A new report this week from Carbon Tracker shows the financial folly of investing in oil exploration when the oil companies doing the exploring already own far more oil than can be used in the foreseeable future. Click for the BBC article or download the full report.
Some 60% to 80% of fossil fuel reserves (oil, gas and coal) already owned by listed firms cannot be burned without pushing planetary temperatures far beyond the 2C limit already agreed to, or even a 3C limit which might become the fall-back position.
What this means to the investors of those firms is that a very large amount of their money is being utterly wasted. According to the report, about $600b was spent in exploring new fossil fuel sources last year, a rate of $6 trillion over a decade. Assuming that even dysfunctional global governance systems can eventually get their act together to save the planet from cooking, the fossil fuels being discovered will never be used. That $6 trillion of investor’s money, in other words, will be wasted.
One lesson I take from this is that investing $6 trillion in renewable energy technologies instead of useless exploration, might be a better idea. Another lesson is that we are doing something rather similar in the water sector.
In the name of “water security” we are investing in expensive dams, pipelines and groundwater projects which could destroy already over-burdened water ecosystems just as surely as the fossil fuel industry’s plans would destroy our planet’s already warming climate.
While there are certainly many places where new water infrastructure remains a sensible and even urgent priority for drinking water access and food security, we need to factor in the ecological cost of adding more stress to already depleted water ecosystems. The rush to build new pipelines as a way of ensuring future water security, will result in a lot of financial waste along with environmental destruction.
A 2012 report from the Natural Resources Development Council, “Pipe Dreams” documents this phenomenon in the United States. Within the Colorado River Basin alone (which last week was designated the Most Endangered River in America) there are active plans to divert 691,000 acre feet (0.85 km3), and this from a river so overused it no longer reaches its once lush delta.
Just as it is perfectly legal for oil companies to waste money looking for oil that can never be used without destroying the climate, it is perfectly legal to expend $billions of public funds to divert water from rivers that have none to give without utterly destroying them. It makes no moral or financial sense, yet it is happening on Earth Day 2013.
What to do? Get involved in the Water Ethics Network and help instill some moral intelligence into water policy decisions!
Water infrastructure that makes sense: Curb cuts in a New Mexico parking lot (above);
Pedestrian-friendly river banks along the Seine in Paris (below)
Stylish men’s restroom (with low-flow toilets) in Cologne, Germany (below)