The release of the latest White House report on climate change makes clear that the threat posed by global warming can now be declared to be conventional wisdom. Have we finally reached the point where the money people and the environmentalists unite?
Maybe so! The "smart money," of course, has known for many years that global warming is real, and that it poses a risk, and that those risks must be accounted for. You cannot, for example, run a major insurance company without planning out in detail how climate change will fuck with the weather and natural disasters. This is just one reason why it is hilarious that the Republican party—the party of money—is also the party of global warming denialists. When major potential Republican presidential candidates are afraid to even say that global warming is real, something has gone awry. The bright money minds on Wall Street must really have to choke down a lot of disgust to vote for these people. (They still will, of course, because they think it will save them on their taxes.)
But the scale of the problem may now be so large that everyone, regardless of motivation, begins to fall in line. Rational environmentalists want to reduce carbon output in order to save the world from ecological disaster. Rational investors and corporate executives and Wall Street people want to reduce carbon output to save their own interests from financial disaster. Eventually, these two sides will merge, and at that point, things can get done. Strange bedfellows and all that.
A good example of this dynamic: a new report from the Carbon Tracker Initiative, a group that merges financial data and intelligence with climate change issues, so the money people can see exactly what is at stake. They estimate that the global oil industry has $1.1 trillion invested in nontraditional projects—like tar sands, and deep water drilling—that will need an oil price of $95 a barrel just for them to break even. That should be somewhat alarming to the rational money people, since prices now hover around $100 a barrel (it was as low as $16 a barrel less than 20 years ago), and global warming reality demands a sharp decrease in oil consumption if we are to avoid the worst of the catastrophe.
Our analysis also shows that if demand for oil is not substantially reduced we are clearly heading for a level of warming far in excess of 2°C. Which reveals that there is no free lunch here for investors. Either policy and technological tipping points will reduce demand in line with our analysis or we will face levels of warming described as catastrophic by many.
So all the money people and the oil companies that are still pouring more than a trillion dollars into oil exploration will, at some point, have to face up to the harsh reality that they must choose between mindlessly continuing down the same path in search of profits, or accepting that we need to plan for a decline in oil supply and a decline in oil profits and a decline in exploratory projects, and that huge portions of the money they are still pouring into such things may end up being lost, because the alternative is more awful global disaster for all humanity.
We're not there yet. But we're getting there. We may not get there fast enough.