Exxon, shark attacks and America’s climate crisis

Last month in New York, while New Zealanders debated the merits of cycling on the Auckland Harbour Bridge, an activist hedge fund called Engine No.1 won two seats on the board of ExxonMobil, the largest oil company in the Western world. Since then, with all the votes counted, it has picked up a third seat.

Engine No.1 wants Exxon, valued at $250 billion, to take effective action now to confront the climate crisis. The fund has existed only since December, manages a mere $250 million in assets and owns just 0.02 per cent of the oil giant. But it now controls a quarter of the board.

How did that happen?

Engine No.1 ran a campaign called Reenergise Exxon. It didn’t appeal to investors’ hearts with a greenie campaign, but went for the jugular: climate risk, it said, equals financial risk. Put simply, the shareholder value of Exxon, which only a few years ago was the largest company in the world, was heading into freefall. One big reason for that: a failure to take climate change seriously.

Chairman and CEO Darren Woods fought hard to stop the uprising. His company supported the Paris Accord! he bleated. But the shareholders were not impressed. They knew that when other oil companies had committed to the Paris target of net zero carbon by 2050, he had called it a “beauty contest”. Woods planned to grow emissions.

Exxon’s top three investors – the hedge funds BlackRock, Vanguard and State Street Corp – sided with Engine No.1. It shouldn’t have been a surprise: they’re all members of the Net Zero Managers Initiative, which supports the Paris goal.

“No issue ranks higher than climate change on our clients’ lists of priorities,” wrote Laurence Fink, BlackRock’s CEO, in his annual newsletter. “They ask us about it nearly every day.”

Climate activism has reached into the very heart of carbon emissions and Exxon is not alone. Also last month, a Dutch court ruled that Shell is legally liable for its contribution to the climate crisis and ordered it to cut emissions by 45 per cent by 2030.

The judge said Shell was responsible not just for its own emissions, but for the use of its products as well. Chevron’s shareholders have said the same thing, voting to compel the company to reduce its customers’ emissions. You work out how to stop oil killing the planet, or you stop selling it.

Shell, which likes to tell the world it’s a responsible green corporate citizen, has said it will appeal.

None of this means corporate America is going to save the world. But as investors – especially hedge funds and pension funds – come round to the view that environmental health is necessary for economic health, it will have an important role to play.

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From the climate files: More people are getting attacked by sharks. Worldwide in the 1970s, according to Florida Museum’s International Shark Attack File, there were 157 recorded cases of shark-bites-human; in the last decade it was 799. Warmer water means changed patterns of feeding for fish of all kinds and entices more swimmers and surfers into the ocean. Florida is the epicentre of shark attacks, with about a third of all recorded cases in the world.

The American crisis

America is in terrible trouble with the climate crisis. NBC reports that 72 per cent of the western United States is in “severe” drought: in many states, they’ve had 20 years with a critical shortage of water. Geologists say it hasn’t been this bad for 1200 years.

Last year in California, 10,431 wildfires destroyed 16,500 square kilometres of forests, farmlands and homes. This year they expect it will be worse.

Las Vegas, with 2.2 million people, now receives just 2.5 cm of rain a year. They’re looking at everything: in southern Nevada, 30 per cent of urban grass is illegal. No grass, no need to turn on the sprinklers.

The cities will probably not run dry, they say, but in Arizona, large parts of which are irrigated desert, the future of the vegetable farms that feed America is now in doubt.

When the rains do return, they do so with violent intensity, causing floods and mudslides.

But lack of water is not the only climate threat to cities. The arctic storm conditions that blacked out cities in Texas and other states last winter killed 80 people.

And while cold is dangerous, the New York Times reports that heat is much more so: 12,000 Americans a year now die in heatwaves.

The Southwest has been in the midst of one this month, with temperatures commonly into the forties.

Low-income communities are worst affected, partly because they have less air conditioning. One study revealed that over summer, Black neighbourhoods were up to 11 degrees Celsius hotter than white neighbourhoods.

Another three-city study found that in heatwave blackouts, two-thirds of residents would be at risk of heat stroke and exhaustion. Blackouts have doubled in frequency between 2015 and 2020.

There is now so little water in Californian rivers that salmon cannot spawn. The state plans to transport 16 million fish to the sea, by truck.

Meanwhile, as California’s drought deepened last year, Nestle drew 220 million litres of water from sources in the San Bernadino Forest, just for bottling. It had a permit for 8.7 million litres, for which it paid US$2100. #NotAllCorporates.

Last year in the US a record 22 weather-related disasters cost more than $1 billion in damages. Staff at the Federal Emergency Management Agency (FEMA) are exhausted. On a recent count, of the 53 senior leaders qualified to lead an emergency mission in the field, only two were available to do the work.

It’s not that America is worse affected than elsewhere. Unlike in several parts of northern Africa and the Middle East, drought has not led to war. And Americans made up only a small proportion of the 40 million people worldwide who had to flee their homes last year, mainly because of storms and floods.

But still, it feels grimly apposite. America, with 4.25 per cent of the world’s population, has contributed 25 per cent of all atmospheric carbon dioxide. The country that did the most to create the climate crisis is not immune to its ravaging impact.

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From the climate files: No ship has struck an iceberg in the North Atlantic since the Titanic in 1912. But they keep breaking off the glaciers in Greenland and there are hundreds of them out there right now. Sometimes, the shipping lanes are filled with more than 1500 icebergs.

America has the power

America is not without the means to play a leading role in resolving the crisis, either.

It has a proposed Green New Deal, now being promoted with the slogan #NoClimateNoDeal, although the prospects are not rosy. President Joe Biden wants Congress to compel power companies to replace fossil fuels with clean energy, although, again, he will be lucky to win that. But the change is happening anyway.

Seven states and 170 cities have already committed to 100 per cent clean energy or clean electricity.

The potential is staggering, as a new report by Environment America, an independent public interest group, makes clear. “We Have the Power” says America could produce 284 million GWh of solar power per year: that’s 78 times the country’s entire electricity consumption in 2020.

It could also produce 40 million GWh of wind-generated power per year: 11 times the total electricity used last year.

Every state, says the report, could generate its own clean electricity, for current use, at least once over. Eighteen states have the solar potential to do it a hundred times over. Arizona could build massive solar farms to power the irrigation of vegetables in places where it does rain.

And why stop at existing electricity use? The report says if all transport, building and other energy uses were converted almost entirely to electricity, every state except one (Connecticut) has the potential to cope using only solar and/or wind.

The technologies to do this exist now and have been proven at scale. And they’re getting cheaper: In the US, the cost of wind power fell by 71 per cent from 2009 to 2020. Utility-scale solar fell by 90 per cent.

They’re getting better, too: Residential solar panels installed in 2019 were 37 per cent more efficient than those installed in 2010. In the same period, wind turbines grew their capacity by 42 per cent.

There’s more. The US has enormous geothermal potential. Last month the Navy dropped its opposition to wind turbines floating offshore. And battery storage capacity has soared while the cost has fallen at least 70 per cent in the last few years: both factors make solar and wind more viable in previously marginal areas.

Advances in EV technology over the past decade have been especially fast: the cost per watt-hour for EV batteries has fallen by 89 per cent while the median driving range has quadrupled.

Energy efficiency is also about reducing demand. Research by the American Council for an Energy-Efficient Economy suggests a full transfer to electric vehicles and energy-efficient buildings, again using technologies that exist now, could cut US energy needs by half.

While New Zealand frets about vehicle feebates, America is now poised for a rapid full economy-wide transition to renewables. But will it happen? Are the ambitions of the politicians driving change large enough? Can they generate enough support?

And what about the rest of us? Are we keeping up?

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From the climate files: It would help if we recycled our own waste. In 2011 the Bill and Melinda Gates Foundation launched Reinvent the Toilet Challenge, looking for ways to recycle energy, water and nutrients from human waste. But who likes that idea?

Are we there yet?

Joe Biden called a virtual Climate Summit in April. Ahead of the big COP26 meeting scheduled for Glasgow in November this year, he pushed world leaders for stronger commitments now.

Did it work? Is the world now on track to keep global warming under 1.5 degrees Celsius above pre-industrial levels, as agreed at the COP21 conference in Paris in 2015?

Climate Action Tracker (CAT) has done the analysis. Its verdict: good but not good enough.

CAT says we’re headed for 2.4 degrees warming by the end of the century. The April commitments reduced the impact by 0.2 degrees.

To put it another way, says CAT, there’s still a gap of 11-14 per cent between what countries have pledged and what we need to do by 2030 to be on the 1.5-degree pathway.

The most important new commitments in April were made by the US and China, although both were coming off a low bar. But neither country pledged as much as it needs to, if it is to play its full role in getting us on that pathway.

China now produces 27 per cent of global emissions, which is more than all the developed nations combined, according to a new report by the Rhodium Group. China has pledged to achieve net zero by 2060, but it’s got over 1000 coal-fired power plants and it’s busy building more. And it’s funding fossil-fuel projects in other countries.

CAT rates China’s climate plans “highly insufficient” and “not at all consistent with holding warming to below 2C.”

Whether it’s net zero by 2060 or 2050, and whether “net zero” is even a meaningful target – a hotly disputed topic – it may not matter if we don’t get onto that 1.5 degrees pathway by 2030.

Former British chief scientist Professor Sir David King: “What we do over the next 10 years will determine the future of humanity for the next 10,000 years.”

World War Zero, the US coalition launched by Biden’s special climate envoy, John Kerry, has turned that into some stark global targets. WWZ says the world needs to:

• Phase out coal five times faster than we have been.

• Increase tree cover five times faster.

• Ramp up renewable energy six times faster.

• Transition to electric vehicles 22 times faster.

Also, it says, from now until 2030 the world needs to invest more than US$1 trillion a year in the transition to clean power. That’s on governments, corporates and venture capital.

It’s also on Leo DiCaprio, Emma Watson, Jaden Smith and Ashton Kutcher, who all belong to WWZ. If it helps, there are politicians, scientists, military and business people in there too. Even Al Sharpton and Arnold Schwarzenegger.

And New Zealand: how’s our commitment?

We’re only average, and that, as Climate Action Tracker says, rates as “insufficient”. If all countries did as we do, the world would likely become 2 or 3 degrees warmer.

That will take the world perilously close to a series of tipping points. They include melting Arctic sea ice and collapsing glaciers in Greenland and West Antarctica, causing stark rises in sea levels. The Amazon rainforest could lose its capacity as a carbon sink.

With the Arctic warming at three times the global average, melting permafrost and giant fires in the boreal forests would both release massive amounts of carbon.

New Zealand is currently reviewing its commitment. In Glasgow, in November, all the world will have to do the same.

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From the climate files: Woolly mammoths may return. Melting permafrost has already yielded the remains of several. One carcass, discovered on an island in the Arctic Ocean, still had red muscle tissue and blood in liquid form. Will they be able to clone it? And what else is waiting for us under the ice?

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