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I wish we could just have a global carbon price instead of all these piecemeal judgements. Start it at $50/tonne, tariff anyone who doesn't apply it, and increase it until global CO2 emissions reach a target level.
There's always a better system on paper. The Kyoto protocol with quotas and CO2 trading was decided on 1997.
It was modeled after the successful sulphur emissions trading, at the insistence of USA.
And even with that, it's been hard to get it through internationally.
So one way to actually cause delay and harm is to just always propose scrapping what's halfway built and go for the next system.
Rio in 1992, Kyoto in 1997, Cancun 2010, Paris 2015 https://www.cfr.org/timeline/un-climate-talks
Cap-and-trade has a lot of appeal from a mechanism design point of view.
But I suspect that in practice it's harder to make work than a simple tax.
In a perfect world, a tax can do everything that cap-and-trade can do and vice versa. They are basically dual approaches. 'Dual' in the linear programming sense of the word.
On paper, it looks like cap-and-trade would be easier to make work. But in practice, politicians seem to like handing out permits for too cheap?
A tax that generates revenue might be easier to get right?
Perhaps a proper cap-and-trade system should auction off all permits every year, instead of handing them out to grand-fathered polluters?
You can go to zero-quota cap-and-trade.
I tried to find easy to read information on how has it worked so far but I couldn't find anything on the right level. If there's a carbon trading expert here, I would really appreciate some layman appropriate (international law perspective) links.
Its really not. Australia's carbon tax was simple, and worked. It only failed to take into account crony capitalism and ideological actors.
Most of the world has a carbon price in some form now - https://en.wikipedia.org/wiki/Carbon_tax#Implementation
Given the soaring cost of carbon in the EU, I think it won't be long before the EU heavily tariff's anyone trading with it without a similar policy
> Given the soaring cost of carbon in the EU, I think it won't be long before the EU heavily tariff's anyone trading with it without a similar policy
This. We should be doing this already. The reason so many goods are made in East Asia, and then shipped to the EU, is because it's cheaper. The reason that it is cheaper is because there are costs for manufacturing in the EU that are not there in China. Those reduced costs frequently come down to:
-- Weaker protections for the environment (i.e. polluting is cheaper than not) -- Reduced cost of labour (i.e. workers are not paid the same for doing the same job, and may be downright exploited or coerced into working -- c.f. Foxconn's scandals) -- Economies of scale. I would argue that this is a consequence of the other two.
[0](Also) Most of the world maintains billions worth of oil and gas subsidies for Energy and Oil/Gas companies.
These incentives effectively subsidize the operational costs of carbon emitting operations, they very directly make it cheaper to pollute.
Although technically subsidies, they are typically just tax advantages. Corporate taxes in general are a bit counter-productive - taxes on energy-producing corporations apparently cross over into embarrassingly damaging to the point where most countries can't stomach it.
It would be better to extend those 'subsidies' to every business rather than attempt to make energy more expensive.
That doesn't seem to be most of the world according to your link, only the big energy-producing countries. There is a lack of differentiation between 0 and very low that makes is hard to be more definitive though.
You don't try and decarbonize with the global world order that you'd like. You try and decarbonize with the global world order that you have.
We probably would have a $50 carbon tax if we had a global world democracy that more or less represented the people. We probably wouldn't even need global warming activists.
The EU already implemented Emissions Trading Scheme. EU is putting a cap on the emissions and the allowed emissions are auctioned, so that companies must compete for smaller and smaller pool of allowances. If companies do not reduce emissions there is no limit to how high taxation can go, as the tax rate is market driven with limited supply of allowances.
China is planning to implement similar system. Only USA is doing nothing in this regard.
https://en.wikipedia.org/wiki/Chinese_national_carbon_tradin...
https://en.wikipedia.org/wiki/European_Union_Emission_Tradin...
in EU, its priced [1] at €52.83, that's $64.42/tonne
note that the pricelevel was ~€20 a year ago...
Chevron thing was meaningless. The Shell decision is material, but subject to appeal [1]. The ExxonMobil vote is permanent and unprecedented. (It was also initiated by a hedge fund.)
[1] https://www.wsj.com/articles/shell-ordered-by-dutch-court-to...
Subject to appeal, yes, but the ruling is binding as of yesterday. The WSJ article is misleading, by not mentioning this essential aspect of the ruling.
The shell case builds on a landmark ruling [1] which has gone through Courts of Appeal and the Supreme Court. In my opinion, the odds of this ruling being revoked is highly unlikely, since the argumentation of the ruling follows [1] hence there is jurisprudence in place.
[1] https://leidenlawblog.nl/articles/the-urgenda-decision-the-l...
The attorney, Roger Cox, thought out the legal framework for these landmark rulings, see his book Revolution Justified (2011) [1], for a summary see [2].
Note many followed in Roger's wake, take for instance yet another recent landmark ruling by the the German constitutional court declared the current climate protection measures insufficient [3]
The organization that took on Shell is Milieudefensie [4] ( hey, why not pay tribute and chip in )
[1] https://www.revolutionjustified.org/
[2] https://www.youtube.com/watch?v=4M-8bYFJsiA
[3] https://www.theguardian.com/world/2021/may/06/germany-to-bri...
> subject to appeal, yes, but the ruling is binding as of yesterday
This is how appeals work. They are binding until a higher court stays or overturns the original decision.
> the odds of this ruling being revoked is highly unlikely, since the argumentation of the ruling follows...hence there is jurisprudence in place
This is how appeals work. Rulings create jurisprudence. A ruling is a pre-requisite to an appeal.
The appeal may be solid or flimsy. But nothing said here points either way. That said, two courts pointing one way may make it harder for the ECHR (which I believe is the next step, though I may be mistaken in this) to overturn.
The Shell decision didn't seem to have a noticable effect on the stock price which I guess means it's already factored in, or investors don't believe it will have much effect in the near term.
I guess it depends on what your counterfactual is?
The decision was expected, but would still have made a difference? As in, if the decision had gone the other way, things would have turned out differently?
The thing with the Shell decision is that even if the decision stands, all Shell has to do is put their emission producing refineries into a different company, they can wash their hands off it then. CO2 emissions? We only sell petrol which we buy from this other company.
Or other paperwork trickery, either way, they'll get away with things. Of course, by 2030 the market will have shifted towards electric vehicles by a lot already.
Paperwork trickery will be harder, as they can't be subsidiaries. So it has to be a real sale to a real external company. This takes time and money and basically means getting out of the refinery business. This doesn't change anything for the shell rotterdam facilities as they still need to co-operate.
Basically, in the worst case is just a number of months delay for all petro investments. While all the green stuff can go ahead. Already a real impact, even if it is not so big in that case as expected.
It looks like the decision includes scope 3 emissions, so in your example the refining would be included, as well as the emissions from burning the petrol
The decision already applies to all of the 1100 holdings Shell has. The mother company is held responsible for all activities of the subsidiaries
I wonder, is it really "crushing" them or is it saving them from themselves? It could be either.
It depends on the balance between writing off old investments before their time (purely economically speaking) and avoiding new investments that would never deliver positive returns anyway as the age of fossil fuel comes to an end.
In fact, this is a question that doesn't just affect the oil majors. The cost of our entire entire energy transition very much depends on timing.
I think what makes this politically difficult is that these costs are directly caused by political decisions whereas the cost of global warming is less easily distingushable from a natural disaster.
Exxon spent over $35M dollars fighting the board changes - it is at least a crushing defeat for the current management/board.
https://www.wsj.com/articles/exxon-vs-activists-battle-over-...
These companies will forever be a shadow of their former selves.
They'll still probably be around but they'll never reinvent themselves as green mega-giants. Any more than Xerox would become the next apple or Kodak became the next Nikon. Carbon extraction is fundamentally part of their DNA.
There's a struggle within these companies between those that want to keep the glory days going as long as possible and those that are trying to metaphorically steer the supertanker towards a greener future. Despite the immense amount of capital at their disposal, this struggle will ensure that it is not deployed efficiently.
Realistically I think stifling these companies financially will do more for the planet than encouraging them and hoping that they will reinvent themselves. A dollar invested by a greentech company will be more effectively put to use than a dollar invested by an oil supermajor.
>Realistically I think stifling these companies financially will do more for the planet than encouraging them and hoping that they will reinvent themselves.
I don't think it matters for our planet what these companies do or whether they can reinvent themselves. The climate change problem can only be tackled from the demand side. As long as there is demand for hydrocarbons someone will meet that demand and someone will invest in new production. Not letting it happen under western brand names may soothe some people's conscience but it won't reduce carbon emissions.
There is demand for energy, not hydrocarbons specifically.
Demand is also not an implacable force. It can be weakened, strengthened and modified with policy and investment. As can supply.
One of the top comments
> Correct me if I'm wrong but the oil companies do not burn their own oil, so they are not the emitters. They sell the oil to their customers (i.e. all of us), and they (we) burn it. Why are the producers blamed for all the emissions? Because it's easy to point a finger at them?
That is some galaxy brain logic, impressive.
I'm happy to blame big oil for plenty of environmental crimes and PR bullshit. But I don't think the commenter is wrong here. What do you think would happen if the big oil companies decided (and let's just ignore the shareholder revolt this would cause, for the sake of argument) that they're done pumping oil, and just closed the oil fields and scrapped their tankers? Would the world just celebrate the solution to the climate crisis and happily move on, from now on using only non-fossil energy sources?
It's not either/or, this is the point of trying to change board composition. These companies don't give their oil away, they are making enormous profits and it is reasonable as a society to insist that they invest some of those profits in alternate forms of energy that pollute less.
The more accurate scenario is one where they drop everything and rapidly switched to synthetic fuels and chemicals from solar, which initially would be prohibitively expensive. Would they do that, they wouldn't sell anything as they would bankrupt their customers, lest they ate some of the costs themselves until their customers had time to adjust. That scenario, while still being hyperbolic, is in essence what we need to see. Big Oil needs to shrink; their prices need to cover the cost to society, their products need to be used less and they need to spend a whole lot of money on cleaning up their mess.
In the shell scenario, they're being given 8 years to make changes. There's a big difference between a mic drop and a transition to alternative fuel sources.
It they stopped overnight it would be a disaster, but if they gradually reduced output over time then alternatives would come online. They would seem expensive, but demand would also adjust and life would change to adapt quite comfortably, I think. There would be some bumps, I'm sure, but I prefer that road to the scorched earth path.
I guess it's possible they meant both parties deserve some blame, you're right. When I read it initially it came off to me like the oil companies should be entirely blameless which just was hilarious to me at the time.
Indeed. Why are meth producers blamed for meth-related problems? Because it's easy to point a finger at them?
It’s not “galaxy brain logic”, it’s absolutely correct. We the people want cheap energy and cheap oil in particular. Exemplified by recent Texas freeze, very recent pipeline-closure-induced gas shortages in the US, less recent protests in France after gas tax hikes ...
The only viable solution is a revenue-neutral tax (i.e. tax carbon but redistribute the money back to the population, making it a progressive tax).
We always forget how much we can cope with change.
We're just coming out of a pandemic where the working patterns of most[0] people have changed drastically. Working from home moved from being a rare thing to a common thing. Schools moved to teaching via videolink. All that, practically overnight.
If we rationed fuel for personal use, then suddenly everyone would car pool. No, we might not like it, but we'd make it work.
In WW2, the government rationed all sorts of things, and lots of stuff became plain unavailable. People coped.
We all want cheap energy, but if energy stopped being cheap, we'd cope.
[0] I have no idea on the actual numbers. I'm assuming it's "most" because everyone I know works from home now. I could be in a bubble.
Its a shame that we rely on the markets to enforce what should be enforced by the UN.
Climate change is a global problem that capitalism is responsible largely for, asking capitalism to solve it is unrealistic at best.
Not so sure this move to EVs is the best thing going forward, unless we really solve the power/energy distribution thing, that is.
Yes, we might partially solve the power generation issue as solar cells are getting cheaper, we get better at reining in wind-power costs, maybe even getting back to nuclear etc, but imo getting that power from point A (generation site) to points B to Z (consumers) reliably and in abundance is a not-solved problem.
Case in point me, as I’m writing this comment. I’ve decided to spend the middle of this week at my parents’ house in the East-European countryside doing wfh (I’ve got the vaccine and I finally feel safe about seeing them in direct contact) but I just had to turn off the light in my room just now because it was flickering. Judging by what I can read on the local FB group this is a usual thing. My parents live 30-40 km away from the country’s only nuclear plant, so while power generation is not an issue reliable power distribution is indeed a big issue.
While this may be anecdotal I venture to say that this example is not singular, that is if you go outside the big populous cities (where, I agree, while still present this sort of issue is less prevalent).
I’m also curious about who’s going to pay fir building that reliable power-distribution network we will need? The car companies aren’t going to do it, neither the big oil majors.
You pay for it when you buy electricity (usually as a fixed component of the price per kWh). Electric cars will consume large amounts of electricity, and that will fund the upgrade of the grid proportionally.
That said, if bi-directional charging becomes commonplace, the grid will probably get substantially simpler - you can burst off your car or your neighbors car in peak hours, 4-9pm.
> Electric cars will consume large amounts of electricity
In the meantime poor communities who won't be able to afford EVs just yet will remain stuck on using the old and unreliable networks, hence increasing the societal and economic disparities. As things stand right now most of the poor in the US and Western Europe can still afford a car, a $1000 or 2000 euro beater but one that still works. In the future they won't probably afford SH EVs and they won't have a reliable network to charge them.
Again, this sort of worldview is pretty much absent from the minds of people making this top-down decisions.
I’m not sure why this means we can’t switch away from fossil fuels for energy production? Sure, we may have to fix distribution of electricity in some places, but that will be necessary regardless of the shift to electric.
> I’m not sure why this means we can’t switch away from fossil fuels for energy production?
Because the network won't hold the new extra energy consumption.
Like I also said, this problem is not obvious enough for people who live in affluent and mostly populous communities (like most of us here, or like the stakeholders from the article), hence why it's not discussed that often in relation to the switch to "green energy". There was something of try to address this in the first (or second? not sure) Obama mandate, the whole "smart grid"thing, of which I've heard not that much lately, and over here in Europe Merkel tried something similar in Germany in late '00s - early 2010s but she failed spectacularly.
If any of this actually sticks.
I can see the judgment against shell going through appeals processes for decades, during which it’ll be business as usual. If the appeals don’t look to be going well, they’ll replace the government and the judiciary as necessary, and will try again.
Chevron and Exxon, the proof will be in the pudding, but it just smells like so much greenwashing right now.
Lol good luck, shareholders/executives don't care because tomorrow everyone's going to use their cars, have their goods shipped by tankers and Tweet on their plastic covered phones.
Everyone in society decides whether or not a business/industry succeeds or fails. Not a Twitter mob.
You hardly have a choice to avoid the plastic crap in life. You can't even buy salami without it being packaged in plastic. No sense in putting the onus on the consumer, when it was industry looking to cut costs who set up this environment in the first place.
Naaahhh you didn't get it. They do it because the consumer (you, me) ask for the convenience of those packages.
</cynical>
> Not a Twitter mob.
This post is a Tweet, indeed. But it discusses 3 real world, substantial changes like court rulings, board changes, and fines.