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Decline and Fall: The Size & Vulnerability of the Fossil Fuel System

By Kingsmill Bond, Ed Vaughan, and Harry Benham - Carbon Tracker, June 4, 2020

Renewable costs are below those of fossil fuels. Five years ago, fossil fuels were the cheapest baseload. The collapse in renewable costs means that for 85% of the world, renewable electricity is the cheapest source of new baseload. By the early 2020s it will be every major country. Because of the rise of cheap renewables, the fossil fuel system is ripe for disruption. This disruption will be have profound financial implications for investors as a quarter of equity markets and half of corporate bond markets are ‘carbon entangled’.

Those responsible for our pension schemes should sit up and take notice; but even greater concern should be felt by financial regulators, as they grapple with finding the right tools to manage the risks of a deflating ‘carbon bubble’.

The world faces two contrasting pathways. Either it can secure the ‘trillion dollar green gigafall’, the trillions that can be generated at low cost from the sun and the wind – particularly benefiting the poorest inhabitants of the world currently dependent upon high cost fossil fuel imports. Or it can stay locked into business as usual, tied into a declining industry that both threatens the global economy with the worst effects of a warming planet, and damages investors with losses, low returns and destabilised equity and credit markets.

In Carbon Tracker’s first report, some ten years ago, entitled ‘Unburnable Carbon – are the World’s Financial Markets Carrying a Carbon Bubble’ we highlighted that listed fossil fuel companies have the potential to develop enough reserves to take the world way beyond 3˚C. Our second report, ‘Unburnable Carbon – Wasted Capital and Stranded Assets’, noted that if we can’t burn what we have already found, why continue to invest in the fossil fuel industry’s expansion? Yet today, we know that some $1 trillion is spent annually on expanding supply and this report goes more into these numbers. Before we wind down the fossil fuel system, we need to stop expanding it.

Some argue that ‘fossil fuels will go away of their own accord’ as the result of the rapid progress made by cleaner technologies and the collapse in demand for fossil fuels driven by the terrible COVID-19 epidemic. Unfortunately, as this report makes clear, financial markets are still heavily tied in to the fossil fuel system.

Read the report (PDF).

Future Beyond Fossil Fuels: California’s Just Transition

By staff - Sunrise Movement, May 1, 2020

You may have heard the term ‘Just transition’ floating around, but what does it mean? This webinar will focus on what a just transition means for workers in California, and how the vision of a Green New Deal can guide the much-needed economic recovery from the COVID crisis.

This video features IWW Environmental Unionism Caucus cofounder, Steve Ongerth, speaking on workers, unions, and just transition in Northern California.

Still Digging: G20 Governments Continue to Finance the Climate Crisis

By Bronwen Tucker and Kate DeAngelis - Oil Change International and Friends of the Earth - May 2020

In 2015, governments around the world committed to hold global warming to well below 2 degrees Celsius (°C) and to strive to limit warming to 1.5°C by adopting the Paris Agreement. This analysis shows that since the Paris Agreement was made, G20 countries have acted directly counter to it by providing at least USD 77 billion a year in finance for oil, gas, and coal projects through their international public finance institutions. These countries provided more than three times as much support for fossil fuels as for clean energy.

With the health and livelihoods of billions at immediate risk from COVID-19, governments around the world are preparing public spending packages of a magnitude they previously deemed unthinkable. In normal times, development finance institutions (DFIs), export credit agencies (ECAs), and multilateral development banks (MDBs) already had an outsized impact on the overall energy landscape and more capacity than their private sector peers to act on the climate crisis. In the current moment, their potential influence has multiplied, and it is imperative that they change course. The fossil fuel sector was showing long-term signs of systemic decline before COVID-19 and has been quick to seize on this crisis with requests for massive subsidies and bailouts.1 We cannot afford for the wave of public finance that is being prepared for relief and recovery efforts to prop up the fossil fuel industry as it has in the past. Business as usual would exacerbate the next crisis— the climate crisis—that is already on our doorstep.

Read the report (PDF).

Union Members Support Coal Phase Out at Levin Terminal in Richmond

By Steve Morse, Martha Hawthorne, Jonathan Kocher, Jud Peake, and Steve Ongerth - Open Letter, January 2020

We are rank-and-file union members who support Richmond’s proposed ordinance to phase out coal and pet coke export from the city.

Others supportive of the ordinance who were present at the December 3rd meeting of the Richmond City Council, include members of unions representing nurses, educators,  and city and county workers. 

The Richmond City Council has been debating an ordinance to phase out coal and pet coke transport from the Levin Terminal over three years. It will finally come to a vote on Tuesday, January 14. We support this ordinance, and Richmond residents’ demands, because we support healthy, vibrant communities with clean air that are free from coal dust.

We also support good, well-paying jobs – union jobs – and the right to bargain collectively and organize for ourselves and our communities.  And we support full employment and a just transition for all workers displaced by the rapid transition away from fossil fuels toward clean and renewable energy that can protect us from climate disaster.

As union members, we call on other union members to oppose the fossil fuel corporations’ agenda -- which callously divides workers, community members and environmentalists -- so that we can’t effectively fight for our common interests and protect the health and safety of our families.

We ask all people to be fully part of the fight for protecting and expanding green union jobs. We all must work for a commitment to a just transition that goes beyond vague support.

We can have good jobs, healthy communities and environmental justice. With real unity, we can halt the power of the oil and coal industries to pollute our neighborhoods, and to pollute our planet.

The Green New Deal offers us a way forward. At the local, state and national level, it is our best strategy for jobs, community health and climate justice. A poll by Data for Progress shows that 62% of working union members favor a Green New Deal, while only 22% are in opposition. We want the collective voice of union workers to reflect this sentiment.

While just transition is a strategy to fully compensate and retrain workers displaced from the fossil fuel economy, the task at Levin Terminal is simpler. The workers can retain their jobs, their wages and benefits. They can retain their representation by the Operating Engineers and the other unions. By shifting terminal operations to handling materials that are compatible with community health and a sustainable world, their jobs can be sustained as well.

We commit ourselves to joining with community health and climate justice activists to create one or more viable fleshed-out plans to change the materials that are stored and shipped at the terminal.  At UC Berkeley alone, there are many resources, including the Labor Center, that could help hone this plan.

We ask Levin and the unions to commit to ongoing meetings with the Richmond community and to work in good faith to make this transition happen.  We also ask Levin to withdraw the threat that they made at the Dec. 3 City Council meeting that they would litigate if the ordinance passed. After all, this ordinance doesn't call for an immediate ban, and it includes an option to return to the council if replacement commodities genuinely cannot be found.

The Richmond City Council voted to push the vote on the ordinance to this Tuesday.  The clock is ticking, and the health and safety of the people here in our community is at stake. How much longer will workers and Richmond residents have to endure the worst air quality in the Bay Area?

Bargaining Electric Power: Miners, Blackouts, and the Politics of Illumination in the United States, 1965-1979

By Trish Kahle - Journal of Energy History, December 12, 2019

This article examines how the perils conjured by blackouts in American cities after 1965 became interpreted as a key point of political and bargaining leverage for the nation’s coal miners. The anxieties provoked by these blackouts –sexual deviance, urban unrest, spoiled food, lost productivity, and Cold War incursions– pointed to a broader crisis of American political and social life driven by the massive social changes which had taken place since the end of the Second World War. As the United States entered the 1970s, a long-range energy crisis appeared not only to secure the future of the once-imperiled coal industry in the United States, but also allowed miners to recast their union as a bedrock of national security rather than as one of the main sources of the nation’s labor unrest.

Evoking the threat of coerced darkness in the modern American home which had been designed for bright illumination, they also pointed to the figurative darkness of the coal mining workscape, described by one miner as “beating the devil at a game of hell”: the constant threat of black lung, disablement, and death. A form of collective bargaining leverage thus opened up a broader debate: how, given the deadly work of coal extraction, could energy be produced in a democratic society that guaranteed the right to life, liberty, property, and, increasingly, light? Did “one man” have to “die every day” to keep the nation’s lights on? This paper argues that miners used the framework of lights and darknesses to contend that mines must be made safe and energy democratized in order to stabilize the energy regime in crisis. In so doing, they framed a new politics of illumination which allowed them to navigate a new terrain of collective action.

Read the text (PDF).

Fossil Futures: The Canada Pension Plan's Failure to Respect the 1.5-degree Celsius Limit

By James K. Rowe, Steph Glanzmann, Jessica Dempsey and Zoë Yunker - Canadian Centre for Policy Alternatives, November 2019

THE WORLD’S LARGEST PENSION FUNDS comprise over half of global investment capital. The Canada Pension Plan Investment Board (CPPIB) manages one of the country’s largest pools of investments, at $400 billion. How pension funds choose to invest has significant bearing on how we collectively address the climate emergency and the needed energy transition away from fossil fuels. In this report we ask: Is the CPPIB investing with the 1.5-degree Celsius limit on global average temperature rise in mind?

In April 2016, Canada was among 195 countries that signed the Paris Agreement, committing to “holding the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius.”

Our major finding is that the CPPIB is not investing with the 1.5-degree limit in mind. Within its public equities portfolio, it has over $4 billion invested in the top 200 publicly traded fossil fuel reserve holders (oil, gas and coal). To stay within 1.5 degrees, these companies can extract only 71.4 billion tonnes of carbon dioxide, yet the companies the CPPIB is invested in have 281 billion tonnes in reserve, meaning they have almost four times the carbon reserves that can be sold and ultimately burned to stay within 1.5 degrees. Since reserves are factored into current company valuations, this means the CPPIB has invested billions of dollars in companies whose financial worth depends on overshooting their carbon budget.

This is a moral and ecological failure. It is also a financial risk. As energy generation shifts away from fossil fuels, investors who do not respond could be left with “stranded assets”—investments that are no longer profitable. In its 2019 Financial System Review, the Bank of Canada included climate risk in its analysis for the first time. Canadian fossil fuel companies and their investors are especially exposed to stranded asset risk since the majority of oil produced in Canada is high-cost, carbon-intensive bitumen from the oil sands. And yet, the CPPIB remains exposed to the biggest oil sands majors, with over $1.2 billion invested in Canadian Natural Resources Ltd., Suncor Energy Inc. and Cenovus. Canadian pension beneficiaries may therefore be particularly vulnerable to stranded assets and the financial risks they pose.

Read the report (PDF).

Alberta’s Coal Phase-out: A Just Transition?

By Ian Hussey and Emma Jacksonn - Parkland Institute, November 2019

This report explains that Alberta will have little coal-fired electricity left by the end of 2023, six years ahead of the federally mandated coal phaseout deadline of December 31, 2029. This relatively rapid transition away from coal power is the result of numerous decisions made since 2007 by various provincial and federal governments, a few arms-length agencies of the Alberta government, and several large publicly traded corporations that produce electricity for the Alberta market. Our report aims to evaluate Alberta’s electricity transition to date against principles and lessons gleaned from the just transition literature.

Following the introduction, the report proceeds as follows. In Section 2, we provide an overview of Alberta’s coal power industry, communities, and workforce. In Section 3, we delineate key principles and lessons from the just transition literature. In Section 4, we present case studies on the three companies affected by the Notley government’s accelerated coal phase-out (TransAlta, ATCO, and Capital Power). We examine the Notley government’s transition programs for coal workers in Section 5 and for coal communities in Section 6. Section 6 also includes a case study of Parkland County, which is the municipal district in Alberta perhaps most affected by the phase-out of coal-fired electricity. In Section 7, we provide an analytic discussion of our research results by evaluating the government’s transition programs against the key principles and lessons drawn from the just transition literature. In Section 8, we outline our conclusions based on the research results.

Read the report (Link).

Broadening Engagement With Just Transition: Opportunities and Challenges

By Robin Webster and Dr Christopher Shaw - Climate Outreach, September 2019

The idea of just transition first emerged in the 1970s, when US union leader Tony Mazzocchi1 proposed that people whose jobs were threatened by nuclear disarmament should be compensated for the loss. In the 1990s Mazzocchi broadened the argument to refer to workers in environmentally damaging jobs, whose employment is affected by new policies aiming to reduce pollution.

The International Trade Union Confederation (ITUC) now defines just transition as reducing emissions while ensuring “decent work, social inclusion and poverty eradication.” Its basic elements, according to ITUC, include public and private investment to create green jobs, advance planning to compensate for the negative impacts of climate policies and opportunities for retraining for people whose jobs are affected.

A wide range of groups - including environmental NGOs, labour justice groups and policymakers - have since adopted the idea and it is codified in international climate policy. The preamble to the 2015 Paris Agreement requires the international community to take into account “the imperatives of a just transition of the workforce and the creation of decent work and quality jobs” and the European Commission aims to bring more focus on “social fairness” in tackling climate change.

Just transition is an important concept; a tool for facilitating dialogue between different stakeholders and challenging the discourse of ‘jobs versus climate.’ As one report puts it, it has the potential to be “at the heart of a powerful narrative of hope, tolerance and justice; a narrative that is grounded in people’s actual lived experiences and aspires to guide collective action while simultaneously giving rise to tangible alternatives.”

It is also important from a pragmatic perspective. Recent events - including the Gilets Jaunes protest against a government proposal to raise fuel prices in France and President Trump’s championing of jobs in the US coal industry as a reason for pulling out of the Paris climate change agreement - demonstrate the need to seek social consent for the low-carbon transition, or risk it being undermined.

The term itself, however, is little used outside the policy and technical literature, and hardly used at all in the global South, where it may conflict with other strong cultural narratives - for example the need for poorer countries to develop and use more energy.10 In countries where the idea is more current, only a limited amount of research has been carried out exploring what the idea of just transition means to the communities it is meant to help.

Yet the idea of ‘social dialogue’ between governments, businesses, trade unions and civil society is at the core of just transition, according to many unions.12 Social dialogue means engaging in discussions about what transition means for people’s lives and sense of identity; for jobs, communities and place.13 If just transition is to move from pages of policy reports into reality, then attention needs to be paid to how to frame the dialogue between advocates of a low-carbon economy, and those who are likely to be most fundamentally affected.

Read the report (PDF).

Colorado’s Just A Transition Away from Coal Energy

By Benjamin Stemer - Global Green, August 20, 2019

Over the past few decades, global concern surrounding the rapid change in our Earth’s climate has consistently risen, to the point that many U.S. states are taking independent and decisive action for the welfare of the environment, their citizens, and the global population as a whole. Colorado is just one example of this trend which favors a reduction on energy produced from coal, and an increased emphasis on renewable alternatives. On May 28th 2019, Colorado signed into law the “Just Transition from Coal-based Energy” which incentivizes the early termination of coal plants, while simultaneously providing financial support for any citizens who may be negatively impacted by the early closing of these coal plants. 

With an issue as complicated and misunderstood as climate change, finding and implementing realistic and timely solutions for our climate crisis has proven to be extremely difficult. However, Colorado is not intimidated by the scope and seriousness of this subject and, as a result, they have moved beyond simply discussing this issue through the passing of their decisive policy titled the “Just Transition from Coal- based Energy”. According to the Institute of Energy Economics and Financial Analysis, with the introduction of this bill, Colorado is setting a strong example for other states to follow (1). This new law creates a Just Transition Advisory Committee, which consists of directors from the Department of Labor and Employment, the Colorado Energy Office, The Department of Local Affairs, representatives from the Governor’s office and the State Senate, as well as 12 local representatives, including three coal workers, three coal community representatives, two members from disproportionately impacted communities, and two experts on economic development and/or workforce retraining. The purpose of the Just Transition Advisory Committee is to create a plan that will provide benefits for impacted workers, make grants available for communities heavily reliant on the coal industry, and offer additional support for anyone impacted by the early closing of coal plants all across Colorado. One highlight of this bill is that any costs associated with supporting impacted workers and communities will be paid for through a process of voluntary securitization of investor-owned coal plants (2). If you’re like most people, you might not have any idea what the process of securitization entails, so let me explain.

A Look At the Miners’ Blockade Stopping Coal in its Tracks

By Earth First! Journal - It's Going Down, August 14, 2019

When I heard news of the coal miners’ railroad blockade in Harlan County, I knew it presented a real chance for growth, especially for movements like Earth First! who are at the intersection of various struggles, including eco-defense, anti-capitalism, climate justice, and prison abolition.

Though I spent most of my life in flat swampy Florida, stories of Harlan County, Kentucky, were burned into my head as a teenage anarchist in circles of Earth First!ers and IWW-types singing labor songs by fireside.

One of the most famous of union ballads, “Which Side Are You On?,” about miners’ resistance in the Kentucky coalfields, includes the line, “They say in Harlan County there are no neutrals there…” Even before the development of climate-focused mass movement, it has always been Big Coal vs. the rest of us.

Over the years, I must have heard dozens of knock-offs of that song for campaigns all across the country. We’d replace Harlan with whatever county we found ourselves in at the time, facing off with corporate raiders of all types.

And now the barricades have come full circle: back to Harlan, a locale of near-mythical significance for it’s legacy of resistance to corporate greed. The miners there have stopped a coal train operated by the company Blackjewel LLC, which filed for bankruptcy and secretly stopped paying the miners while they were still working.

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