Scientists expect emissions, driven by fossil fuels and agriculture, to continue rising rapidly.
The Seneca Resources shale gas well in St. Mary’s, Pa. Eighty percent of North America’s rise in methane emissions was from fossil fuels.Credit…Keith Srakocic/Associated Press
Global emissions of methane, a potent greenhouse gas, soared to a record high in 2017, the most recent year for which worldwide data are available, researchers said Tuesday.
And they warned that the rise — driven by fossil fuel leaks and agriculture — would most certainly continue despite the economic slowdown from the coronavirus crisis, which is bad news for efforts to limit global warming and its grave effects.
The latest findings, published on Tuesday in two scientificjournals, underscore how methane presents a growing threat, even as the world finds some success in reining in carbon dioxide emissions, the most abundant greenhouse gas and the main cause of global warning.
“There’s a hint that we might be able to reach peak carbon dioxide emissions very soon. But we don’t appear to be even close to peak methane,” said Rob Jackson, an earth scientist at Stanford University who heads the Global Carbon Project, which conducted the research. “It isn’t going down in agriculture, it isn’t going down with fossil fuel use.”
Scientists warn that if greenhouse gas emissions continue to rise on the current trajectory, the world has little hope of limiting global warming to 1.5 degrees Celsius, or even 2 degrees Celsius. If the world warms beyond that, tens of millions of people could be exposed to life-threatening heat waves, freshwater shortages and coastal flooding from sea level rise.
And while the coronavirus pandemic led to a large temporary drop in carbon dioxide emissions as much transportation and industry ground to a halt, there are signs methane emissions have not dropped nearly as much, Dr. Jackson said.
“We’re still producing food. We’re still producing natural gas,” he said. “If we continue to release methane as we have done in recent decades, we have no chance.”
Overall, global methane emissions are up 9 percent from the early 2000s, according to the latest findings, and human activity is responsible for more than half of those emissions. Raising livestock like cattle and sheep, which burp copious amounts of methane, is a major source of methane emissions, as is coal mining, which releases methane from deep within the rock.
Of the anthropogenic emissions, agriculture makes up about two-thirds, while fossil fuels contribute most of the rest. The increase in emissions between 2000-17, though, came equally from agriculture, which rose nearly 11 percent from the 2000-06 average, and fossil fuels, which rose nearly 15 percent.
Methane emissions grew quickest in three regions: Africa and the Middle East; China; and South Asia and Oceania, including Australia. A surge in coal use caused methane emissions to jump in China, while population growth and rising incomes have led to more emissions elsewhere, the scientists said.
The United States has led a significant rise in methane emissions from North America. About 80 percent of the total increase for the region was driven by fossil fuels, underscoring the environmental fallout of America’s shale boom.
Curbing methane emissions will require better plugging leaks and other fugitive emissions from oil and gas infrastructure, like wells and pipelines, which are a major source of methane emissions, the scientists said. It will also require an overhaul of agriculture, especially cattle and rice farming, two large sources of methane emissions.
A big question mark is the contribution of natural sources of methane emissions, like wetlands, mud volcanoes and permafrost. Natural methane emissions have been relatively unchanged from 2000-17, albeit with large uncertainties.
There are fears, for example, that thawing permafrost in the Arctic could start releasing large quantities of methane into the atmosphere, further accelerating climate change. For now, scientists have found little evidence of increasing methane emissions in the Arctic, though they warn that could change as warming intensifies. Scientists have warned that the Arctic region is warming at more than twice the rate of the rest of the planet.
“The key message is that methane concentrations and emissions are still rising, and we know the main cause,” said Marielle Saunois, a scientist at the Laboratory for Climate and Environmental Sciences in France, and a member of the research team. “This is not the right path.”
Hiroko Tabuchi is an investigative reporter on the climate desk. She was part of the Times team that received the 2013 Pulitzer for explanatory reporting. @HirokoTabuchi•
Ontario Power Generation bought three natural gas plants in May. Twenty-nine group are now calling for the province to phase out natural gas plants entirely. Photo from Ontario Power Generation/Twitter
The Ontario government must phase out its fleet of natural gas-fired power plants by 2030 to have a hope of meeting its climate goals, a coalition of 29 groups says.
Led by the Ontario Clean Air Alliance, the list includes the David Suzuki Foundation, the Registered Nurses’ Association of Ontario, the Canadian Association of Physicians for the Environment, Leadnow, and 350.org.
If the government doesn’t shift away from its plans to rely on natural gas more in the coming years, the province risks erasing some of the gains made by phasing out coal, said Ontario Clean Air Alliance chair Jack Gibbons.
“It’s essential for Ontario to move forward and meet its 2030 climate targets and not go backwards,” Gibbons said.
“We believe this proposal is a no-brainer.”
The coalition’s call to action also comes with a few more asks: for Premier Doug Ford to reverse cuts to energy efficiency programs, put more funding towards developing low-cost renewable resources, accept an offer of cheap hydroelectricity from Quebec and cap emissions from existing natural gas plants until they can be phased out.
The coalition’s call was backed by Ontario Green Party Leader Mike Schreiner on Thursday, who called for the NDP and Liberals to add their support as well.
“For two years, (Premier) Doug Ford has doubled down on costly, climate-wrecking fossil fuel projects while ripping up clean energy projects,” Schreiner said in a statement.
“We can build back better from COVID-19 with healthy, affordable electricity while refocusing on the climate crisis.”
The office of Liberal Leader Steven Del Duca declined to comment.
Ontario NDP climate critic Peter Tabuns said his party backs the call to action.
The Ontario government must phase out its fleet of natural gas-fired power plants by 2030 to have a hope of meeting its climate goals, a coalition of 29 groups say. The call has been backed by the Ontario NDP and Green parties. #onpoli
“We know there is no future for gas-fired plants in Ontario,” Tabuns said. “We aren’t going to be able to make our climate targets with them.”
Most of Ontario’s energy comes from hydro and nuclear power. In 2019, natural gas made up 9.5 per cent of the province’s total power generation, the government said.
But the Ford government is planning to rely on natural gas more heavily in the years ahead to make up for nuclear plants going offline for refurbishment, and for the premier’s cuts to green energy programs. That means greenhouse gas emissions from electricity generation in Ontario are set to nearly triple over the next decade, the Independent Electricity Systems Operator (IESO), which operates Ontario’s energy market, said in January.
In May, provincially owned Ontario Power Generation spent $2.8 billion to buy three natural gas plants.
Alex Puddifant, a spokesperson for Energy Minister Greg Rickford, didn’t directly address the criticism from the coalition, but said in an emailed statement that natural gas is more reliable than renewable energy or imported power.
“In comparison to alternative choices (e.g., renewables, imports), natural gas generation provides the needed flexibility to respond to changing conditions in the power system,” Puddifant said.
Tabuns said the government should instead focus on supporting workers in the natural gas industry so they are able to find other jobs when the plants are inevitably phased out. It doesn’t make sense to use such an emissions-heavy power source in the midst of a climate crisis, he added.
“If we’re actually going to be politically successful bringing people on board in Ontario to a green economy, they’re going to have to know that they’re not going to be abandoned,” he said.
Ontario could help the world meet its climate targets, Tabuns said. Such changes could also benefit public health, as switching to lower-emissions energy sources decreases pollution that can cause health problems.
But if the province doesn’t change course, he said, “it would be disastrous.”
“We see a just transition for gas power plant workers and a phaseout of gas-fired power in Ontario as what we have to do to meet our climate targets.”
Expert Panel on Sustainable Finance Delivers Final Report; Finance Minister Joins International Climate Coalition
In April 2019, at the Spring Meetings of the World Bank Group and International Monetary Fund, Finance Ministers from more than twenty countries launched a new coalition aimed at driving stronger collective action on climate change and its impacts. The newly formed Coalition of Finance Ministers for Climate Action endorsed the Helsinki Principles at the meeting, that promote national climate action, especially through fiscal policy and the use of public finance.
Finance ministers have a unique opportunity to design and implement comprehensive stimulus packages that can drive a strong recovery and build a better future: so argues a new paper prepared at the request of the co-chairs of the Coalition of Finance Ministers for Climate Action and summarised in this commentary.
The COVID-19 context
The world has been transformed by the COVID-19 crisis. Beyond its tragic human costs and loss of life, the pandemic and the necessary lockdowns have resulted in severe economic impacts with immense loss of jobs and a major threat of global depression.Impacts differ across countries, with emerging markets and developing countries also hit by historic declines in commodity prices, tourism and remittances and unprecedented reversals in capital flows, which have fuelled a deep loss of confidence and exacerbated vulnerability to other potential shocks. Finance ministers have had to respond quickly and act decisively, shaping and implementing rescue plans and securing international support where needed.
Despite the huge amount of global stimulus to date, a fast bounce-back cannot be guaranteed. The outlook is uncertain and it could take several years to recover from this crisis, with long-lasting effects, including for debt and fiscal positions.
At the same time, the climate and nature crisis remains just as pressing, requiring urgent action. Concentrations of greenhouse gases in the atmosphere are likely to keep rising and the world could see temperatures far outside human experience over the next few decades. Much stronger action on mitigation, resilience and adaptation will be necessary. The importance of protecting nature has also become much clearer and sharper in the COVID-19 context: failure to protect nature has increased the risks of infectious diseases emerging and led to immense social and economic damage.
The world was on an unsustainable and vulnerable path prior to the crisis and the recovery must avoid the dangers and fragilities of the past – there can be no going back to the old normal. Attempts to unwind existing environmental regulations and policies and return the economy to the old model, which was characterised by low productivity, high inequality and climate/environmental risk, would be misguided and could severely hinder the ability of finance ministers to respond to the multiple challenges, vulnerabilities and forces of change they are facing.
An opportunity for finance ministers to lead a strong recovery and build a better future
Finance ministers have an opportunity to design and implement comprehensive and ambitious stimulus packages that both restart their economies, including restoring confidence and delivering on the urgent challenge of jobs, and set a path of sustainable, inclusive and resilient growth. This calls for clarity of strategy and direction, to chart a purposeful course over the next decades.
The recovery has to be green, but much more than green. In particular, inclusion and sustainability can and must go hand in hand. There will need to be a strong focus on employment, especially for the young generation, to respond to the immediate shock and longer-term structural challenges. Stimulus packages that aim to grow the denominator of debt/GDP through productive and sustainable stimulus investment are also the most attractive route to debt sustainability; a path of austerity that leads to a great depression would be particularly damaging – socially, economically and environmentally.
The recovery packages finance ministers need
There are three key elements of stimulus packages that finance ministers need to get right for a better recovery and future. They need the right investment, the right supporting policies and the right finance.
The right investmentsare fast, labour-intensive in the short run and have high multipliers. There are strong arguments, supported by mounting evidence, that green investments perform well, if not better, than alternative investments, across most of these dimensions. Green investments also address climate risk and have other attractive co-benefits. Green investments are available in a broad range of productive complementary assets, including physical and human capital, knowledge and intangible capital, as well as natural and social capital.
The transformational opportunities for better growth are looking ever more attractive, with fast moving technological advances such as in sharply falling costs of round-the-clock solar and growing awareness of co-benefits, for example of reduced congestion and pollution.
There are a range of tools that can help finance ministers get the investment decisions right, including applying a wellbeing lens, green budgeting, project-level guidance and checklists, sector-level guidance and tools for resilience, broadly defined.
The right policies can help to maximise the benefits of the investments for jobs and sustainable growth. Three key policies are carbon prices, supportive regulations and bailout conditions.
Falling fossil fuel prices provide an opportunity for carbon pricing and inefficient subsidy reform, which can provide a source of much needed revenues, and can be part of wider fiscal reforms to restore fiscal sustainability. Complementary and supportive regulations and competition policies can provide clear signals, policy certainty and induce innovation in growth sectors, lowering the level of public stimulus expenditures required to bring an economy back to full activity. Bailouts with conditions can save jobs and accelerate low-carbon restructuring in ‘brown’ firms/industries. All policies will need to carefully consider distributional consequences to ensure a just transition for workers and communities.
The right finance is needed to fund the investments for recovery and long-term transformation. With an extremely difficult macro-fiscal context, especially in emerging markets and developing countries – many will also face debt difficulties and heightened vulnerabilities – finance ministers will need to find ways to create fiscal space and unlock finance for the best growth and job enhancing investments available to them. They will also need to anticipate and lay the foundations for the substantial investments needed to drive the transformation to a low-carbon and climate-resilient economy.
To do this it will be critical to mobilise all pools of finance and utilise them more effectively. This includes strengthening domestic public finance foundations, bolstering and making more effective use of international climate finance, and enhancing the role of international and national development banks. It will also be crucial to augment substantially the mobilisation of private finance and align all finance with the Paris Agreement and Sustainable Development Goals (SDGs).
Implications for the Coalition of Finance Ministers for Climate Action
The global context and the recovery packages we need will have important implications for the priorities and work agenda of the Coalition; finance ministries will be central in the design and implementation of these packages.
The work of the Coalition around the Helsinki Principles was fortuitous; most of this work can help support a better recovery. Some elements of the work will be of particular benefit, e.g. revenue-enhancing measures and pricing, including carbon pricing and inefficient fossil fuel subsidy reform; some elements will need to be expanded, including around mobilisation of private finance, and in other cases some new work will be needed to align with the COVID-19 context, including around complementary regulations and bailout conditions.
There are tremendous advantages to Finance Ministers working and moving together at a time when joint action can bring the urgency and scale of action needed to reach climate and development goals.
Members of Stand.earth deliver their petition to Zurich Insurance. Image credit: Stand.earth
Trans Mountain must renew its insurance by the end of August in order to proceed with its controversial tar sands pipeline – and two more insurers have just announced they’re dropping the project.
This. Is. Huge. Because Zurich, Trans Mountain’s biggest insurer, could be very close to dropping the pipeline too.
But despite committing last year to stop insuring tar sands projects like this one, we have intel that Zurich is under direct pressure from the Federal Government to find a loophole that will make it possible for them to keep insuring the pipeline. A wave of public pressure is urgently needed to push Zurich over the line, leaving Trans Mountain scrambling to find new insurers before its deadline next month.
Last year, Zurich became one of the world’s first insurance companies to announce it would no longer back dirty tar sands projects. But when push came to shove, the company ended up renewing its coverage with the Trans Mountain pipeline in 2019 – falling for Trudeau’s greenwash about the fossil fuel pipeline somehow fitting within Canada’s climate targets.
Clearly, Zurich isn’t getting it. Someone needs to remind its executives that the Trans Mountain pipeline is literally designed to bring toxic tar sands from Alberta to the Pacific coast, massively increasing the risk of a tanker spill in the Salish Sea and locking in tar sands expansion for another 40 years.
Tar sands are one of the dirtiest, highest carbon sources of oil on the planet. Emissions from oil and gas production are one of the primary reasons Canada cannot meet its Paris commitments. And the only thing limiting the growth of the tar sands right now is a lack of pipeline capacity. That’s why stopping the Trans Mountain pipeline is critical in the fight against climate change.
Taking on the insurance industry may seem like an unusual tactic, but it just might be our best shot for stopping this pipeline project once and for all. Earlier this month, the Supreme Court of Canada denied the Squamish Nation, Tsleil-Waututh Nation and Coldwater Indian Band leave to appeal the approval of the Trans Mountain pipeline. Though each of these nations remain steadfast in their commitment to fighting the project and are still exploring other legal options available to them, getting insurers to drop the pipeline is now more critical than ever. And without insurance, the Trans Mountain pipeline simply cannot go ahead.
Already, momentum is building. As a result of public pressure, eight insurance companies have recently decided to stop insuring the tar sands. The insurance industry is waking up to the fact that fossil fuel companies are risky customers for it, and is well aware that climate change is an existential threat to its business model.
If we can pressure Zurich to follow suit and drop its policy with Trans Mountain ahead of the August 31st renewal deadline, it would be a huge setback for the beleaguered project. And (bonus!) it would make it harder for future tar sands projects to get insured too. But to convince Zurich not to fall for the Federal Government’s environmental lies about the pipeline once again, and remind it that this project is a complete climate disaster – we need a public outcry.
Shifting the entire insurance industry may seem like a big task, but we’ve already made huge progress since we launched this campaign last year. When Trans Mountain’s insurance was up for renewal in 2019, we reached out to all its insurers directly and put the spotlight on the industry in the media. So many people in the Stand.earth community stepped up to put the pressure on insurance companies, signing petitions, emailing key executives, and calling head offices. When we delivered your petition to Zurich’s Vancouver office last summer, an employee told us that they’re very aware of our campaign – and in fact, their office had been flooded by calls and emails from this community.
This year, we’ve sent letters to all Trans Mountain’s insurers again – and right off the bat, German companies Munich Re and HDI responded to let us know that they were going to be dropping the project. None of this would have been possible without the incredible work done by Stand members. We’re so close to getting Trans Mountain’s biggest insurer to drop the pipeline once and for all, but Zurich is still dragging its feet.
Climate campaigners and Indigenous peoples across Canada have spent the past several years protesting the Trans Mountain pipeline. Mark Klotz / Flickr / cc
Rainforest Action Network recently uncovered a document that lists the 11 companies that are currently insuring the controversial Trans Mountain tar sands pipeline in Canada. These global insurance giants are providing more than USD$500 million in coverage for the massive risks of the existing Trans Mountain pipeline, and they’re also lined up to cover the expansion project.
The existing Trans Mountain pipeline is a major environmental and public health hazard with a long history of disastrous spills. Earlier this month, 50,000 gallons of crude oil spilled from a pump station located above an aquifer that supplies the Sumas First Nation with drinking water.
The Trans Mountain Expansion Project would multiply these risks tremendously. Though it is officially called an “expansion,” this is no minor renovation. The Canadian government, which owns Trans Mountain, is attempting to build a parallel pipeline that would ship more than 890,000 barrels per year of highly-polluting tar sands crude oil to the coast of British Columbia.
For more than a decade, the expansion of Trans Mountain has been delayed in the face of powerful, Indigenous-led resistance on the ground and in the courts. It has not secured the Free, Prior, and Informed Consent of Indigenous communities that are directly in the pipeline’s route. Right now, the Tsleil-Waututh Nation, Squamish Nation, and Coldwater Indian Band are actively engaged in legal challenges on the project, and land defenders are asserting their rights and title along the route.
Furthermore, pushing forward this project flies in the face of Canada’s commitment to cut emissions in line with the Paris Agreement. To keep global warming under 1.5ºC, we must stop expanding tar sands — and all fossil fuels — and instead invest in a just transition to phase out existing operations.
In the midst of the COVID-19 crisis, the government and corporations are doubling down on their destructive plans to build new fossil fuel projects. Bulldozers that are laying the initial pipe on Trans Mountain have not quieted, even though this construction poses major risks to Indigenous and rural communities in its path, as well as workers that are housed together in close quarters. In Alberta, viral outbreaks have been linked to man camps at tar sands extraction sites, and yet the province’s energy minister proclaimed that now is a great time to construct a pipeline, due to social distancing protocols that limit public protest.
The risks of these pipelines are so great that under federal law, the current pipeline and its expansion are not able to transport any oil without insurance. So if we can stop the flow of insurance money, we can stop the flow of oil.
We’re ramping up the pressure on the insurance companies that are providing critical financial support.
Who’s insuring the pipeline? (2019-2020)
Here’s the list of insurance companies that are providing coverage from August 2019 through August 2020:
Zurich (Switzerland)
Lloyd’s (UK)
Liberty Mutual (US)
Chubb (US)
AIG (US)
WR Berkley (US)
Starr (US)
Stewart Specialty Risk Underwriting (Canada)
Energy Insurance Mutual (US)
Temple Insurance (Germany), a Canadian member of the Munich Re group
HDI (Germany), which is owned by Talanx / Hannover Re
These insurance policies are being arranged by the biggest insurance broker in the world: Marsh. Fun fact: Marsh is also currently under fire for facilitating insurance for the Adani Carmicheal coal mine in Australia.
Trans Mountain’s insurance policy is up at the end of August, so we are urgently calling on these companies to:
Publicly commit to not renew their insurance policy for Trans Mountain for 2020-21;
Moving forward, rule out insurance for all tar sands extraction and transport projects and companies;
Adopt a policy to ensure that projects and companies they insure have obtained the Free, Prior, and Informed Consent of impacted communities.
We’ve made some progress. In late June, Talanx indicated that it already dropped the pipeline, and Munich Re signaled that it will not renew its policy. These two German insurers recently adopted policies restricting tar sands business.
A global coalition of environmental NGOs, First Nations, and insurance campaigners is demanding that the rest of Trans Mountain’s insurers follow suit and stop being complicit in the violation of Indigenous rights, spread of COVID-19, and the desecration of sacred waterways and the global climate.
Elana Sulakshana leads Rainforest Action Network‘s campaign pressuring the U.S. insurance industry to stop making the climate crisis worse. She has been active in the climate justice movement for the last eight years, most recently organizing for just and equitable climate policy in Washington State, fighting fracking in the U.K., and campaigning for universities to divest from fossil fuels and reinvest in communities.
While oil and gas are not alone in struggling in the economic slump, the reality of the climate crisis is starting to bite, analysts say
An estimated US$1.6tn has been wiped from the global oil and gas industry this year, but the danger for Australia’s LNG sector remains little acknowledged. Photograph: Dazman/Getty Images/iStockphoto
The global oil and gas industry has crashed. In mid-June, BP – formerly British Petroleum – slashed the value of its assets by US$17.5bn and revealed plans to cut its workforce by 15%. It forecast the price of oil would be a third lower than expected for decades to come and said it may be forced to leave new fossil fuel discoveries in the ground.
It was later joined by Royal Dutch Shell, which announced its own US$22bn writedown, with its vast gas business – including major liquefied natural gas (LNG) developments in Australia – expected to take the heaviest toll.
Wood Mackenzie, a global energy research and consultancy group, says the fall in value is industry-wide, estimating US$1.6tn has been wiped from the sector this year, with more to come.
While oil and gas are not alone in struggling in the face of biggest economic slump in nearly a century, WoodMac says its carnage cannot solely be blamed on Covid-19. The economic reality of the climate crisis is also starting to bite.
“Just a few years ago, few within the oil and gas industry would even countenance ideas of climate risk, peak demand, stranded assets, liquidation business models and so on. Today, companies are building strategies around these ideas.”
If that reflects the global picture, the story among Australia’s oil and gas businesses – which until recently have been enjoying booming growth selling LNG to Asia, and driving most of the increase in national greenhouse gas emissions – is less clear.
The idea of stranded assets due to climate change is not new. It suggests carbon-intensive projects potentially worth trillions risk becoming next-to worthless – stranded – if investors abandon them in favour of emissions-free technology, as required to meet the goals of the Paris climate agreement.
In Australia, the risk is recognised by the country’s major financial institutions and regulators, and has increasingly become a focus of shareholders. Earlier this year they gave resolutions calling for climate action and transparency at oil and gas companies Woodside Energy and Santos more than 50% and more than 40% support, respectively. Activist shareholders are not persuaded by suggestions support for gas is justified as it emits less than coal when burned, and point to studies suggesting it may release more emissions than previously thought.
‘Double-whammy effect’
On coal, where the concept of climate risk is increasingly accepted, Australia’s second-largest superannuation fund, First State Super, last week announced it would divest from any company that earns more than 10% of revenue from thermal coal mining. It followed an earlier, similar statement by Hesta, and three of Australia’s four major banks promising to soon stop supporting thermal coal.
But the possibility of major assets being stranded is only occasionally acknowledged across politics, media and the industry. The federal resources minister, Keith Pitt, responded to First State Super’s announcement by saying it was “mystifying” that a fund would deny its members a “solid and attractive investment opportunity” in coal based on “misguided ideology”.
Australian oil and gas companies have been hurt by the shutdown, with decisions on more than $80bn of new LNG projects put on hold and Oil Search this month laying off a third of its workforce. But the local industry’s public position on what the future holds differs from its competitors in Europe.
In response to questions about Shell and BP’s writedowns, the Australian Petroleum Production and Exploration Association (Appea), representing oil and gas producers, did not mention climate risk.
Andrew McConville, Appea’s chief executive, said Covid-19 and the ongoing low oil price were having a “double-whammy effect” and that it would remain an “incredibly challenging time” for the sector even after the broader economy began to recover. But he said the industry was accustomed to cyclical commodity prices and would be “here for the long term”.
“Energy demand, and oil demand with it, will recover as travel restrictions are eased and economic activity resumes over time,” McConville said. “The right regulatory and fiscal policy settings will help ensure that Australia remains a competitive destination for oil and gas investments into the future.”
The Morrison government agrees, having backed the idea of a “gas-fired recovery” from coronavirus after a drop in domestic gas prices. Its National Covid-19 Coordination Commission, led by the former Fortescue Metals executive Nev Power, has focused on gas-related recommendations.
Neither the government nor the commission has explained how lower gas prices would encourage increased private investment unless it is backed by substantial public support. Even if that were in the offing, analysts believe maintaining low prices would be a pipe dream given production costs in new Australian gas fields are recognised to be high.
This, in part, is what is driving the push to install gas import terminals along the Australian east coast. While it may seem ridiculous to starting buying fossil fuels from overseas while the country mines huge amounts for export, experts believe it may be the cheapest gas option – if the Morrison government and industry are determined to back new gas infrastructure rather than accelerate a switch to cheaper renewable energy.
Big investors may ultimately drive change
Analysts and investor representatives say it is still unclear how much weight climate risk will be given in oil and gas investment decisions in Australia in the short-to-medium term.
Zoe Whitton, the head of ESG research with the financial services multinational Citi, says Australia’s outlook is arguably different to some other oil and gas producers as it mostly extracts gas, not oil. It also mostly sells to north Asian countries, where investment patterns are less clear and have been interpreted as backing both fossil fuels and renewable energy.
It means that compared to Europe, views on gas still range from it being seen as a legitimate transition fuel to any support for it being clearly at odds with where the rest of the world is pulling. Whitton says investors are increasingly, but not uniformly, in the latter camp.
“The local [companies] face the same pressure that the internationals do,” she says. “There is a process of negotiation going on between companies and investors, but I don’t expect the locals will respond to the global signal in a uniform way or a rapid way.”
“The truth is gas may be a transition fuel for some regions, but not at any price and not forever,” Whitton says. “So the question is at what price, and for how long?”
Emma Herd, the chief executive of the Investor Group on Climate Change, representing institutional investors with funds worth about $2tn, says there is clear evidence an industry-wide structural change is under way. “Covid is to some extent attaching a rocket to a trend we were seeing anyway,” she says.
She says Australia is part of that trend, but agrees with Whitton that it is a slightly different conversation than in some parts of the world. “Australia is saying its gas will continue to be competitive and its markets will hold up as others go down. The big question is: is that true?”
Herd says if there is any analysis to support the idea that the local gas industry will thrive while others crash it has not been publicly released.
The lack of information is driving calls for fossil fuel companies to release data on their “scope 3 emissions” – in basic terms, the carbon pollution that results from the fossil fuels a company sells. Herd says including information on scope 3 emissions in financial reporting is vital for investors to understand financial risk in a world that has pledged to cut emissions, and driving the push at recent annual general meetings for greater disclosure.
“The obvious question is if Shell and BP can do it, why can’t Australian companies to the same extent?” she says.
“What we need to see for our gas companies is reporting at the asset [project] level, not just at the company level. We need the data to assess risk. That could change the viability of some of their projects.”
Australia’s oil and gas companies did not engage on the question of climate risk. Santos declined to comment while spokespeople for Woodside and Origin Energy said the companies periodically reviewed their portfolio of assets. Origin said several factors contributed to the valuation “including commodity prices, interest rates, exchange rates and costs”.
Whitton suggests big investors, who may ultimately drive change faster than governments, have additional criteria.
“A lot of investors are saying ‘look, if I have 10 futures and if in five of those futures gas is an answer and in five it is not, but renewable energy is an answer in all 10, then you can see where the greater risk lies,” she says.
“The reality is when you have a really wide range of future scenarios the risk of stranded assets is higher. And the risk of stranded assets is higher in Australia just by dint of the higher likelihood that people will take a bet on oil and gas compared to the EU, where they won’t.”
It’s times like these that investors start to take a good, hard look at their portfolios. The market downturn has left many questioning whether stocks they’ve held for years, even decades, are good options any more. One such sector many have begun to question is the oil and gas industry.
For years, analysts have predicted the return of oil and gas. However, energy companies have been anything but lucky. Since 2017, across the board stocks plummeted by about 50%. Many of these companies have barely managed to stay afloat, especially now that an economic downturn has hit. Add to that the inability to keep up with production due to COVID-19 and you have a dire situation.
It gets worse
The oil and gas sector has seen a string of issues that have many thinking twice about investment. Take, for example, the Dakota Access Pipeline. The U.S. District Court stated the pipeline failed to meet environmental standards, which means the pipeline will be unable to operate until 2021. The closure affects some Canadian companies that use the pipeline to ship their product, which means there’s no connection with the Enbridge system.
Then there’s the Keystone XL pipeline. The U.S. Supreme Court recently refused to allow construction, despite President Donald Trump’s bid to restart the project. Again, this would see another delay to at least 2021, if ever should former Vice President Joe Biden become the new U.S. president.
Much of this stems from one thing: activism. Oil and gas has become a huge focus of both environmental and community activist, who see the creation of pipelines and drilling as both bad for the earth, and bad for the indigenous communities who have claims to the land. This of course is not just in the U.S., but has been in Canada as well.
Just this week, the Supreme Court of Canada rejected an appeal by B.C. First Nations against the Trans Canada Mountain pipeline expansion. While it means the pipeline can move forward, it’s still bad publicity and could lead to further appeals.
Any hope?
The only hope around stems from two areas, and both are short term boosts. One is from Warren Buffett, who recently came out of acquisition hibernation to buy Dominion Energy Inc.‘s natural gas pipeline and storage assets for US$9.7 billion. So this company could see a boost in the short term, and it shows Buffett perhaps believes gas is undervalued at the moment.
There could also be a boost to the sector once the pandemic is over. With production back up and running, there should be a surge in production and share prices pretty much across the board. So if you’re willing to wait, then it could be a good call to sit back until shares return to pre-crash prices.
Bottom line
It doesn’t look like oil and gas will return in the short term, and in the long term there are many who argue it’s a dying breed. It might be time to look at other options, such as the utility sector for stable revenue. I would definitely consider Algonquin Power & Utilities Corp.(TSX:AQN)(NYSE:AQN) for that reason. The company is both into energy and utilities, creating stable revenue that will keep shares rising for decades.
While shares of Algonquin are near all-time highs, they still have a potential upside to bring it back to pre-crash prices. If the world starts increasingly moving toward to renewable energy, a company like Algonquin will skyrocket. It already has the base invested in renewable projects, and has been supported by its utility businesses.
Meanwhile, the company continues its growth strategy through acquisition over the past two decades that secured even more growth. The company also has a secure 4.94% dividend yield for investors.
The Supreme Court of Canada. – Chris Helgren/Reuters
The United Conservative government of Alberta just introduced a spate of anti-union legislation. They are continuing the country-wide practice of governments cynically thumbing their noses at the Supreme Court of Canada. While hyping their commitment to collective bargaining, the provinces are practising precisely the opposite.
Not one of these union-busting laws will likely survive a Charter challenge. But that’s not the point. Though the Supreme Court has pronounced definitively on several key labour issues, all this new regulation will have to wend its way through the lower courts before being thrown out.
That will cost taxpayers millions and make lawyers richer. But while the lawyers argue, the legislation sticks. And while it sticks, it contributes to a climate of intimidation and stifled collective bargaining. That’s what the governments really want. Future governments can pick up the pieces and pay the price.
What are the issues involved?
Denying unionization to groups of workers:
Thirteen years ago, the Supreme Court of Canada ruled that access to unionization is Charter-protected for all save a few involved in management and confidential activities. Yet several groups are still excluded from that right, including agricultural workers, domestics and the dependent self-employed.
Crown attorneys in Nova Scotia comprise one group that has never won full unionization, rendering them vulnerable to having their negotiated access to arbitration yanked, as the provincial government here did last autumn.
Hobbling collective bargaining:
In 2015, the Supreme Court ruled that the right to strike falls under the Charter. If governments want to remove that right, they must substitute binding arbitration. But provincial governments want neither strikes nor arbitration, especially in the public sector, where either they have outlawed strikes entirely, imposing their own conditions, or have imposed a harsh regime of “essential services,” rendering strikes meaningless.
Provincial governments have also impeded union access to first collective agreement arbitration. That is one of the first things the Nova Scotia McNeil government did after its election in 2013.
Making it more arduous for unions to organize:
Nova Scotia was the first province, in 1982, to kill “card count” certification of unions. Thenceforward all jurisdictions followed suit, forcing a vote and giving bosses greater leeway to bully their employees into abandoning union drives.
Some NDP governments across the country brought card count back in, but subsequent governments rolled this back. They claim votes are more democratic; but if they’re so keen on democracy, why don’t they allow workers in all workplaces to vote periodically if they want workplace democracy through union representation?
Stifling union political expression:
Way back in 1991 the Supreme Court ruled that unions have the right to spend their members dues on a host of political activities. If enough members disagree, said the court, they can exercise their collective power within the union to change its policy.
But the Alberta government is now trying to revisit the issue by forcing workers to opt-in to having part of their dues used for non-collective bargaining purposes. Of course, this is really a sneak attack on the NDP and unlikely to succeed in the courts.
Restricting picketing activity:
Since the earliest days of modern labour law, the courts have upheld peaceful picketing of employers. In 2002, the top court put secondary picketing (at businesses outside the main employer) under Charter protection. Now Alberta is trying to reverse both of those and to make unions pay heavy fines for blocking roads or rail lines.
Just last month, the Manitoba Court of Queen’s Bench threw out legislation, similar to Nova Scotia’s, freezing the wages of 100,000 public workers. The judge said the law “operates as a draconian measure that has inhibited and dramatically reduced the unions’ bargaining power and violates associational rights.”
But if the government appeals the ruling, as it undoubtedly will, the law will stay in place for several more years.
In Canadian industrial relations, that amounts basically to a lawless regime.
Latest push says many in the arts-and-culture sector are subject to precarious short-term work
Author Emma Donoghue is among a group of Canadian artists, writers, technicians and performers calling on Ottawa to guarantee a basic income for anyone in need. The group adds that those in the arts-and-culture sector often have precarious employment and few benefits. (David Chidley/The Canadian Press)
A group of Canadian artists, writers, technicians and performers is calling on Ottawa to guarantee a basic income for anyone in need.
Novelist and screenwriter Emma Donoghue, poet George Elliott Clarke and opera singer Adrianne Pieczonka are listed among those supporting a call to “provide financial security to meet people’s basic needs, regardless of their work status.”
The concept would involve the government making regular payments to citizens to meet their basic needs.
The request is detailed in an open letter written by visual artist Zainub Verjee, multidisciplinary artist Clayton Windatt and the campaign’s team leader, media artist Craig Berggold. It is addressed to Prime Minister Justin Trudeau, Deputy Minister Chrystia Freeland, Finance Minister Bill Morneau and Minister of Canadian Heritage Steven Guilbeault.
Signatories include the Writers’ Union of Canada, Playwrights Guild of Canada, the International Alliance of Theatrical Stage Employees, the Canadian Federation of Musicians and the Canadian Actors’ Equity Association.
The Covid-19 pandemic has highlighted the precarious nature of incomes among artists, writers and others in the culture sector. In April, in response to the impact of the coronavirus, organizers of the Sobey Art Award made the decision to award $25,000 to each of the 25 artists on its 2020 long list. The Sobey Art Foundation and the National Gallery of Canada, jointly administer the annual contemporary art priize.
.
Art by Stephanie Comilang, winner of the 2019 Sobey Art Award. This year, in response to the Covid-19 pandemic that has made life financially difficult for artists who are already struggling with precarious work, those on the 2020 long list will receive $25,000 (Leroy Schulz)
The letter, released Thursday, says the COVID-19 pandemic has put millions of Canadians out of work, and has “deeply affected” those in the arts, culture, heritage, tourism, and creative industries.
It’s part of an ongoing campaign by the Ontario Basic Income Network to build support for a basic income, in partnership with Basic Income Network Canada and Coalition Canada.
Previous letters have focused on the impact of precarious income for women, small businesses, food security and health.
The latest push says many people in the arts-and-culture sector are subject to precarious short-term contracts, and many don’t receive benefits, paid sick leave, or employment insurance.
The group suggests a basic income guarantee that would build on existing programs, including the Canada Emergency Response Benefit.
County Sustainability Group 