An Inconvenient Thought

Propensity to fight losing battles

Tag: climate

  • What did they expect in a 3C world?

    Günther Thallinger, board member of German insurer Allianz SE, wrote on LinkedIn:

    Once we reach 3°C of warming, the situation locks in. Atmospheric energy at this level will persist for 100+ years due to carbon cycle inertia and the absence of scalable industrial carbon removal technologies. There is no known pathway to return to pre-2°C conditions. (See: IPCC AR6, 2023; NASA Earth Observatory: “The Long-Term Warming Commitment”)

    At that point, risk cannot be transferred (no insurance), risk cannot be absorbed (no public capacity), and risk cannot be adapted to (physical limits exceeded). That means no more mortgages, no new real estate development, no long-term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.

    Yesterday I wrote about Wall Street “expecting” a 3C world. When analysts published these research notes, did they ever pause to ponder what it meant for the existence of their industry? Well, at least their long position on air-con stocks can beat the market.

  • Wall Street thinks climate goals will fail and we will need more air-con

    Oliver Milman, reporting for the Guardian:

    Recent reports by Morgan Stanley, JPMorgan Chase and the Institute of International Finance all make clear the finance sector considers the Paris climate agreement limiting global temperatures, signed a decade ago by nearly 200 nations, is effectively dead and investors should plan accordingly.

    “We now expect a 3C world,” states a March analysis by Morgan Stanley. This level of global heating above preindustrial times is well beyond the 2C limit agreed to by governments and would lead to catastrophic heatwaves, floods, economic strife and other upheavals.

    The Morgan Stanley investor research forecasts, though, that multiplying heatwaves will provide a windfall for companies that provide air conditioning, and that the global market could grow by 41% to be worth $331bn by the end of this decade. The analysis outlines several dozen air conditioning businesses around the world that are likely to profit from a hotter world.

    The finance whizzes on Wall Street think the world is not doing enough to stop climate change (partly thanks to their own moral cowardice), so we will need more air conditioning? No shit, Sherlock.

    Paddy McCully, senior analyst at Reclaim Finance, said it well:

    “It is to a very large extent being influenced by Trump and his agenda of accelerating climate change, although also due to banks using Trumpism as an excuse to roll back commitments that they had never actually intended to keep.”

    Morgan Stanley’s investor research on air conditioning is “mind numbingly cynical”, McCully said. “Especially as it comes just months after they first weakened their decarbonization targets and then quit the Net Zero Banking Alliance.”

    The problem with predicting the future is not that it’s futile. We should have all learnt the lesson since at least 2016. The problem is that predictions, especially reputable ones like this, limit our ability to imagine a different future.

    These predictions are different from IPCC saying “if we don’t stop using fossil fuels and halve emissions by 2030, we are screwed”. IPCC is not making a prediction about the future. They are connecting our collective choices with the consequences of these choices. Ultimately, it’s clear that the choice is in our hands.

    But when Wall Street says they “expect a 3C world”, they don’t mention the power and choices we still have to slow down and shave off every fraction of a degree in warming. They present one possible future as if it’s preordained because, well, if you don’t pay them $2,500 an hour to meet their stock analysts, who’d let you in on the secret that people will want more air-con as the world becomes hotter?

  • A grassroot solar revolution in Pakistan

    Here is a story I missed entirely: amid a spiralling economic crisis and recovering from a climate-fuelled, catastrophic flood in 2022, Pakistan imported at least 17 gigawatts of solar panels in 2024, making it the third-largest destination of Chinese solar exports, and the sixth-largest solar market globally. This amount is equivalent to more than a third of the country’s total installed capacity (46 GW as of June 2024).

    The most stunning part: this surge was entirely driven by bottom-up, distributed demands from millions of farmers, businesses, and households. No coordinated government policy push or subsidies. Millions of Pakistanis, fed up with paying high prices (electricity tariffs rose by more than 150% since 2021) for unreliable power supplies, took things into their own hands and put cheap solar panels on their farms and roofs.

    So far, this sounds like the breakout success of distributed renewables that we have all been waiting for. Renewables are supposed to democratise energy access and empower billions of people around the world. With renewables, people in poor countries don’t have to wait for governments and international lenders to build a grid for them. Pakistan is doing the distributed renewable revolution, at scale.

    But the flip side of this story is that millions of Pakistanis, those who can’t afford their own solar panels, still have to rely on an aging, poorly planned, and managed, inefficient grid. These grid governance failures are what drove people to rooftop solar in the first place. Now, with a shrinking customer base, a bigger cost burden is on those who are left holding the bag.

    Perhaps this is not the kind of energy revolution we want to see. The solution to universal clean energy access can’t be “build it yourself” and letting people fall through the crack if they can’t. Plus, a well-integrated and coordinated system with shared and pooled resources will be more resilient and efficient.

    Transforming our energy systems (power grids, transportation, and more) requires coordinated actions. A build-it-yourself mentality breaks down our commitment to coordinate with each other. It might seem easier to give everyone free solar panels than confronting deep, complex conflicts in energy systems, but I’m afraid quick fixes don’t exist for planetary problems.

  • CCUS in Malaysia

    A few days ago, the Malaysian Parliament passed the Carbon Capture, Utilization and Storage Bill 2025. RimbaWatch, an NGO conducting research on climate-related issues, analysed CCUS projects announced in Malaysia, and found that, unsurprisingly, almost all of them support extracting and burning of fossil fuels:

    Of the 6 initiatives being proposed in Sarawak, five are linked to fossil fuel expansion, either through enabling sour gas developments or encouraging the development of a gas power plant. These CCUS initiatives are linked to some of the biggest gas discoveries in Malaysia, and the Kasawari and Lang Lebah fields alone hold a combined 16 trillion cubic feet of gas and 20.4 million barrels of oil equivalent of crude reserves.

    In Peninsular Malaysia, all four initiatives can be linked to fossil fuel production, either through enabling the development of a high-CO2 field with 4 trillion cubic feet of gas, or being attached to fields with either existing or future production.

    Some of the most high-profile CCUS projects in Malaysia, such as Kasawari, will be used to extract so-called “sour gas”. These are fossil gas fields that contain high percentages of hydrogen sulphide (H2S) and carbon dioxide (CO2). These acidic (“sour”) gases can corrode and damage pipelines and equipment, so they need to be removed (“sweetened”) before the hydrocarbons can be used.

    After the CO2 is removed, where would it go? The simple (and cheap) answer is: just release (“vent”) them into the atmosphere, where they can hang out with all the other anthropogenic greenhouse gases! Or you can bury them somewhere underground, but that would cost more.

    Fossil fuel companies have to capture the CO2 in sour gas if they want to sell hydrocarbons, but they don’t have to store the CO2 like these proposed Malaysia CCUS projects. How nice of them!

    Why would they bother to store the captured CO2? I have two guesses:

    1. CCUS for these fossil fuel expansion projects is a smokescreen. This is classic greenwashing. By touting their flashy, futuristic CCUS, they try to recast themselves from climate villains into climate heroes.

    2. They can make up for the higher cost of storing CO2 by selling carbon credits, charging more for “low carbon natural gas”, or extracting more oil from depleted oil fields (“enhanced oil recovery”). 1

    If these companies are going to drill and pump fossil gases anyway, with or without the CO2 storage, then what’s the problem with having CCUS? Wouldn’t it be better to have CCUS, ceteris paribus, than not for these projects?

    A basic, well-known problem is, empirically, large-scale CCUS simply doesn’t work. There is a long list of high-profile CCUS project failures, including Chevron’s infamous Gorgon LNG project in Australia which happens to be “sour gas” too.

    But the most glaring, fundamental problem is that fossil fuel is fossil fuel is fossil fuel. No matter how much CO2 (or methane, for that matter) can be captured during the production processes and squirrelled away safely, all fossil fuels will eventually end up in the atmosphere as pollution. It’s simple: if something is good for fossil fuels, it’s bad for the climate.

    1. EOR is the most common use of CCUS, and historically, the financial viability of CCUS projects are inextricably linked to oil prices. Higher oil prices means more profits from EOR, so more likely the CCUS investment will pay for itself. RimbaWatch noted that, while the passed CCUS Bill prohibits using imported CO2 for EOR, it doesn’t say anything about using domestically sourced CO2 for this purpose. If Petronas can pump sour fossil gas, capture the CO2, and use the CO2 to pump more oil, isn’t it nice？ ↩

  • Renewables for energy security

    Anika Patel, outlining key takeaways from Chatham House’s climate and energy summit for Carbon Brief:

    A key benefit of the UK’s “climate leadership”, [Rachel] Kyte argued, is that the energy transition will “make British people more secure”.

    [Ben] Parsons said the argument – recently deployed by Conservative leader Badenoch – that the energy transition replaced reliance on Russian fossil fuels with reliance on Chinese technology was incorrect.

    “Fossil fuels are fuel – they require constant replenishment. Renewables are infrastructure,” he said, adding that arguably the UK should be accelerating its deployment of clean-energy technology.

    When you hear people arguing for fossil fuel in the name of “energy security”, please interrupt and correct them.

  • Transition carbon credits are an unwise distraction

    Patrick McCully in an opinion piece for Eco-Business:

    The two largest offset standard-setting bodies are currently developing protocols to enable the creation of a market in carbon offsets from the emissions avoided by shutting down coal plants and replacing them with renewables.

    Like other voluntary carbon market methodologies, these protocols will suffer from the tendency to overestimate emission reductions. They also fail to recognise that offsets are a zero-sum game: the emissions benefit from closing coal and building renewables will be lost if polluters elsewhere are able to buy offsets from these retirements in order to avoid cutting their own emissions. Large scale coal retirements will require governments and financial institutions to accept that they will not be able to recoup all of their investments in coal plants, and will require large-scale support for the rapid deployment of sustainable power.

    Spot on. Like all avoidance-type carbon credits, the so-called “transition credits” let polluters “offset” their very real emissions (and harms) with imaginary reductions (and benefits). The seemingly robust and rigorous modeling to calculate the amount of potential emission reduction is based on two assumption-riddled speculations about the future. That’s some serious sleight of hand.

    In Southeast Asia, the key barriers to shutting down coal power plants are often political. Project developers (coal interests with significant political influence) and investors (mostly commercial banks and multilateral development banks) who built new coal plants in the late 2010s are now holding energy transition hostage to protect their financial interests. Instead of undermining their coercive power, transition credits represent capitulation.

    McCully also pointed out that carbon credits are particularly attractive to fossil fuel companies like Shell (world’s largest purchaser of carbon credits in 2024 by far). They use all forms of carbon credits to avoid reputational and regulatory pressure, but transition credits can be particularly beneficial to oil and gas interests. By paying a small price for these credits, oil and gas companies (with the help of governments, banks, and philanthropies) can get rid of the incumbent coal power in these fast-growing economies and make room for their “cleanest form of fossil fuel” gas solutions.

    My simple rule-of-thumb: if something is welcomed by fossil fuel interests, it’s bad for the climate.