This is a turbulent year for commodity markets, and yet, almost unnoticed it also marks the 150 years anniversary for one of the most important books ever written on the issue. William Stanley Jevons, a professor at UCL, published his book entitled ‘The coal question – an Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal Mines’ in 1865. His book should still serve as a useful reference for contemporary debates. So, why should such an old book be of relevance for us today? The straightforward answer is to consider it as wellspring of knowledge about the interface of geology and economics, i.e. resource economics, but I’d like to also offer three avenues worth exploring and derive some propositions for the future. (more…)

Over the summer, Emma Terama and I had the pleasure of hosting A-level students through the Nuffield Research Placements Platform at the UCL Institute for Sustainable Resources. The Platform provides students with hands on experience of a professional research environment, and is focused on science, technology, engineering, and mathematics subjects. Jasmin and Sharif spent five weeks at UCL ISR. (more…)

image credit Anathalie Musabyemariya

Access to modern energy, such as electricity, and the services it provides are taken for granted by many of us. Globally, however, there are an estimated 1.3 billion people without access to electricity, and 2.7 billion who rely on traditional biomass for cooking. The use of traditional biomass is associated with well documented impacts on health and wellbeing, which particularly affects women and children. Bringing into sharp relief the deep and persistent global energy inequities, Morgan Bazilian and Roger Pielke Jr. draw attention to the fact that the poorest three quarters of the global population use less than 10% of global energy. Addressing this energy poverty challenge will require concerted and sustained effort, and increasingly constitutes a key area of international governance. (more…)

Along with many of the political pundits I thought I would be writing this blog today full of uncertainty as to which combination of the energy and climate policies in the party manifestos would be going forward. In the event we can turn from these speculations and focus on how the Conservatives are likely to tackle the twin issues of energy and climate change.

Before the election David Cameron, along with the other then leaders of the major parties, signed a commitment to the greenhouse gas reduction targets in the Climate Change Act. It will not be easy to keep the Conservative parliamentary party behind that commitment, as the experience of the coalition showed, and a reasonably early sign of how troubled these waters will prove will be the Government’s response to the Climate Change Committee’s proposed Fifth Carbon Budget, due at the end of 2015. (more…)

This December, Professor Jim Watson spoke at UCL on the topic of decision-making in the face of uncertainty. As the lead author of the UK Energy Research Centre (UKERC) synthesis report “UK Energy Strategies Under Uncertainty” Professor Watson discussed key technical, economic, political, and social uncertainties in the UK’s low carbon transition. (more…)

(c) IstockPhoto

“The solutions are in our hands if only we could recognise them”, one of the key remarks from the closing panel discussion at this year’s BHP Billiton Sustainable Communities/UCL Grand Challenges Symposium hosted by the UCL Institute for Sustainable Resources on Nov 6-7.

This is, I think, a sentiment shared by most, and certainly by those attending this year’s conference, which ran with the theme ‘Stewardship for Planet Earth’. Over the two days of the event we heard contributions from academics, policy makers and practitioners, both presenting and in the audience, and held rousing discussions about our individual and shared responsibilities for how, and to what extent, we exploit our natural resources. (more…)

Academic conference dates: 11-12 June 2014
Venue: Wanha Satama, Helsinki, Finland

The 16th International Futures Conference organised by Finland Futures Research Centre dealt with the different dimensions of Sustainable Futures in a Changing Climate.

Sustainable development and climate change operate at all scales ranging from local and regional to global, and require multidisciplinary research and cross-sectoral cooperation. Environmentally, socially and economically sustainable development as well as successful climate change adaptation and mitigation can only be achieved by encouraging knowledge sharing and cooperation between different sectors and decision-makers. Against the backdrop of Rio +20 (2012) and governmental commitments to post-2015 sustainable development goals (SDGs), this meeting brought together academics and decision-makers for fresh debate on questions of environmental sustainability and social equity.

The conference exhibited a remarkably high stratum of keynotes, delivered by:

President Tarja Halonen (Co-chair of UN High-level Panel on Global Sustainability; former President of the Republic of Finland); Pekka Haavisto (Minister for International Development, Finland); Prof Joyeeta Gupta (Professor of environment and development in the global south at the Amsterdam Institute for Social Science Research of the University of Amsterdam and UNESCO-IHE Institute for Water Education in Delft); Dr Markku Wilenius (Senior Advisor, University of Turku, Finland Futures Research Centre); Dr Ying Chen (Research Fellow at Institute of Urban and Environmental Studies (IUES), Chinese Academy of Social Sciences (CASS), Deputy Director of CASS Research Center for Sustainable Development (RCSD) and Professor at CASS Graduate School); Dr Rajendra K. Pachauri (Chair of the Nobel Peace Prize-winning Intergovernmental Panel on Climate Change (IPCC), Director General of The Energy and Resources Institute (TERI)); Prof Alf Rehn (Chair of Management and Organization at Åbo Akademi University, Finland); Prof Sohail Inayatullah (Tamkang University, Taiwan; Faculty of Arts and Business, the University of the Sunshine Coast; and the Centre of Policing, Intelligence and Counter Terrorism, Macquarie University, Sydney).

In the academic debate, sessions naturally focused on (narrow) individual research topics, however, with the right audience, such as in my session titled WG 10: URBAN SUSTAINABILITY, a lively discussion was initiated after most presentations, and even continued after the talks (presentations available via the conference website). I was able to share thoughts and details of my work with various colleagues, not least with Dr Ying Chen of CASS with whom we immediately identified future collaboration possibilities, as well as having had the opportunity to lunch with Dr Pachauri and his TERI colleague, sampling Finnish delicacies.. most votes being given to the ‘Fazer blue’ chocolate.

In the more politically driven talks it was striking, how much value could be placed on environmental sustainability and quality. Minister Haavisto (International Development) mentioned how environmental disputes concerning e.g. water play no small role in instigating conflict in Africa. President Halonen commented on an often-heard lamenting about leadership: “It’s right we don’t have strong leaders any more, we have a democratic system!” Some more highlights from the keynotes as captured in my twitter feed (@eterama):

• Professor Sohail Inayatullah on what works re: futures & foresight: challenge the old; be inclusive;
• Infrastructures mentioned as potential means of climate mitigation, and “Energy remained the missing MDG” says Dr. R.K. Pachauri;
• SDGs on the post-2015 agenda: environmental sustainability one of MDGs lacking the most says President Tarja Halonen;
• Dr Chen agrees with me on the driving forces of emissions and climate change: population and urbanisation play huge roles for environmental impact.

What made this conference a success was not only the inclusion of high-level policy-makers together with strong academics, it was the well-enabled interactions of the two over a two-day period in a comfortable and engaging setting. What also helped was the rain on the second day, which kept people well indoors and conversing with one another throughout the meal times and breaks! I would also like to take this opportunity to thank the Kone Foundation for supporting my attendance and enabling my research in this space.

Dr Emma Terama, Visiting Research Associate, UCL ISR

Emma joined UCL in 2011 on an Academy of Finland post-doctoral fellowship. She currently works on a personal Kone Foundation grant investigating sustainable consumption in the urban transition. She uses mathematical and statistical models for population projections, multivariate regression and socio-economic scenarios to combine population trends with environmental impact and climate adaptation and vulnerability. Her background in applied natural and computational sciences allows for an understanding of modelled and real life structures and their causal dependencies (or the lack of). She has a second affiliation with the Finnish Environment Institute as a senior researcher, working on the EU FP7 project IMPRESSIONS: high-end climate scenarios. View Emma’s profile.

The success of a country is commonly measured by its total economic output, the Gross Domestic Product (GDP). Acknowledging the pivotal role of natural resources in creating such wealth, the European Union is now promoting resource productivity as a leading indicator of progress. Resource productivity is measured as the ratio between economic output and material input, and is supposed to show advancement towards sustainable growth.

However, does the efficient extraction of economic value from material inputs also entail the protection of the environment providing those resources, most importantly by limiting global warming?

The graph below partly answers this question by comparing indicators for productivity and pollution. The horizontal axis displays resource productivity: the economic value (Gross Domestic Product, GDP) created per kilogram domestic material consumption (DMC). The vertical axis represents pollution intensity, calculated as the amount of greenhouse gases (GHG) emitted per unit of DMC. The coloured trend lines are for the member states of the European Union, calculated over the period 2000-2011. The black dotted line is the overall trend. Malta is excluded since it has much higher values for both variables, although it confirms the trend.

The figure shows that higher resource productivity correlates with higher GHG emissions per unit of material, implying a rise of total emissions per country under constant resource use. This relationship holds both for 60 per cent of countries across time, and for every year across countries. Also, the countries with upward trend lines show stronger correlations than the ones with downward trend lines. Most likely, countries experience similar development patterns and generally increase pollution with resource productivity.

As a result, increased resource productivity is no guarantee for curbing climate change. Instead, striving for higher productivity under constant material consumption is likely to worsen global warming through increased total GHG emissions. This is not to say that resource productivity directly causes global warming; it merely shows that, all else being equal, higher resource productivity is not a good proxy for sound environmental stewardship. Also, it must be noted that pollution per unit of economic output actually goes down under higher resource productivity, which is good, but not enough to decrease total emissions.

To make sure higher resource productivity does not come at an environmental cost, countries will have to alter the way in which they develop. Not surprisingly, other data reveals that countries with high resource productivity also use more energy per kilogram of material consumed. To curb climate change, resource productivity must thus be achieved either while using less energy-intensive materials, cleaner energy, or both.

Alternatively, countries may move up along the trend line but still reduce total GHG emissions by reducing their domestic material consumption. This requires no change in the energy supply industry but demands radical changes in extraction, manufacturing, and consumption. This approach, known as dematerialization, requires absolute decoupling of the creation of wealth from the consumption of resources. So far, countries have achieved little in this regard.

Unless we opt for a different model of economic development, resource productivity alone is unlikely to coincide with absolute limits to global warming. Fortunately, the European Union aims to adopt many secondary indicators focusing on (among others) air emissions, material consumption, and economic transformation. Some of these secondary indicators may approximate environmental progress better than resource productivity does, and we may have to watch them closely to secure a carbon free path to the future.

The opinions expressed in this post are those of the individual author and not UCL ISR.

Stijn van Ewijk, Doctoral Researcher, UCL ISR

Stijn is a doctoral researcher at the UCL Institute for Sustainable Resources. His research focuses on sustainability indicators for waste and resources, the causes of waste problems, technological pathways to sustainability and the effectiveness of resource and energy policies. View Stijn’s profile.

Climate change mitigation and the preservation of antibiotics effectiveness are two of today’s greatest public policy challenges. Each call for a similar measure, wherefore they should be considered in a joint perspective:

First, the looming threat of climate change calls for concerted action. Among the vast array of different measures, reducing methane emissions from farm animals could make a great contribution. Also, the pressure to convert land to produce food for animals reduces the availability of carbon sinks. Thus, reducing demand for animal feedstock can contribute to climate change mitigation efforts.

Second, the routine use of antimicrobials/antibiotics for increasing animal growth or preserving animal health is likely to lead to the to the development of infections resistant to antibiotics treatment in humans (Tavernise 2013). While the case for banning the use of antibiotics for maximising animal growth is particularly strong, there are also good arguments for further restricting its use even for preserving animal health. Antibiotics have been the “wonder drugs” of the 20th century, saving immeasurable lives. Yet, today their effectiveness is becoming more and more diminished due to the development of resistant bacteria strains. Trading human health off for animal health is problematic. Even more, in today’s industrialised farming the living conditions of animals are often dismal, necessitating the standard use of antibiotics in the first place. If farm animals had more decent lives, the need for antibiotics would decline. This is reflected in the limitations on the use of antibiotics in organic agriculture (Borell and Sørensen 2004).

By looking at the joint benefits of policy responses to these problems, the argument base for taking action to address any of them is broadened and the costs calculus changes:

If antimicrobials use on animals were rigorously restricted, it would have strong implications for the dairy and meat industry. Animals couldn’t be crowded together as extremely as they are today, thus reducing feedstock input and methane emissions output per land unit. Feedstock is often sourced from abroad, the demand for which is adding pressure to turn more biodiverse and CO2 storing land into agricultural land. Letting cows graze on grassland is associated with lower emission than intensive grain feeding (Bellarby et al. 2013). Thus, under the assumption that not simply more land will be used for putting animals on the pasture or in the barn, limiting animal antibiotics use can have a double climate policy benefit: less methane and less pressure to convert land for feedstock supply.

Happy cows, healthier humans, and a more stable climate: restricting the use of antibiotics on animals can support all of this.

Nino Jordan, Doctoral Researcher, UCL ISR
Nino is a doctoral researcher at the UCL Institute for Sustainable Resources. His research focuses on business interests towards environmental regulation and the interactions between innovation and regulation.View Nino’s profile.

References

Bellarby, Jessica, Reyes Tirado, Adrian Leip, Franz Weiss, Jan Peter Lesschen, and Pete Smith. 2013. “Livestock Greenhouse Gas Emissions and Mitigation Potential in Europe.” Global Change Biology 19 (1) (January): 3–18. doi:10.1111/j.1365-2486.2012.02786.x. http://onlinelibrary.wiley.com/doi/10.1111/j.1365-2486.2012.02786.x/abstract.

Borell, E. von, and J. T. Sørensen. 2004. “Organic Livestock Production in Europe: aims, Rules and Trends with Special Emphasis on Animal Health and Welfare.” Livestock Production Science, Trends and Development in Organic Livestock Farming Systems 90 (1): 3–9. doi:10.1016/j.livprodsci.2004.07.003. http://www.sciencedirect.com/science/article/pii/S0301622604001150.

Tavernise, Sabrina. 2013. “F.D.A. Restricts Antibiotics Use for Livestock, 11 December.” The New York Times (December). http://www.nytimes.com/2013/12/12/health/fda-to-phase-out-use-of-some-antibiotics-in-animals-raised-for-meat.html.

Will humanity be collectively able to avert dangerous tipping points for climate change? Probably not, according to BP’s Energy Outlook 2035(1). Sadly, this may well be true. Is it good news for BP? Yes, rather so.

Is BP’s Energy Outlook 2035 an objective assessment of reality? Only to an extent.

BP Energy Outlook presents itself as a realistic assessment of reality, yet it is

• a reality that BP actively shapes and
• it creates a perception of reality that is beneficial to BP.
• It also wittingly or unwittingly aids the perception that industrialising countries are responsible for emissions reaching a level that makes dangerous climate change likely, thus generating a sense that climate action in OECD countries will only have a limited impact.

When presenting the BP Energy Outlook 2035 at University College London on 1st April 2014, BP’s Group Chief Economist and Vice President, Christof Rühl, left no doubt that he considers climate policy to be low on the agenda of policy makers. According to the Outlook climate change policies will remain too lax for staying within the emissions confines recommended by scientists: “Global CO2 emissions from energy use grow by 29% or 1.1% p.a. over the forecasting period. Policies to curb emissions continue to tighten, and the rate of growth of emissions declines, but emissions remain well above the path recommended by scientists.”(2)

What if climate policies would become stringent enough for staying within the 2 degree limit? Following HSBC 25% of BP’s proven and probable reserves would be ‘‘unburnable’’ under a low carbon policy environment consistent with a scenario (‘‘450’’), which limits global warming to 2C, with “BP’’s value at risk from unburnable reserves [being] equivalent to only 6% of its market value as most of the ‘‘lost’’ reserves are low margin (3,4). This doesn’t sound too bad. Yet BP is still investing into more exploration and extraction, ensuring that their interests continue to be pitted against the successful implementation of a low carbon regime with extensive coverage.

BP does’t just assess what would be the most likely future developments in energy markets, it also actively shapes them. According to BP its Outlook “is based on a “most likely” assessment of future policy trends (5). Is BP just responding to markets signals and expectations of regulatory developments? Past investments, “sunk costs”, mean that “oil companies are unlikely to stop extracting oil, even if they invest in renewable energy (6). If “exit” is not likely, “voice” is: lobbying and the shaping of perceptions. Standard economic approaches treat firms as solely responding to government intervention (7). Yet firms such as BP actively invest in politics (8,9). Big oil and energy intensive industries want a world with a low carbon price. Others, e.g. renewable energy companies, energy efficiency pioneers and the concerned public, want a high carbon price. What BP tells us in its Outlook is that they think they will win.

BP’s Energy Outlook creates a perception of reality that is beneficial to BP. BP is a publicly traded company. A threshold carbon price can benefit BP as oil and gas gain in desirability when coal’s higher carbon intensity drives it to the sidelines. While a carbon price high enough to stay within a tolerable degree of global warming would also hurt BP it would still hurt oil and gas companies far less than coal companies. BP could probably manage the transition. Its suggestions of substituting gas for coal in the mid-term make sense. However, for BP loosing 6% of its market value doesn’t sound like an enticing proposition. A scenario compatible with a reasonable likelihood of averting dangerous climate change threatens the profitability of BP’s assets. Acknowledging this would presumably not have the most benign effects on its share price. Concerning the argument that some of BP’s assets may prove to be unburnable, they write “we believe that the unburnable carbon approach to assessing the impact of potential climate regulation on a company’s value oversimplifies the complexity of the issue and overstates the potential financial impact (10). Creating an impression that the future will be benign for big oil may yet turn out to be delusional for investors at large but is still good for current shareholders. The situation could be overdetermined: BP may not have much of a reason to assume that stringent climate policies will be put in place. Yet, even if they had reason to assume it, it wouldn’t be in their interest to admit it. Currently, the markets don’t price in the risk that climate regulation stringent enough to ward off dangerous climate change could impact on fossil fuel companies’ share prices (11). If BP recognised a low carbon scenario in their outlook as a realistic possibility, it would raise the question of how such a scenario would impact on their assets, entertaining the prospect that some might become unburnable or “stranded”. This could change market perceptions, with some investments moving out of more and some into less carbon intensive forms of energy. If BP included the possible impacts of a low carbon scenario on market demand in its Outlook it would become apparent that BP is actively investing on the assumption that this is not going to realise — that they bet on a future that entails dangerous climate change.

The Outlook can also be interpreted as suggesting that industrialising countries are responsible for emissions reaching a level that makes dangerous climate change likely. When commenting on Christof Rühl’s talk, environmental economist Paul Ekins, Professor of Resources and Environmental Policy and Director at the UCL Institute for Sustainable Resources, pointed out that the BP forecast graph depicting emissions by regions (see above) may be taken to suggest that the emissions cuts (compared to a baseline scenario) necessary for being in line with the International Energy Agency scenario “consistent with the goal of limiting the global increase in temperature to 2°C” (IEA 450 scenario) (12) would need to come from non-OECD developing countries. Yet, in order to make limiting emissions palatable for developing countries, OECD countries clearly need to take the lead.

Considering that the OECD member countries have a joint population of 1,257 million in 2012 (13), with the global population exceeding 7 billion (14), a mere stabilisation of OECD emissions seems hardly adequate. Differences in capabilities as well as historical responsibility clearly mandate a pioneering role in decarbonisation for industrialised countries. While lower demand from industrialised countries for fossil fuels makes them cheaper and thus raises incentives for industrialising countries to rely on them, lower prices also make future exploration and extraction efforts less attractive. As investment for renewables increases in industrialised countries, prices also fall for industrialising countries. It is far from clear that OECD countries’ climate action would be insufficient for remaining below the 2C target. Even if the target was exceeded, such action would be far from futile. If rich countries pioneer low carbon infrastructures, this will also help industrialising countries to rein in their appetite for fossil fuels.

The BP Energy Outlook 2035 suggests to solely give a realistic forecast (15). Yet BP forecasts a reality it helps to create. And its forecast further bolsters investments into this kind of reality. BP’s sense of realism is a confidence in its own prospects. While much can be learned from the data, the way it is presented supports fatalism, helps to keep up share prices and aims to provide legitimacy to further fossil fuel exploration and extraction. It provides the rationale for betting on dangerous climate change.

Nino Jordan, Doctoral Researcher, UCL ISR
Nino is a doctoral researcher at the UCL Institute for Sustainable Resources. His research focuses on business interests towards environmental regulation and the interactions between innovation and regulation.View Nino’s profile.

References

1. BP (2014) BP Energy Outlook 2035.
2. BP (2014) BP Energy Outlook 2035., p. 81
3. HSBC Global Research (2013) Oil & carbon revisited. Value at risk from `unburnable’ reserves
4. On “unburnable carbon” see also Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment (2013) Unburnable carbon 2013: Wasted capital and stranded assets.
5. BP (2014) BP Energy Outlook 2035., p. 95
6. David Coen, Wyn Grant, and Graham Wilson (2010) Perspectives on business and government, David Coen, Wyn Grant, and Graham Wilson(eds.) The Oxford Handbook of Business and Government, Oxford University Press, Oxford, p. 18.
7. “…economics has no use for a concept of power because it is assumed away in the conditions of the pure market.” Colin Crouch (2010) The global firm: The problem of the giant firm in democratic capitalism, David Coen, Wyn Grant, and Graham Wilson (eds. ) The Oxford Handbook of Business and Government, Oxford University Press, Oxford, p. 149.
8. On firm “investment” in politics see Colin Crouch (2004) Post-democracy, Polity Press, Cambridge.
9. On BP’s political contributions see e.g. Hiskes (2010) BP’s donations to Congress are more worrying than its donations to Obama
10. BP (2014) BP Energy Outlook 2035., p. 14
11. See Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment (2013) Unburnable carbon 2013: Wasted capital and stranded assets.
12. “A scenario presented in the World Energy Outlook that sets out an energy pathway consistent with the goal of limiting the global increase in temperature to 2°C by limiting concentration of greenhouse gases in the atmosphere to around 450 parts per million of CO2.” IEA Website
13. http://data.worldbank.org/country/OED
14. http://www.un.org/apps/news/story.asp?NewsID=45165
15. Christof Rühl: “Don’t shoot the messenger!”, University College London on 1st April 2014