That’s the headline of a new article by Marc Gunther at the Guardian.
I was excited to read that headline. Has the time finally come that someone else has figured out the solution to global warming?
I recall that I have been preaching on this blog again and again that global warming is easily solved in a week with time to spare once the oil companies join the fight on the same side as Bill McKibben. Phaseout Profit Theory. Having more fossil fuel stay in the ground means less supply. Less supply means higher fossil fuel prices. Therefore, fossil fuel companies should be interested in having more oil stay in the ground.
Unfortunately, the article only describes the old and well-known efforts by the Carbon Tracker Initiative to include the risk of “stranded assets” when analyzing the value of fossil fuel company stock.
“Turning fossil fuel companies into allies” would be achieved, in the view of the article, if some of the investment directed at finding new resources now would be channeled into renewable energy instead.
While that is a good idea and inevitable in the long term anyway, for the short term it is not necessary to have oil companies invest in solar projects. All we need them to do is strongly reduce their investments in developing new resources, leading to higher prices in the future because of reduced supply. They should like higher prices.
As Michael Liebreich explained in his recent key note speech, the oil producing countries are losing close to a trillion dollars per year in revenue because of the latest 40% drop in oil prices.
It is clearly not in their interest to have that happen.
So what they should do, they should join Bill McKibben and voluntarily restrict their investments in new resources, as well as their production. If they finally see the light and leave more oil in the ground, guess what happens to that 40% price slump?
Just announcing that all oil companies join the 350.org campaign might be enough to send oil to $200, giving an extra $5 trillion a year to the oil producers.
Again, I think that idea of “turning oil companies into climate allies” is a great headline. But the way to do that is not what the article recommends.