NRDC says Government subsidies for producing oil dwarf company investments in renewable fuels
Thu 15 December 2011
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The US' Natural Resources Defense Council (NRDC) has submitted evidence to the California Air Resources board which shows that investments in traditional oil production are vastly greater (200 times) than company investments in renewable fuels. Moreover Government subsidies for producing oil are a hundred times greater than oil industry investments in renewable fuels.
To inform discussions about California's implementation of cleaner fuel standard, the NRDC has analyzed the past five years of oil industry investments in lower-carbon renewable fuels such as advanced biofuels and compared these to the industry’s investments in traditional oil discovery, extraction, and production. NRDC has also compared these investments against those in even dirtier fuel sources such as Canadian tar sands.
Data was gathered from a number of sources including financial statements of individual oil companies, financial and industry consulting services, government and industry reports, and news articles.
The research concludes that for every dollar the oil industry spent to find and produce more oil, less than half a penny was spent on producing renewable fuels. It also found that the oil industry invests fifty times more in producing dirtier tar sands alone than in renewable fuels.
Government subsidies for producing oil are a hundred times greater than oil industry investments in renewable fuels.
In an article on related issues published in the Financial Times Lord Stern says that governments must not overlook a fundamental contradiction between the way global fossil fuel reserves are evaluated and long-term policy goals. By ignoring this contradiction, he says, companies and markets, as well as governments, are undermining management of the huge risks that rising levels of greenhouse gases pose to their survival.
More than two-thirds of current annual emissions of greenhouse gases are carbon dioxide produced by the burning of coal, oil and gas. But according to the Carbon Tracker Initiative, proven reserves of fossil fuels, the big majority owned by nation states, would, if burned, produce 2.8tn tonnes of carbon dioxide, about double the carbon budget for the 50-50 chance of meeting the 2 degrees target.
Lord Stern continues..of this total, the proven reserves of the world’s top 100 listed coal companies and top 100 listed oil and gas companies could produce 745bn tonnes of carbon dioxide; more than half of the entire greenhouse gas budget for the next 40 years. National oil companies, often not listed, have far bigger proven reserves. Companies probably have substantial further potential reserves, and there are billions of dollars committed to searching for more, including tar sands and shale gas.
Stern concludes that it is hard to believe that these companies, with a combined value of $7.42tn, are banking on an imminent deployment of carbon capture and storage, which prevents carbon dioxide from being emitted from the burning of fossil fuels. So are they assuming countries will not meet their pledges for reducing emissions, and that we will carry on with “business as usual”? If this is the case, the resulting rise in atmospheric concentrations could eventually mean, with a substantial probability, global warming of 5 degrees or more, to temperatures not seen on Earth for more than 30m years. That would probably transform where and how people could live and lead to the migration of hundreds of millions, as well as to conflict and severe economic decline.
Stern says the companies' behaviour points to a logical contradiction between what many governments are saying and what markets appear to believe – implying severe risks both to the markets themselves and to the environments that shape lives and livelihoods across the world.
For the full article and further information, see the associated links.
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