The global climate system is a registry of past energy transfers throughout the Earth’s atmosphere and oceans. As heat-trapping gases proliferate throughout the atmosphere, excess solar energy is infused into the atmosphere and the oceans. The excess heat absorbed by the world’s oceans projects more heat into the atmosphere and generates more powerful storms.
Superstorm Sandy, the largest tropical cyclone by diameter, spanning more than 1,000 miles, was fed by warmer Atlantic waters and dislocated climate patterns the converged in a way never before seen. Supertyphoon Haiyan, the most powerful tropical cyclone ever recorded by science, was also fed by warmer ocean water and converging climate patterns infused by excess heat.
The arguably immeasurable impacts of such excess energy and climate dislocation are negative externalities—costs externalized from a particular business transaction to third parties or to society. As our ability to quantify these impacts is fine-tuned, carbon-intensive business models are coming into question as carrying too much long-term risk.
We know there is no single more intensive source of carbon dioxide pollution than coal. And for that reason the World Bank is moving toward the elimination of funding for new coal development projects across the world, and the European Union and the United States are moving to phase out coal-burning power plants. China has also barred the construction of new coal plants outside three of its most populous industrial cities.
Residents of Krakow, Poland, breathe so much particulate matter from intensive coal burning, the effect is estimated to be the equivalent of smoking 2,500 cigarettes per year. The public health impact is catastrophic, and the climate impact is definitively unsustainable. Coal is the first of the fossil fuel industries to be inviable as a long-term investment priority.
These externalized costs cannot continue to be borne by the world community, while those doing business in high-emissions industries don’t pay their own way. As atmospheric and ocean warming escalates, the costs are rapidly becoming unmanageable, even at the society-wide scale. There is not enough artificial wealth to compensate for the natural wealth lost to climate instability.
In shorthand: warming oceans accelerate climate destabilization and generate more powerful storms. The “damage and loss” measure of climate impacts is steadily worsening, and carbon-heavy investments are becoming far more questionable. The 5th IPCC report, published in September, found we have a limited global lifetime carbon fuel “budget”, and that we have already burned more than half of it.
To understand why fossil fuel assets are overvalued, in the current “carbon bubble” market, it is necessary to understand the basic reality of what they cost to burn. To avoid the inconvenience of life during and after Superstorm Sandy, New Yorkers and New Jerseyans would happily pay a little more for energy, meaning artificially lower retail prices are not enough to keep fossil fuels dominant.
In addition to that, we know it is possible to drive a comprehensive transition to clean, renewable fuels, without imposing added costs on most families and small businesses. A simple carbon fee and dividend plan would apply a tax at the point of entry of any carbon-emitting fuel into the economy, and return all revenues to households, the solution spanning the entire marketplace.
Warming oceans and climate impacts are an unprecedented, planetary market failure. With the cost-correction spanning the entire marketplace, and carbon rebate in the hands of consumers, investors are forced to face the consequences of buying into a mathematically unmanageable scheme. They will either incur costs they cannot fund from a rational marketplace, or they will invest in new technologies and new business models.
According to the Carbon Tax Center in New York, more than two-thirds of households would receive more in the dividend than they would pay in diffused increased costs that fossil fuel purveyors would seek to transfer to society. Because climate impacts are already happening around the world, we now see the true costs of carbon fuels coming into view.
Warming oceans breed more powerful cyclones, which devastate both the most industrialized and affluent corners of the world and the most remote and vulnerable. Defenseless communities in coastal Queens, Brooklyn and New Jersey cannot afford to “adapt” to superstorms like Sandy, nor can Tacloban, Cebu or more remote areas of Leyte Province, in the Philippines.
It is the global unaffordability of pervasive climate dislocation that is now coming to light, and so the world community needs to start planning for a low-carbon future. Most nations have adopted some policy relating to this need, but there is no comprehensive global effort that is actually driving emissions down fast enough.
The longer that trend continues, the more rapidly current and future investments in carbon-heavy assets will see their presumed value drop off, as the world economy corrects for climate impacts. We are now seeing a moment of global transition, from uncertainty hovering over questions of carbon-induced climate impact to uncertainty hovering over questions of carbon asset risk.
We cannot reverse the trend of ocean warming, so long as we keep burning carbon-emitting fuels. Businesses, governments and citizens, across the world, need to start moving into the post-carbon future economy, as soon as possible.
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Originally published Nov. 19, 2013, at Geoversiv.com