Is Sustainability Still Possible?

Is it time to abandon the concept of sustainability altogether, or can we find an accurate way to measure it? If so, how can we achieve it?

New Economics Institute

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Every day, we are presented with a range of “sustainable” products and activities—from “green” cleaning supplies to carbon offsets—but with so much labeled as “sustainable,” the term has become essentially sustainababble, at best indicating a practice or product slightly less damaging than the conventional alternative.

Is it time to abandon the concept of sustainability altogether, or can we find an accurate way to measure it? If so, how can we achieve sustainability? And if not, how can we best prepare for the coming ecological decline? These are the questions that our friends at the Worldwatch Institute have attempted to address in the latest edition of their State of the World series.

In State of the World 2013: Is Sustainability Still Possible?, experts define clear sustainability metrics and examine various policies and perspectives, including geoengineering, corporate transformation, and changes in agricultural policy, that could put us on the path to prosperity without diminishing the well-being of future generations. If these approaches fall short, the final chapters explore ways to prepare for drastic environmental change and resource depletion, such as strengthening democracy and societal resilience, protecting cultural heritage, and dealing with increased conflict and migration flows.

State of the World 2013 cuts through the rhetoric surrounding sustainability, offering a broad and realistic look at how close we are to fulfilling it today and which practices and policies will steer us in the right direction. We think you'll agree.

Sincerely,

Eli Feghali
Communications Manager, New Economics Institute




 Bloggers Reference Link  http://www.p2pfoundation.net/Transfinancial_Economics

Unburnable carbon 2013: Wasted capital and stranded assets

This new research from Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment at LSE calls for regulators, governments and investors to re-evaluate energy business models against carbon budgets, to prevent $6trillion carbon bubble in the next decade.
Unburnable carbon 2013: Wasted capital and stranded assets (2) has revealed that fossil fuel reserves already far exceed the carbon budget to avoid global warming of 2°C, but in spite of this, spent $674billion last year to find and develop new potentially stranded assets.
“Smart investors can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision. The report raises serious questions as to the ability of the financial system to act on industry-wide long term risk, since currently the only measure of risk is performance against industry benchmarks.” Professor Lord Stern

The carbon budget deficit

Between 60-80% of coal, oil and gas reserves of publicly listed companies are ‘unburnable’ if the world is to have a chance of not exceeding global warming of 2°C

• The total coal, oil and gas reserves listed on the world’s stock exchanges equals 762GtCO₂ – approximately a quarter of the world’s total reserves;
• If you apply the same proportion to the global carbon budgets to have an 80% chance of limiting global warming to 2°C, their allocation of the carbon budget is between 125GtCO₂ and 225GtCO₂, illustrating the scale of ‘unburnable carbon’;

(click image for larger version of the diagram)

• This diagram shows that even a less ambitious target of 3°C would still apply significant constraints on our use of fossil fuel reserves;
• However companies in the coal, oil and gas sectors are seeking to develop further resources which could double the level of potential CO₂ on the world’s stock exchanges to 1,541billion tonnes;

Stranded assets

Globally, coal reserves are centred in Pacific and Eastern regions, whilst oil is predominant in Northern and Western regions
(click image for larger version of map)
Even if CCS is deployed in line with an idealised scenario by 2050, this would only extend fossil fuel carbon budgets by 125GtCO₂

• This is equivalent to 12-14% (50-80% probability) of carbon budgets to limit global warming to 2°C and to only 4% of total global reserves;
• As the idealised scenario below illustrates, CCS will only come online at scale from 2030 onwards, by which point the carbon budget may have been used up.

(click image for larger version of the diagram)

Wasted capital

Company valuation and credit ratings methodologies do not typically inform investors about their exposure to these stranded assets, despite these reserves supporting share value of $4trillion in 2012 and servicing $1.27trillion in outstanding corporate debt over the same period. We need to challenge these methodologies

• To avoid systemic risks such as climate change, investors will have to demand to go beyond the traditional definition of risk as underperforming the benchmark
• The rebalancing and redistribution of funds if required to protect shareholders’ interest and prevent wasted capital, the scale of which can be seen below. Greater understanding of the uncertainty and risk around fossil fuels can help the redistribution of these funds towards alternatives more attractive.

(click image for larger version of the diagram)

Recommendations

Therefore, this study makes a number of recommendations for action by governments, financial intermediaries, institutional investors and citizens to manage this risk. Click below to read them.
(click image for larger version of the diagram)
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Wasted capital and stranded assets

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Carbon Tracker Initiative

The Carbon Tracker initiative is the first project of Investor Watch, a non-profit company established by its directors to align the capital markets with efforts to tackle climate change. The board of Investor Watch includes Mark Campanale and Jeremy Leggett. Investor Watch was founded in 2009 (Company No. 06888857)