quo where the profits of a wealthy few put the rest of us in mortal danger isn’t just broken—it’s immoral.
What the divestment movement proved is when enough young people come together to demand that their survival be taken seriously, our economic leaders are forced to listen. The reason banks like UBS and Morgan Stanley are paying such careful attention to people like Chloe is that they know that the frustration and anger that divestment channels isn’t going away. That it’s the reason a small youth-led revolt grew into a $5 trillion movement in only a few short years. And that when her generation takes control of society, it will bring this desire for radical change with it. Our system isn’t run by market forces, after all. It’s run by people. Their values decide its shape and form. It was clear to me as I left the Bloomberg summit that a better world can be attained by changing those values. Indeed, it’s the only option we have. And in the next chapter I’ll show how that same lesson helped end a thirty-year diplomatic stalemate on climate change.
6
Staying Alive in Paris
The young people who helped end three decades of international stalemate on climate change tend to have the same ambivalence toward national borders as Erlend Knudsen. They were also scared shitless about the future that world leaders were negotiating on their behalf. Erlend saw dystopian versions of the future play out over and over again in the research he did for his Ph.D. in climate science. The twenty-nine-year-old Norwegian knows that unless we make profound changes to our status quo, Greenland’s 650,000 square miles of ice sheets—an area nearly the size of Texas—could melt into the ocean and flood every major coastal city on the planet. For a while he assumed that “our politicians or whoever is in charge will understand the importance of the data and act upon it,” he said. “But it doesn’t really work like that.”1 So in late 2015 he set out on a harrowing journey in the hopes of creating a world where it would.
Erlend grew up around snow and ice. He was born and raised in Sandefjord, a midsize town in the south of Norway known for its proximity to ancient Viking settlements. As a child, he spent pretty much every Sunday on skiing or hiking trips with his family. As he got older, he began to take trips without them. “Those trips got longer and more adventurous,” he said. Many of them were spent exploring Arctic regions in Norway’s far north—remote places where, as he described it, “there’re more polar bears than humans.” He loved the Arctic’s austere beauty. “The calm and cold white surfaces of the snow and ice attracted me,” he once said. Erlend’s attraction to the Arctic was metaphysical as well. “It is very hard for humans to survive there,” he said. “You really learn how vulnerable as a human being you are in nature.”
Erlend was also learning how vulnerable nature is to humans. At the University of Bergen he came to appreciate a troubling fact about climate change’s impact on the Arctic. Normally ice and snow reflect the sun, but when that ice and snow melt, the water or land beneath them starts rapidly absorbing heat, which is why the Arctic is warming at rates double the global average. During nine years of academic research, Erlend dealt with so much scary climate change data that he “stopped getting shocked about it,” he said. But there was one “jaw-dropping” fact that the young scientist found impossible to accept: after decades of scientific research into the causes and impacts of climate change, world leaders still failed to take the threat seriously: “I was like ‘If we already know all this, then why don’t we do anything?’”
