 I'll get it going, and we're sure this is on, right? In a few minutes, meanwhile, we still have a few people filtering in, and as if you notice the layout of the room, it would be helpful if you scoot it over to the left a little bit, if you've got it open spot, because we may need every single seat in the room. Exciting. Good morning, everyone. Good morning. Good morning. So thank you, on behalf of the Stockholm Environment Institute and our partner organizations, for coming here today to the first international conference on fossil fuel supply and climate policy. And we're really happy that in the end, so many of you could make it here. And as Mike already said, we might fill up the room completely, so keep some spaces open for colleagues. So over the last years, we've witnessed a number of very significant developments in the fight against climate change. I would assume that all of you know, of course, that last year the Paris Agreement was adopted, and World Leaders committed to transforming the global economy, but also to moving away from fossil fuels and onto the pathway towards a low carbon economy. And also with last week's UN meeting in New York, it's becoming increasingly likely that we will have an early entry into force of disagreements, which is quite a moment's achievement. At the same time, as was also underlined last week during the one and a half degrees conference right here in Oxford, much of the hard work and the hard choices still lie ahead. So climate change mitigation efforts need to be scaled up. They need to be scaled up quickly. They need to be scaled up dramatically. We know this. But we also need to think about combining proven approaches with new ideas for accelerating this move towards a low economy. So it's therefore clear that we need all the available levers that we have at our hands to tackle this problem. But while we know that action across the board is necessary, climate policy as we know it has focused thus far primarily on measures to reduce the use of fossil fuels. And we're talking about carbon pricing and measures to promote the uptake of renewable energy, for example. So with this conference, we're trying to basically work towards a shift in this approach. And we want to explore different types of policies and actions and to look at their potential. And these actions we're calling supply-side policies or supply-side climate policies. So in this conference, we want to discuss how these types of policies can supplement and enhance other more demand-side oriented policies. And through your research and outreach, many of you in this room have been involved in that. And we really think that you've inspired this focus in us, but also in others in this room. You really brought attention to the fact that only a fraction of the world's fossil fuel reserves can be burned if we are to keep global warming below one and a half or two degrees Celsius. So in the end, we want to explore these questions and look at what they mean for fossil fuel producers, for investors, for policy makers, and so on. Thanks, Harrow. By the way, Harrow then asked himself Michael Lazarus. You've gotten lots of emails from us, I think. So it's fantastic to be here. It's really exciting. And as Harrow was saying, the reason we wanted to bring you all here together is because many of you in this room are really leaders in beginning to think about and propose these ideas for what we're calling supply-side policies. What they might look like, what are their prospects, what are their implications? So what do we mean? We mean items that have been on the agenda for some time, such as removing subsidies for fossil fuel exploration and production. Then newer ideas like we'll hear about in this morning's panel is a bit of a teaser about various policies, like a moratorium on new coal mines. Or what about a tax or a fee on fossil fuel production, coal in particular? What about funds to leave fossil fuels in the ground for developing countries, particularly in biodiversity hotspots? Countries deciding not to approve infrastructure projects, whether it's pipelines, or as we saw in the U.S. with the Keystone XL pipeline, with the rationale being around the signal related to climate change, or around lands that are under control of the federal government for production of various fuels. We'll hear about that. We'll hear also a bit about fossil fuel producers and new strategies that they may be adopting or considering in light of the changing circumstances. So the question really before us is under what conditions can policies like this really be feasible? Can they be effective? Can they be efficient? Can they be equitable? Can they be fair? What do they mean in terms of a transition, a just transition, especially for communities, workers, governments, dependent upon the revenue from fossil fuel production? How can we make this work? So that's why we brought you here today, to have a lively debate about whether we can address climate change from the supply side. And whether we can bring policies together that help really more effectively put us on that 1.5 or 2 degree trajectory. So our hope in this conference is that you will all be having discussions in these rooms, outside, create new collaborations, come up with new research ideas, so we can really push the ball forward together. So thank you so much for coming all the way to Oxford to join us today. But before we jump into the content, we have the practical matters that we have to run through. First of all, the most mundane one being just so you know, the restrooms are a bit hidden. You head out these doors down the stairs. Second thing to be aware of is that we are being webcast live. It's on the SEI YouTube channel, I think, right, Marion? And if you are presenting and if you have a concern about that, let us know and we can make arrangements accordingly. We have a tight schedule. We have a lot of people we wanted to put on stage and talk to you as well as those who are in the audience who normally are on the stage and gosh, we wish we could have fit you all in. So we want to stick to a tight schedule so you can make the most of the sessions as well as the most of the breaks. So speakers, moderators, be aware that we are going to be tough. I know we say that, but we mean it. If you have logistical questions, we have two fantastic go-to people from our SEI Oxford office. Stefan Bosner, please stand up. Julia Barrett. So if you have questions, whether it's around the internet, the facilities around what's coming up next, please feel free to get in touch with them. And are we supposed to do a little safety talk? Okay, we signed a little contract. If there's a fire, go to the lawn outside. If they're following objects, duck. All right, so with that, oh yes. And even surfaces. Old college. So crawl everywhere. All right, so it's really, with that, we want to turn to opening this conference. And we can think of no one better to open this conference than Paul Eakins. Many of you have cited the work of Paul Eakins and Christoph McGlade, the work that they did three years ago that Paul will refresh us on a little bit. Shortly, Paul is a professor of resources and environmental policy and director of the Institute for Sustainable Resources at University College in London. Deputy director of the UK Energy Research Center has been involved in leading energy policy in the UK for some time. So it's with great honor that we welcome Paul Eakins to say a few words at the beginning of this conference. Thank you. Well, thanks Michael and Aaron. And obviously it's a huge privilege and pleasure to be here just to kick this important conference off with really two sets of thoughts. The first arising from this paper, McGlade and Eakins, not Eakins and McGlade, very important academically. And I'm very glad that Christoph's in the audience so that if you stole me any really difficult questions about that paper, I shall have no hesitation in calling him to my aid. And then I'm going to talk a little bit about the implications of that, the policy implications and the investment implications, as with the title, which I think will help us along. So that was not the right thing. I can get back but which of these buttons I'm obviously unlikely to do it again. You want to move forward? Okay, that's fine. Okay, so this is the front piece of the letter in nature that Christoph and I were co-authors on, published last January 2015. It did make quite a splash. In fact, Carbon Brief said that it was the paper on climate change in 2015 that got more media coverage than any other. And as I became an academic to do that kind of thing, I was enormously grateful to Christoph for enabling that to happen because he of course did most of the work and those of you who are academics will realize that. So we knew that burning all available fossil fuel reserves would bust the carbon budget for two degrees several times over. But we didn't know before Christoph's work how that was split between oil, gas and coal and of course very different carbon intensities and probably most important where those unburnable resources would be likely to be. And I say would be likely to be and we've engaged in considerable correspondence about this. We'll see there's a normative statement in the title that should stay underground. Well that's really difficult on what basis should stay underground. Clearly a lot of it has to if we want the two degrees, let alone the 1.5 degrees, but how do we choose? Well I'm an economist and so we choose or our model chose on the basis of least cost. So we burnt the cheapest fossil fuels first up to the carbon budget. I'm not going to spend much time on this. Many of you will do modelling yourselves. I think models are not God but models are useful. If they have these three qualities especially and if they don't have those three qualities then the model is less useful. But when the structure is robust and this is the times modelling system developed out of the Marker modelling system developed by the International Energy Agency. So lots of people around the world have worked on this modelling system and so we're standing on the shoulders of giants very much. Where the input assumptions are plausible and we'll talk a lot about the input assumptions before you get the results and where the data quality is high. It was as high as Kristoff could make it. I had no idea there was so much uncertainty about fossil fuel reserves. I kind of thought well we sort of knew what was out there but this is by no means the case. So this is a little graphic of TM-UCL. Those of you who know energy system models will understand it very easily. It starts here with energy service demands that are generated by some projections of GDP or whatever right across heat power transport. So it's the whole energy system. And then on the basis of least cost optimization it works back through the energy system through transmission conversion to primary resources. And our version also has a climate module which we've invested quite a lot in order to try to make it consistent with some of the global circulation models so that we can either constrain temperature which is what we did in our model run or we can constrain carbon emissions and obviously by constraining temperature you do constrain atmospheric concentrations and therefore emissions. So the model calculates the impact of selected primary energy sources on emissions and temperature rise but as I say you can work backwards. Lots of input assumptions have to be made so regional, global populations, GDP growth rates, costs, rates of low carbon technology, development, etc. We and I mean Kristoff did an enormous number of sensitivities around those input assumptions. The first paper I'd ever been associated with was published in Nature. It took us nine months to respond to referees' concerns so that's a lot and you'll see the extent to which the referees forced us to go in order to get it published. And this is the core of the work if you like. It's supply cost curves for the three major fossil fuels, oil. And before we did this work I had no idea that there were so many different kinds of oil. I kind of thought well oil is oil isn't it? But no, oil is not oil in it. There's all these different sorts. And this is gas and different kinds of gas and this is coal, rather fewer kinds of coal and the cost curves at which they can be extracted and I've already said it's a least cost optimizing model but also you would have expected the model to work up the marginal cost curve of each of those resources with different carbon intensities of course. And the constraint was this little green bar here which is the IPCC's carbon budget for 2050 for two degrees with the light green being the uncertainty range you can see it's around 1,000 gigatons, a trillion tons of carbon dioxide. So we constrained the model only to emit a trillion tons to meet the energy service demands that came out of our analysis of various GDP projections and therefore energy consumption. And you can see from this the extent to which the available reserves and resources exceed this little green bar. The dark brown is reserves and that's about three times as much carbon as we can afford to burn according to this budget. The dark brown are resources where reserves are broadly defined as resources that can be produced with current technologies in a defined period of time in an economically viable way. Obviously lots of uncertainty about that depends on whether the oil price is $40 a barrel or $140 a barrel but to some extent you make those assumptions there and that was the extent of the problem. The left panel and this is just a few of the sensitivity analyses which the referees required us to do is the range of projected global GDP from all the scenarios used in the IPCC fifth assessment report. I can't remember exactly how many there are now but I think it's an excess of a thousand. So that's a lot of runs that we had to do to have a look at that and a huge variation by 2050 in how rich the world is going to be. So that's GDP in trillions of dollars and there is the range and obviously the energy service demands that come out of that are very varied and then there was another whole range of sensitivities. Two DS is our central two degree scenario. Five DS is essentially no climate policy so not even INDCs so we hope we're already beyond that. Three DS is constraining the model to three degrees and then these are the bars for oil, gas and coal that come out of the model with low and high fossil fuel prices with whether we allow it to have BIOCCS or not and so all these various sensitivities. And this is the kind of key result which got people quite excited. I've highlighted the big numbers of the unburnable reserves so remember there's a whole heap of resources out there on top of these reserves and you can see that Canada, it's 74% of its oil unburned that of course is the oil sands in Canada. The Middle East 38% seems to be quite a small percentage but when if you look at the quantity of oil that is burnt under that scenario you can see that that's a lot of giga barrels. Gas here again a lot in the Middle East, former Soviet Union has a lot and coal, the headline figure down here, 82% remains unburned with some world burning less than 10%, so more than 90% remain unburned so some pretty challenging stuff. The model generates an implicit carbon price so that's the kind of policy so in a way an economist would say this is the result of an optimal policy and we know the world doesn't really operate like that but there you are I mean that's the way it is. And you can see that the carbon price takes a run-up to 2020 because of various short-term constraints we put on the model and then has a nice little curve going up to about $250 per ton of CO2 by 2050, now you'll be thinking well that's obviously completely unreal. Interesting thing is that Sweden of course already has a carbon price of 100 euros per ton of carbon dioxide so Sweden is already up here well before 2020, the UK tax on petrol and diesel or gasoline as I think you call it in the United States is something like 350 if you computed that as a carbon price is about $350 a ton. Of course it isn't a carbon price it's a revenue raising measure and it's been in place since the 1970s but it shows that it is at least possible to tax fossil fuels now at the kind of level that we're envisaging in order to drive the two degree target. Really interesting to see the trajectory over time of these different fossil fuels some people have commented the fact that we use quite a lot of oil right the way through to 2040 before it starts really to decrease so this carbon budget isn't zero a trillion tons it's quite a lot of carbon and there's a lot of oil used. The coal you can see dropping off a cliff there and substituting for the coal is the gas and again something that has been subject to some comment is the fact that in the short to medium term more gas is used in the two degree scenario than is used in the five degree scenario but then of course the gas pattern is off as well and as we know in the second half of the century all fossil fuels will have to fall so that net emissions go to zero but we didn't report out to them. A couple of little results that have also caused some comment but CCS doesn't make a great deal of difference and lots of people have said well how is that possible why is CCS not the saviour of coal and you can see it only increases by 6% the quantity of coal that can be burned and the reason for that really is the constraints that we put on the model before 2050 we don't allow the model to build CCS until 2025 commercial CCS that is and even that's beginning to look a little optimistic now given the huge scale of the plants that would be required to make a difference and then we constrain the build rate out to 2050 because it's clear that once the model the problem with optimizing models is that if it likes a technology it likes to do nothing else if that's cost effective and so one needs to constrain it in those ways this is a picture of the conditions that would be necessary in order to continue to produce or to produce new oil sands from Canada you will know that producing oil sands in Canada is a very energy intensive process at the moment the input fuel for that production is mainly natural gas natural gas is obviously carbon intensive or relatively not carbon free let's put it that way and if you were to completely decarbonize all the energy inputs into producing Canadian oil sands then the model suggests that they would be cost optimal and they could be produced but that is a huge ask a lot of bioenergy would need to go in in order to substitute for natural gas that is currently used for gas production oh and I'll come back to this little statement down here that there's no development of oil or gas resources in the Arctic so that's kind of the quick presentation so what does all this mean well it has huge implications obviously both for politics and for businesses so we did this work obviously before Paris but Paris long on rhetoric long on ambition and clearly this has huge geopolitical implications about how fossil fuels are going to be produced huge implications for licensing or fossil fuel exploration lots of countries busy licensing new exploration I hope for finding reserves and if the implication of that is serious about the budget of course is that if we produce resources that are not produced in the model then to stay within the carbon budget some resources that were produced in the model will have to stay underground and how what kind of decision making process can we envisage that will allow some countries to produce fossil fuels and others not to produce them if they are there and if they're available developing countries have special dispensation I think Michael said we're going to have a session on that we're doing some modelling on that for DFID with IAED Steve Pye is leading that but he's certainly talking later there he is, yep and obviously enormous justification for exploration production financing really we're following up the work I guess that Carbon Tracker has been doing on that in the investment community and of course that's now right at central bank level with the Financial Stability Board various central bank governors investigating what exactly corporations should be telling us especially fossil fuel corporations about their expertise moving on then very quickly to investment well the sums of money that need to shift direction are very large indeed a mind bogglingly large it's extraordinary that with those numbers as well as with others there's a lot of uncertainty so it depends whether you believe the IEA there are estimates of a trillion a year of extra investment that is required in low carbon energy or whether you believe the new climate economy which is a mere 270 billion extra in low carbon and again this will depend on assumptions about the costs of low carbon energy sources and as we know over the last 10 years anyone who was forecasting the costs of low carbon energy sources would have been proved very badly wrong because the prices the costs of solar and of wind have fallen much more quickly than anyone was anticipating overall the IEA thinks that something like a hundred trillion dollars is going to be invested over this 40 year period so that's quite a lot it's two and a half trillion a year much of this is currently destined or was when we were doing this work for fossil fuel infrastructure but it's really encouraging that a lot of that investment is now being rethought so 10 years ago we were all talking about China having projections for one new coal-fired power station every week or whatever it was and if you look at the projections they're considerably reduced they're not zero but they are considerably reduced and that needs to go to low carbon infrastructure so how are we going to generate three trillion dollars a year in low carbon investments well some of it is already happening but 330 billion is not nothing but it's clearly not three trillion private investment is going to be doing most of the heavy lifting it's going to have to these investments are going to have to command a risk-reflective normal rate of return the oil and gas prices are fascinating because they're kind of a double-edged sword they help choke off investment in new fossil fuel developments and we've seen enormous reductions in exploration production investments over the last year or so since the fossil fuel prices fell but also they obviously deter and delay investment in clean energy because the gap between renewables, low carbon and fossil fuels widens as they are so while those low carbon investments are more expensive we're going to need public policy and broadly and less these low carbon energy sources do become cheaper than fossil fuels it's hard to see how so I'm not going to spend any time on this adjunct conference all these ideas in a lot of detail policy needs to be consistent, predictable and transparent, pretty well everything that UK energy policy has not been we need to get out of fossil fuel subsidies, many of you will know the IMF paper that suggests that they're around five trillion a year if you include costs which of course is good economists you should but which we normally not include carbon pricing, I have a preference for carbon taxes but I'll settle for emissions trading where it works large scale R&D energy storage, energy related ICT and of course in fuel production technologies generally policy support of all kinds in order to close that gap between the price of carbon energy sources and fossil fuels huge push for sustainable urbanization if we build cities the way they've been built especially in the United States it would be quite impossible to get anywhere near to need to do something about deforestation forest degradation and food and diet and going on at the college dining room this is my last slide and the risk of stranded assets is positively related to the stringency of carbon emissions mitigation policy I find it really interesting as a policy person you can actually tell how likely the fossil fuel companies think stringent climate policy is by their whole attitude to their existing assets and it is different between them so you've got Exxon Mobil on one hand which basically doesn't think climate policy is ever going to do much and of course it does what it can to ensure that that's the case and then you've got some of the other fossil fuel companies who are starting again to invest a bit in low carbon some fossil fuel assets are already stranded and it would be fascinating to see what a various central bank and other task forces come up with once they report come and which assets are stranded in my view and it's fascinating what Michael said at the beginning about focusing on the supply side I think that which assets are stranded is going to be decided by consuming countries and not by producing countries I cannot imagine a global agreement where by Saudi Arabia or Russia or any of the other guys with those assets we won't produce these I was up in Tromsø and I think one or two people that may have come from that workshop and there was a very very insistent and impressive gentleman from the Norwegian Oil and Gas Corporation arguing like crazy that they need to go off and produce Arctic resources and I see a model that we don't produce Arctic resources and he was saying these Arctic resources are really cheap they can go in there, they can do them and so I asked him, I said well you produce the Arctic resources who is not going to produce the resources because if any country in the world needn't produce fossil fuels it's Norway it's very very rich it has a huge sovereign wealth fund because it has acted in a very responsible manner from its fossil fuels today but it actually doesn't need to produce fossil fuel resources and yet the Norwegian Oil and Gas Corporation to go and do that so there's a huge debate in Norway and I was sort of caught between the crossfire Norwegian NGOs that didn't want to produce fossil resources in the Arctic and the industry that did so I think it's going to come from consumers energy markets will only push low carbon to the extent of their cheaper fossil fuels and the role of public policy is to make that happen in as cost effective a way as possible policy makers will only do that if low carbon energy sources are perceived to have other advantages I think as we know the actual momentum politically towards climate policy is relatively weak nationally and on the ground and what's driving China's concern in these issues of course is largely air quality locally that's fine, that's where the big externalities are according to the IEA analysis and so climate policy carbon reduction becomes a kind of co-benefit rather than the other way around so it is happening and Paris was hugely encouraging but of course as we know it's not happening anything like enough to get us to 2 degrees let alone 1.5 and I hope that this conference will give us a bit more momentum thank you very much Paul don't go anywhere especially after that last slide thank you so much for sort of a great overview of the sort of table you set with your study as well as these conclusions that you draw which suggests that you know supply side policy as we've talked about and some people have worked on is a challenge I think people are aware of that so with that in mind we'll have a chance to talk about some of those shortly but we wanted to allow the audience to throw in a few questions here because we're about to cut to another panel so surely there must be questions let's take three questions and I saw a hand in the back and the two right there and we'll get to these other two should we have time I think yes it's Kuni, yes thanks Kuni Chen with the Nature Conservancy in New York so we have an interest in supply side approaches to restricting coal in the United States I had an interest in some of the cost curve charts that you showed earlier in your presentation so does your does your research suggest that you know restricting fossil fuels should you tackle the high end of the cost curve or the low end of the cost curve that's one way or the other Mark hold on next round there were two hands that just came up before you okay so I believe it's you yes Miles right okay so the main policy discrimination between whether we scenarios where we meet two degrees affordably and those in which we can't afford to meet two degrees is the rate of penetration of CCS over the century as a whole so by limiting it you could argue that your paper fed the perception that CCS can't help where it's abundantly clear that it's the anything that can help so does this keep you awake at night my question is simply because this research was done before Paris and there was such a strong sentiment to embrace a 1.5 degree target in Paris are you thinking of recalculating these balances between the different sources of carbon before we jump on Mark hold up for a second what we'll do with this round and then we'll get to you introduce yourselves please Massey at the University of Massachusetts okay thanks well if you're going to focus on the supply side the market will obviously be more keen to produce the low cost resources than the high cost resources and I think that when the market is giving certain signals then it is possible for policy makers to reinforce those so that coal in the US my understanding is it's largely been undercut by shale gas and that that's what is driving the reduction in coal use I think under those circumstances public policy can firstly ease the transition which is really important time of policy isn't going to hurt lots of people and yes it obviously then does make sense to ensure that you're not subsidizing the high cost stuff to bring it on stream first as far as I'm aware there's not a lot of that going on in the US but I'm not terribly up with substantive policy in the US what I do know is that in Europe we do still subsidize high cost coal to quite a large extent for Germans in particular despite their wanted energy and that's obviously that's obviously a big problem rate of penetration CCS nice challenging question miles no it doesn't actually keep me awake at night because when I'm asked I always say CCS may be important later in the century but it's very critical of the government having pulled the plug on our own CCS policy here and it would have been great if 10 years ago when we started talking about this we had commercial CCS up and running but I still think that the assumptions we made in the model which is that you don't get the first commercial deployments till 2025 and that there is then a constraint on the feasible rate of building I think those are perfectly reasonable assumptions and yeah they do make the whole business much more challenging and I wish we could get on with dealing with that technology especially for industry but the CCS people that I talk to say you can't do just industry because it doesn't justify the infrastructure investment so you have to do industry and power together and co-locate them where that made sense so I think CCS is fine but I think we need to be aware that the longer we wait before we actually do it at scale the windows are closing and of course after 2050 there is a carbon budget but it's a much smaller carbon budget certainly from 1.5 degrees and CCS is not the zero carbon technology so it uses up to 25% more energy and it only captures 90% max of carbon emissions so that is a significant part of the carbon budget in 2050 and on 1.5 degrees you can imagine that having got this beast of a model we are dead keen to use it under all possible circumstances where it's appropriate 1.5 degrees is a push though and the model doesn't like 1.5 degrees it will produce and lots of bioccs if you allow it to do that to get the negative emissions that the model accounts well we know that bioenergy may not be negative emissions in some studies that suggest bioenergy is more carbon intensive than the sun fossil fuels so production of zero net emission bioenergy is one thing and then obviously we've talked about the CCS so if one stresses models to that extent then it really shows how difficult 1.5 degrees C is nevertheless we shall do it and then we'll try to weave a narrative around that but it seems to make it feasible alright we have time for one more round of questions yes we can see hands hands, yes Mark Laura and then Mark Fulton from ETA and Carbon Tracker so your model, like your model shows how dominant coal is in the numbers and I'm pushing the paper I'm about to give but within that we know that the Asian coal markets dominate that and within that China dominates so and I would make one comment the notion that China has suddenly stepped back is ridiculous there's 205 gigawatts of construction as we speak that's definitely one a week so I feel what do you feel that maybe that because China is SOE because it's public coal and so on that to some extent in this whole discussion we spend a lot of time on oil and gas right we talk about coal but the heart of the coal problem is in the public sector and somehow we're all sort of hoping for the best or something I don't know what that is maybe it's CCS in China that's a real option but I just wonder whether you feel that the coal story is getting underplayed as it is the carbon bomb hi my name is Laura Merrill and with the Global Subsidies Initiative of IISD it's not a question about subsidies it's asking Paul this was really groundbreaking that it was about modelling for keeping it in the ground based on this temperature that we've got to stay within could we do modelling for what we need to do for sustainable energy for renewables for energy efficiency and how will that have to take off what modelling can we do to see how quickly that's going to have to move to take the space of this energy we're using and what kind of feed-in tariffs are we going to need which natural resources which sustainable natural resources are we not utilising that we should be or could be are there any good papers that sort of look at the inverse of this question to take it from the sky and to take it from other resources natural sustainable resources and the inverse of keep it in the ground Hi, Seb Himbes from Bloomberg New Energy Finance the question's about sort of the zero-sum game nature of this and how you divide up the different energy resources so just get a clue of how in the modelling you divided between transport and electricity generation and whether there was any and whether the substitution options for those two parts of the energy matrix were how they were captured so in other words are we baking in the assumption that oil gets a free run because we haven't got the substitutes for X number of years and therefore coal has to cop it or how do we make the balance between oil coal and gas considering the rapid reduction in costs of different technologies that we're now observing Thank you, my name is Nimo Basi from Health of Modern Foundation in Nigeria I would like to know the Paris Agreement set the targets of 1.5 degree Celsius or well below 2 degrees could you help me figure out what well below 2 degrees means is it above 1.5 or below 1.5 Right, okay well that's great Coal, you're undoubtedly better informed than I am Mark about Chinese coal plants my understanding was that they're still building quite a lot of plants but they've definitely scaled back on the number that they're planning to build in the future only marginally, okay so that cause of excess optimism has been quashed so I'm sorry about that I try to keep optimistic but I'm aware that this is tough if I can go to Bloomberg next obviously the carbon thing is a zero sum game what is not a zero sum game and I'm fully of the opinion that it was this change in discourse that led to Paris being more positive outcome wise than Copenhagen what is not a zero sum game is the economic opportunities of low carbon and that seems to me to have been transformed in the years between Copenhagen and Paris so that it is possible now if you're an optimist and obviously one has part against being a Pollyanna to say these new technologies can actually drive a new industrial revolution you will know the language, you'll have read my report but if we don't have that kind of narrative then nothing will happen and so I think it's really important to get a kind of positive aspirational narrative which is now at least credible given the technological advances that we've got and I think the for me the most important thing coming out of Paris was not the 2 or 1.5 degrees but it was very significant messages about investment in innovation that came from both the public sector with mission innovation all that stuff, doubling R&D budgets but also from the private sector because when people like Branson and Gates say they're going to invest a lot of money they're doing it as business people so they think there is a business story there rather than just a public policy story and so that's really hopeful on the resources, well of course the model produces the other resources, the model says these energy service demands have to be satisfied and if they're not going to be satisfied by fossil fuels they're satisfied by someone else, by something else so we could tell you from the model how much renewables there was, how much PV how much wind how much energy efficiency those of course are a result of cost assumptions like everything else and allowing the model to choose that I didn't touch on the Bloomberg thing about bit between transport and electricity the real strength of the times model is that it has got all energy uses there and therefore it chooses among the cost optimal options, the reason that the oil goes on for longer is because it's more difficult to decarbonise transport than it is to decarbonise the power sector so you decarbonise the power sector first and then quite a lot of transport goes over to the power sector so we get battery electric vehicles, we get hydrogen, a lot of the hydrogen produced from natural gas with CCS and so that comes back again the importance of CCS if you allow the model to do that so it really is important to have a kind of whole system model that goes below that and that takes all those things into account. On the basis of the technologies we know about obviously there will be technologies hopefully that come up over the next 20-30 years that we don't know anything about IMO on what does well below 2 degrees mean? Well your guess is as good as mine I'm certainly not going to second guess the Paris negotiators you will know the politics around this you will know that there was the high ambition group and largely driven by the small island states putting a very strong moral argument for why they shouldn't be inundated and obviously they may will be inundated even at 1.5 degrees so I don't think anyone believes that we can keep below 1.5 degrees barring some catastrophe to civilization or whatever where between 1.5 and 2 are we going to end up if we take the necessary steps I have no idea I will be very pleased if we stick to 2 Thank you so much Paul we're now going to transition to our panel we're going to have you know that was great to sort of set the greater challenge that we face in the broader context here of what is possible through canned supply side policies still get us beyond what the standard palette of efforts and the signal and the ambition and the breakthroughs can get us on so to that I'd like to invite up Frank Giotso from the Australian National University and the way we're going to work this panel by the way is we'll be up here I'll talk a few slides we'll have a little a few back and forth questions Frank and I and he'll go sit down we'll bring up the next person then we'll have about 20 minutes or 30 minutes for conversation at the end with between the panel and the audience so Frank the title of your abstract is the case for supply side policy how timely and you're going to talk to us a little bit about a coal tax as well so tell us a little bit about what is that case yeah that's right so Paul already said it coal falls off a cliff under 450 or 2 degrees scenario just how far off the cliff very much depends on national approaches and our friends from the deep decarbonisation pathways projects will explain more about that in the following session but take any of these scenarios with or without CCS then from the point of view of a major coal producing and exporting countries such as the one I live in Australia this can look pretty scary so Australia for example accounts for 7% of global coal production by volume and about 27% of global coal exports in most recent years the value of coal exports from Australia account for something like or equate to something like $2,000 per person in the population now of course those $2,000 don't the average person actually doesn't see their $2,000 if it cools elsewhere but it does account for enormous lobbying power within the coal industry and hence impact on public policy and so can't resist showing you this this is the Australian coal industry telling the Australian people that there won't be any more coal beer if you get rid of coal so that's kind of where we are now the starting point for the actual analysis that we do other than showing coal ads is the contention that in that global decline of coal it is actually a good idea for coal producing and exporting countries to tax the very resource that is declining and the reason for that is essentially rent shifting so you try and shift the rents from countries that import and use coal that gets scarcity rent out of a carbon tax to produce in countries and you try and shift the rent from producers mining companies to governments who then in turn can try and ease that transition so this is of course not the first transition industrial resource transition that takes place so you might have heard of wood to coal transitions in Australia we've had a wool to coal transition you know I mean it's very likely that coal eventually is going to go the way of the sheep having constituted a major share of exports and not doing so any more in the future now that is of course a difficult transition and governments will be tempted to make it easy and make it easy for industry and that could mean subsidizing continued coal production and exports where we want to roll to in terms of the analysis that we do and put into the public debate is that idea that you want to go the other way and produce revenue and financial resources for governments so that they can actually ease that transition and go with the flow rather than go against it so let me get this right Frank you're proposing a beer tax yes that's right a beer tax and it's highly popular so far good explain to us how that's going to work who is going to pay this tax how are you going to extract such a tax out of producers and who would the beneficiaries be so the basic idea would of course be a harmonized tax on coal production or coal exports now this will only work if a significant number of large coal producing and exporting countries come on board if they don't then modelling based on analysis as well shows you that very readily the benefits dissipate however if you have a significant number of coal producers on board and there will be a paper presented by Roman Mendelevic tomorrow I think showing that that can in fact impact global coal prices traded coal prices and hence coal use prices and depress coal consumption as well and thereby help achieve the goal of global climate change mitigation and that in that process it also shifts some of the rents from producers from consumers to producers and so what coal companies see is a lower coal price in the market what coal users see is a higher cost of using coal and the wedge in between that is the tax that accrues to the coal producing governments to subsidise beer and do other things good things with it such as reduce taxes perhaps even achieve a double dividend and perhaps try and leave a majority of their population better off and this is what we're going to analyse as part of our contribution to a new project called the global coal transitions project and so we're aiming to do a suite of market modelling economic modelling and distributional modelling exercises to investigate to what extent it will in fact be possible for redistributive policies of that kind to leave a majority of the population of coal producing country better off Paul was talking about earlier cast doubt on whether producers will be willing to not sell what they can possibly sell so presumably you would need some sort of coalition of countries to agree on this you have a sense of how large you would need to be to avoid that leakage effect that would undermine the policy could Australia do it alone and would there be benefit so Australia or any other single major coal producer could not do it along or the lack of output from Australia would quickly be taken up by the others the larger the coalition the greater the effect and the larger the benefits to those part in the coalition so coalition is a good word much better word than a cartel but you know I mean there is of course one large historical precedent and that is OPEC so really what we're talking about here is OCEC but on on a price based model now how realistic is it for the major coal producers to come together and in fact agree on a harmonized coal taxes and all together different issue I mean game theoretic literature tells you it is very difficult to establish large coalitions on the other hand of course the larger the coalition the greater the benefit to each individual member of that coalition have you spoken to any policy makers or other researchers how do they react do they think that this is something that's feasible well look I mean in my country this is stuff that's well over the horizon to the extent that it doesn't even cause a great stir because it's considered so way out there but you're going to change that right you know if you think back 5 or 10 years then a domestic transition away from coal use is considered way out there not going to happen crazy stuff and in Australia we now have a very viable and sensible debate about how the domestic phase of coal using industries so I am very cautiously optimistic that perhaps over the next decade or two we can get to somewhere where we can at least discuss this alright well thanks, thanks Frank and hopefully so go ahead and have a seat over here we don't end up keeping sheep in the ground so next I have the honour to keep it down under with Richard Dennis many of you familiar with Richard Dennis Richard is chief economist at the Australia Institute he's been working on this concept of a new coal mine moratorium so I was fascinated to see those of you who get who here gets the coal hub weekly newsletter some of us do here very surprisingly it's a coal industry newsletter and what was the top story was Richard's paper on coal mine moratorium in Australia so interesting it's gotten the attention of industry yeah look certainly and Frank Frank and I discuss these things a lot the reality is the coal industry in Australia feels entirely unthreatened by anything Frank and I say so no this is important because we are planning in Australia so you know Paul put up his peak coal's got to come down and Frank show you we're planning in Australia to build coal mines bigger than Manhattan we are planning to build coal mines bigger than central London go to the top of the Eiffel tower and look to the horizon you wouldn't see as far as one of the biggest mines they're currently planning to build they're good on you for two degrees one and a half degrees no seriously and I hate to say I agree with a lot of Paul's analysis but I massively reject his conclusion if you think that behaviour in consuming countries is going to affect us you're mad no you're really there is no scenario in which a world that's tackling climate change needs a 40 kilometre long new coal mine we're building one for the simple reason that we don't think the world is going to try and tackle climate change and to be clear at Paris we were frustrated that we weren't included in the coalition of ambition not joking this is how big the lie is and we of course supported one and a half degrees of course we'll agree with anything you say that's what's going on and then we go off and subsidise the construction of mines bigger than any city you live in that's what's happening and no one's turned any pulling to Paris and went maybe we shouldn't double our coal output we've got a bigger share of the traded coal market than the Saudis have of the oil market and we're planning to double output you think we don't know that's going to push price down that's our marketing strategy that's what we say in China these days Vietnam, Cambodia, Bangladesh we say it's going to get cheap the low coal prices are our marketing strategy and we'll subsidise the fixed costs and then the marginal costs are low so the taxpayer picks up the risk, the taxpayer funds the fixed cost we build the railway lines and then we sell cheap coal that's what's going on one and a half degrees, two degrees have fun with that if you want here's the thing it wasn't whaling companies that demanded a moratorium on whaling do you understand how moratorium works it wasn't the whalers that said let's have a moratorium it was the rest of the world saying this can't continue it's not asbestos miners that say maybe we should stop mining asbestos the fact that Australia has no intention of reducing our coal output is why you need to demand a moratorium if you're waiting for us if you're waiting for us to stop stop modelling it there's no evidence that we're going to stop and we've got our former resources minister was just appointed yesterday to run the mining industry's peak political lobby group now if you think markets work if you think people respond to incentives if you think rational people spend their money well then why have all the skills to buy did the peak mining council in Australia think the former politician who ran the resources ministry was the smartest buy to run the did they buy an engineer no did they buy an accountant no they bought the politician who used to oversee the policy that facilitates it not imaginary this is what we're doing and my point is why a moratorium we're not going to stop we're not going to stop if you don't want to stop us that's okay we'll cause climate change for you we've got a lot more land we can move up but if you want to sit in Europe or somewhere else saying well here's what we're doing and I hope Australia will come to the party just look at the schoolboy we've doubled our coal output in the last 10 years we hope to double it again Richard how's this moratorium going to work well really simply oops so some of you are familiar but you know the former president of Kiribati wrote to all world leaders saying I hear you're interested in this climate change thing if you did that surely you'd call for a ban on no new coal mines and of course no one outside the Pacific did because you wouldn't want to upset a rich country so basically the domestic moratorium we've recently seen the Obama administration introduce a temporary moratorium on federal lands the Chinese have announced a moratorium building new coal mines the Indonesians have recently announced a moratorium Australia's the last big kid that hasn't interestingly these are all domestically initiated domestic moratorium the main benefit of a moratorium is it increases the coal price okay remember when environmentalists thought you needed expensive fossil fuels to discourage use remember the good old days now we think low fossil fuel prices are evidence that we're winning can't be both kids low fossil fuel prices are because we've failed to prevent a flood of supply and China, America and Indonesia benefit from a moratorium we're already seeing coal price pick up because supply isn't growing as fast as it was this is a benefit, it solves the political problem you're actually a moratorium creates a cartel with market share allocated according to incumbent status moratorium is great for the owners of incumbent coal it's terrible for the proponents of new coal it pushes the price up but don't panic the price can't lead to new investment in new mines if you've got a moratorium the mechanism that causes the price to go up prevents the increase in supply so there's significant there's significant geopolitical benefits of a moratorium compared to a carbon price but to be clear I'm an economist my PhD was in macroeconomic modelling I like models, I like economics but I've also spent a lot of my time working as a political strategist and if you look at other people that have won fights against big businesses with entrenched political power take the tobacco industry I've never heard the public health experts argue with each other about whether a tax on tobacco is better than a restriction on its sale I've never heard the public health experts kind of disagree about optimal tobacco policy this is important they don't talk about optimal policy they talk about a whole suite of policies that might help and whenever the political opportunity to grab one comes along they grab it and if the government you've got today is more a price than regulation kind of government then hop on that bandwagon and as time's gone on in Australia and a lot of countries you've seen regulatory and price controls go up a lot you don't have to choose we have time just for one more minute here and sort of tell us how you see this moratorium taking off and then what happens when it gets like India that face a huge development challenge or Mozambique who have yet to develop the coal resources well if and it's a big if because we're kind of 21 cops in and no one's mentioned coal yet but if we agreed that a world that's tackling climate change needed less coal mines not more if you had that thought then you'd have to start an entirely different negotiation with a country like India about what's fair and what's not but we're not even at step one and you know I live in one of the richest countries in the world and we're still building new coal mines and no one's putting any pressure on us to know it so I think for a country like India there's no doubt that if I was the Indian government I'd say why should we and we should be able to answer that question for them but we haven't even started that conversation yet and if you think it kind of helps the global south until Kiribati that you don't mind if India builds new coal mines well we don't have much time to start and finish that conversation but we can continue it shortly meanwhile thank you so much Richard and next I have the pleasure to introduce Maria Mirmis Maria is the an associate researcher and professor at hopefully I get this right why don't you say it Universidad Andina Simón Bolívar oh thank you in Quito in Quito Ecuador who along with Carlos Larea Carlos you're in the audience yes has written a paper that you'll find on the website and they've worked for some time on this question of starting with the Yasuni ITT proposal that Carlos helped to create a few years ago right now you've written this new paper on a global fund for keeping fossil fuels in the ground in biodiversity hotspots in developing countries and put forward a new idea on the sort of policy landscape here why don't you give us a quick overview of that fossil fuel deposits lying under areas of high conservation values starting with biodiversity hotspots should be among those resources that are kept in the ground the first questions that comes up is are there enough fossil fuels under high conservation value areas and there isn't much data about it but the most recent study or survey was done by the World Wildlife Fund in World Heritage sites exclusively and they found that on average in the world about 31% of World Heritage sites have extractive threats they are either accessions or oil production in them and in some areas such as Africa the percentage is pretty high it's 61% and we must keep in mind that these are just World Heritage sites we've got areas of high conservation value global conservation value in wet lands of international importance manned biosphere reserves and areas labeled as critical for conservation by the World Wildlife Funds that are entire regions and in those regions we did a quick survey of the 18 regions that are critical for conservation for global conservation, 12 of them have fossil fuel production so there's reason that there are enough or many areas of high conservation value that are at risk of fossil fuel production and that are supply site and what do we say supply site theory as it was said before would target the resources or the reserves of the lowest economic value the high cost research would be the ones left underground supply site theory has also thought of internalizing some environmental costs such as social cost of carbon which actually takes into account the carbon content of those reserves and how it would affect the global environment. What supply site theory hasn't done is internalized the cost of affecting the surface areas of global value so what we are proposing what we aim to propose is to internalize that cost but we think that this can't be internalized traditional economic tools so there have to be other tools such as multi-criteria analysis to do so the purpose of what we're doing is trying to internalize the global cost of destroying the areas that lie over the deposits and our proposal is a global fund it comes into play with some other proposals that come from supply site theory such as coalitions where countries that are more committed to climate change come together and stop exploiting their high cost resources and what we say is that this global fund could work together with such coalitions. The right side. Just on the right side. How would the global fund work? It should be an instrument under the United Nations and that it has two sides countries with biodiversity hotspots propose a project to keep fossil fuels in the ground to be financed but it's not just being paid for keeping the fossil fuels in the ground the funds must go to a very well developed low emissions development strategy and this low emissions development strategy and proposal to keep fossil fuels in the ground has to be socially approved. It is very much modeled under the Yasuni initiative I'm not sure everybody is aware of the Yasuni initiative Ecuador in 2007 proposed to the world after resources from oil under Yasuni Yasuni is a national part that's one of the biggest concentration and a few years later President Correa cancelled the initiative but it has a very interesting institute framework was built up and we're thinking of reproducing that now under this proposal the global fund would finance projects such as Yasuni Yasuni would be a project such as other projects that would provide to the global fund and just to keep how am I on time just one more minute okay so it is important that the fund would finance both keeping fossil fuels in the ground and a low emissions development path and that these countries of emissions would have social support but we're not claiming that this will solve fossil fuels in the ground under biodiversity rich areas we're going to get to that 2% so the effectiveness of the fund is very dependent on other global climate policies that are implemented so Yasuni that was going to cost I think 7 billion dollars over the course of 10 years and we're talking about a global fund how would you possibly raise that level of funding well but we think is that if we are to limit fossil fuel production there's going to be a rent we're actually allocating rights to exploit to some people and saying to other people you can't exploit your oil so in that transfer that transfer of rent should be taxed because it's an earned rent just because fossil fuel prices will go up and that could be captured to finance creating a scarcity rent that we're talking to but you need a more global mechanism to collect it we see that there are challenges to many supply side policies so why would you be can you say a word about why Yasuni didn't go forward and why you might be more optimistic about a fund like this yes well there are several reasons one is the context now we have the climate agreement not going to take us to the 2 degrees but it does have the value of having global commitment everybody signed it so there's more of a global commitment to climate change that wasn't there for Yasuni the second thing is the unburnable reserves the carbon budget we didn't have a carbon budget no one knew or I think the mindhousing article came out about one year after the Yasuni proposal so that wasn't very it wasn't very strong and now we have campaigns for keeping fossil fuels in the ground so there's the world is more committed to keeping fossil fuels in the ground and we know we can't burn all the reserves and other aspects are the social approval that these budgets would need to have like we're referring to having referendums in the country so that we know the country is committed to it and this is not subjected to political change if we change the president it still has the social adherence of the whole country so we think those are aspects that would make it more thank you Maria as mentioned earlier some of these are little teases of some of the ideas we're going to be exploring in more depth in the sessions to come and so again I have the pleasure of introducing Jehan Sauvage from the OECD it's a policy analyst there who's been working on subsidies quite a bit and now you're going to talk about trade why trade? thank you Michael good morning everyone yes why trade so like Michael said most of my work in the past has concerned fossil fuel subsidies and not just the consumer subsidies such as the low prices you find in emerging countries but also the producer subsidies like tax breaks that are for drilling on public and private lands so I'm very happy to be here and very thankful for inviting me because I believe supply side issues are important and I do think trade is a central issue here, a central question plus I was asked to actually set the stage in this session so I wanted to do something a bit broader and different than just subsidies so that's why trade just as a joke to start I think this summarizes very well the problem we're facing today I found this on internet I can't remember exactly where, I think it was a Bloomberg site or something to me this exactly is the problem and we've had the same issue when it comes to the reform of producers subsidies, no one wants to go first but now coming to the issue of trade why do I think trade is very important the first thing to note is that well trade in fossil fuels is about 3 trillion, trillion dollars a year crude oil is still the number one traded commodity in the world well ahead of cocoa or coffee or maize or whatever else I'm just yeah, sorry, just this here if you look at that from the perspective of maritime shipping so international seaborn trade UNCTAD has some really good figures on that and what it shows here this data I found the other day is that 42% of all maritime trade by volume is fossil fuels if you compare that to grain which is kind of essential to human life that's 4% containers like the cliche image of trade it's like the container ships with iPhones made in China and the containers with bars or whatever that's 15% so well trade is in large part fossil fuel trade and it's not just maritime shipping most of you know that in the US for example rail is used a lot for shipping fossil fuels and not just coal now you get oil coming from North Dakota to the south and the Gulf of Mexico I was talking about the volume let's look at the value estimates based on usual trade databases and what I found is that we're getting close to fossil fuels representing 20% of the total value of trade in the world that means that countries import a dollar worth of fossil fuels for every 4 dollars of whatever else they want to import that's really huge so that's why I think trade ought to be discussed here so in your abstract let's talk about double standards with respect to fossil fuel trade how is that possible so there's several cases we've identified where we've seen discrepancies or blind spots in the way policy makers look at fossil fuel trade or trading other things like renewable energy equipment consider for example import tariffs you may know that currently import tariffs oil natural gas almost zero everywhere trade barriers are few very few and that's reasonable we've been using oil for decades so why would you want to impose a tax when you import oil it's essential for your economy but at the same time we still have positive tariffs levied on a lot of environmental goods like winterbinds for example and the crazy thing is that today policy makers are still arguing are still discussing whether or not we should liberalize trade in environmental goods there's negotiations going on right now as we speak to form a plural actual agreement to liberalize trade in environmental goods and it should be like a very easy agreement to negotiate and it's not even that is hard a second case would be something that has been very discussed in the press which is local content requirements which is when you impose on someone the use of a locally or input and there's been a lot of that in renewable energy the most famous case was Ontario where the province had a feeding tariff which said if you want to get a feeding tariff you have to use Ontario made equipment for renewable energy that's obviously against all trade trade rules right WTO it's really firm in that you cannot do that and so these cases of local content requirements have been challenged by different member countries in the WTO so WTO said you have to remove these fine, as a trade economist I can only agree problem is there's also local content requirements for drilling equipment in countries like Brazil, Indonesia no one cares never seen a single challenge in those a third example would be subsidies like I mentioned subsidies are ready but you've heard about countries like Germany where renewable energy subsidies are getting increasingly scrutinized people are saying these are making our electricity bills way too high they're inefficient there's not much sun in Germany so it doesn't make sense to subsidise solar there at the same time we still have a few subsidies that are above $500 billion a year so again why the different treatments why this blind spot last example is export restrictions again in WTO we've got challenges for export restrictions on rare earths or some rare minerals like in China that's been a very disputed case and the US won in WTO against China who was restricting its exports of rare earths when countries have export restrictions on fossil fuels including the US and so recently again no one challenges that, no one cares the point is there may be very good reasons why we treat those differently you could say in the US the export restrictions were not that binding until recently whereas they are binding in China for rare earths and there's many arguments that could be made all I'm saying is why the blind spots why look at those things with different eyes interesting although it did take some time for the export restriction to be removed so WTO trade negotiations do you have hope that those trade negotiations will address each of those four blind spots or do you see policy makers taking on these issues in new ways in forums like G20 I mean clearly producer subsidies have been brought to the forum we'll talk about that in a session this afternoon what about those other double standards you raised content standards you mentioned export restrictions well I'm trying to be optimistic here I think there's already a legal and institutional architecture doing so the WTO for all its problems is still a functioning organization and that's compared with all other institutions that has the WTO has a dispute settlement mechanism has legally binding provisions which are lacking in the UNFCCC in other arenas so I think we have the basic infrastructure for enforcing some kind of tougher discipline of fossil fuel restrictions or subsidies the problem is the political will we need countries that come to WTO with challenges we need countries that come to WTO saying let's get rid of that because we've got the agreements and we've got the dispute settlement mechanisms I know that some countries are already championing the issue in the WTO and in regional trade agreements it hasn't been made very public because it's all happening behind the scenes and corridors but if you know the trans-pacific partnership so that's a big trade agreement between the UIS and other pacific countries including Japan and Australia and Mexico etc there was an earlier draft the agreement was leaked on the internet and it had some provisions on the discipline of fossil fuel subsidies they got removed in the final text of the agreement but it shows that some countries thought let's include that in the trade agreement in the WTO you have countries like New Zealand that are actually pushing for some kind of pre-lateral agreements on fossil fuel subsidies just like there's already agreements on subsidies for agricultural fisheries so we need more political will okay political will that's our job so thank you so much Jehan we'll come back as mentioned talking about subsidies shortly this afternoon why don't you join our panel and our last panelist thanks Jehan and our last panelist is Shivan Kartha my colleague at Stockholm Environment Institute and some of you may know Shivan someone who's worked on this question of equity and fairness for some time IPCC Courtney Lead Author for the Fifth Assessment Report on this issue and here we are on the supply side and do we have to deal with equity on the supply side too? we have to that's a good question equity is a morass equity is extremely challenging in the climate realm and no less so on the supply side Paul gave us hope at the very beginning by saying let's just let the market deal with it let's put constraints on demand and then the wisdom of the market will translate that into preferences for certain supply fossil supply assets and not for others that's the optimal strategy that's the rational strategy and Richard said optimal rational what does that have to do with it and I think that's kind of why we're all here we realize that we need policies on all sides and as soon as we start thinking about policies on the supply side as soon as we start thinking about what will we constrain on the supply side we have to take into account the fact that different suppliers want to extract their own supplies and that has equity implications so how do you begin to address that maybe give us perhaps a little preview but not a repeat of what we're going to talk about the last session of this afternoon equity and just transitions to some alternative frameworks for beginning to think about rights to produce well different people think about this very differently the student marching on a campus for our divestment versus the social movement fighting for indigenous people's rights versus the investor in central London or Wall Street there are different equity issues that come to the fore and there are two to try and really caricature it and stylize it there are two main different ways of thinking about this one is that extraction is pollution that it's the extractors who are fundamentally responsible they are at the beginning of the supply chain and their product ends up leading to pollution and it's that kind of a perspective that has led to at the very least calls for disclosure so we can at least see what is the level of financial risk that these extractors in the continent are exposed to but then even further than that there really is also a sentiment that this isn't just pollution in some technical sense with financial implications but this is pollution in the sense of there being a moral and ethical responsibility this is pollution that ultimately ends up leading to the inundation of the small island states so this needs to be dealt with in the way that other ethical issues have been dealt with and in many cases people have started likening the issue of extraction to other ethical offenses as serious as apartheid or slavery there are a few articles written on that and then there's a whole other perspective which is that it's not extraction it's pollution, extraction is development we rely on this extraction this extraction is what gives us livelihoods, this extraction leads to important levels of foreign exchange revenue this extraction actually gives us some geopolitical power it gives us some energy security so these are almost diametrically opposed views is it pollution, is it bad or is it development, is it a good and it's somehow reconciling these two different different perspectives that we'll need to start thinking about if we start thinking about supply side policies I think at this point because we have a session on this very topic I'm going to ask you to go over and sit and join our panel right now and thanks again for introducing the topic and give you your card too and let me just say since you've all been sitting here patiently on the panel if you're dying to ask another panelist a question you can do so before we circulate sort of panelist privilege anything that you want to corner one of your panel mates about what about historical responsibility for extraction it's a very good question historical responsibility has clearly been a very salient political issue in the climate negotiations it's the issue of historical responsibility it's actually it's written in the Framework Convention itself as one of the fundamental underlying equity principles and on the supply side it's in some ways just as salient that there is a pretty radical disparity across the world in how much different countries have dug up and in the rents accruing to those countries due to that similar to on the demand side historical responsibility on the supply side is of interest and is ethically salient in large part because we have this intuition that that historical responsibility that those historical actions have action led to some sort of profit some sort of prosperity it's contributed to development so on both sides I think it's helpful to think about the two together responsibility insofar as it has linked to a country's position in the world today their level of capacity to deal with the problem their level of capacity to support other countries who are straining to deal with the problem Paul you had a question yeah I'd like to continue the dialogue with Richard really given that I think you said something I proposed was mad so this is interesting and it follows up on the coal thing that have we given enough attention to coal it's fascinating I think what I heard you say was that there are some countries that are addressing their own domestic coal use but that is much less effort and in the case of Australia no effort at all to address exports and that therefore your idea of a moratorium would be to bring the exporters together in order to effectively in order to stop that production or to reduce it and I thought I heard you say that there was no way that that was going to happen because why would the countries do that which brings me back to the consumer side because all those exports go somewhere and they end up in consuming countries consuming countries do have an economic incentive not to import because it costs them for an exchange and if the difference in cost between the coal and an alternative energy source which may be an indigenous one is not too great and the countries therefore think that they are going to be spared the external costs of coal use which are not insignificant then I think consumer countries have a much better chance of curbing those exports than the exporting country and just as with your example that the whaling moratorium was not brought about by the whaling nations it was brought about by the non-whaling nations who didn't they would have imported some stuff from Wales but they were prepared to forego that in order to get a moratorium and to drag the supply countries after them and as we know that moratorium is looking increasingly ragged because the producer countries are finding all sorts of ways to characterize it as scientific exploration far from undermining my case that it's the consumer countries that are going to have to start it whether we're talking about moratorium or whether we're talking about actually substituting for the imports I think you strengthened it spoken like a true economist look if we assume that the market will act rationally and if we assume that powerful agents don't use their political power to prevent other people acting rationally I agree with you 100 percent but I don't think there's any evidence of markets geopolitically significant markets operating in that way but big picture the difference between what you're saying and what I'm saying is smaller than it might seem I think it's great that some countries are going to buy less coal keep it up is that enough rest on your laurels and say well we're buying less gee I hope all the south east asian developing countries follow suit soon or my country stuffed great that your european countries are moving on from coal fantastic why not while moving on from coal place diplomatic pressure on countries like Australia why just have faith that the market will sort this out my country subsidizes the new minds that we're talking about we're pretty locked in to this course of development and we as I said the low coal prices are our sales pitch to Bangladesh to Cambodia rational agents would buy I don't know how mobile phones are priced here in the UK but in Australia they have a high price up front and have cheap calls they can pay a low price up front and have expensive calls and I can get your spreadsheet and pretty much convince you that you should probably pay a bit extra up front and get the cheap calls but you know what poor people generally do they pay the low price up front and high price going on so in your model does every country have the same discount rate does every country which and poor have the same preference for contemporary consumption over future consumption because these assumptions are non-trivial and when you add in that Japan and Australia will actually help finance the construction of your coal fired power station and no one's potentially offering you that fear renewable alternative then maybe the market won't work as well as you'd like it to alright so last we have an ongoing debate and it is Oxford and I see many debates sites here around this very question will markets deliver let's turn to the audience here and see what questions pop up right away so we've got France and Tina and the gentleman right here around one just show me hands in general so I get an idea of where you are ok thanks thank you my name is Tina Sultvitt from Noria Bank in Norway my first question is to Dr. Ekins I could totally see a confusion by going to the oil and gas conferences in the north of Norway absolutely one of the arguments the oil companies in Norway is using is that they produce the cleanest oil because it's not or they don't emit as much CO2 how do you think about that kind of argument and my second question goes to Professor Carter you talked about moral and ethical responsibility from the producing countries or fossil fuel producers but what about the financing of it should we also put some cost on the maybe banks or financial institution financing it thank you I'm Hugh Lee I work in the coal industry we're assuming fossil fuel companies at the moment are they are assuming that climate change policies are not going to work and so they're going to continue to be able to sell their products at what point if climate change policies don't work do we have a collapse in the world economy so there isn't a demand for their products is it too late and in the back we had so I don't know which of the panel I'm Franz Matzner with NRDC from the United States and I'm not sure who to direct the question to so I'm just going to open it to the panel I was intrigued by the continued sort of debate over as if supply side and demand side interactions are binary and I'm wondering if the panelists could discuss like whether there's a way to look at these as being reinforcing so that you have what I heard a lot is you know demand side policies are within the domestic context and they work mostly the economic levers and supply side is sort of not necessarily about economic optimization but it's addressing the socio-political aspects of it and if there's more research so my question version of that is what more research can we do to help bolster and reinforce with more evidence based research the socio-political side and rationales for the interventions on the supply side let me just ask our panelists for relatively brief replies I'm going to keep our question short because I saw a lot of hands go up I'll just touch on that last one I'm an economist economics is allegedly the science of the efficient allocation of scarce resources supply or demand aside if again it's a big if we were at all serious about tackling climate change do we need more coal mines or less now even that every quantitative analysis is less then surely it can't be economically efficient to spend tens of billions of dollars building a new mine that no analysis says we need so I agree you don't have any port in a storm supply side policy demand side policy I think the binary says a lot about how economists think about problem solving rather than what is an effective suite of policies to move forward but if you think economics is at all interested in the efficient allocation of scarce resources the fact that we're today allocating scarce resources to build long-lived mines that we clearly don't need suggests that that's inefficient can we simultaneously have a price yeah sure why not could we use the price to fund you know paying people in developing countries to leave beautiful forests in place yeah have a crack at that too it's not rocket science so there are several questions here so why don't just pass the microphone down and let everybody get a shot at it if they want to say something let me address the Norwegian issue because that was specifically directed to me yes that was an argument that was certainly made very eloquently by the industry spokesperson who was an extraordinarily impressive guy very eloquent he really knew his stuff he made two arguments why Norway should be licensed in order to explore the Berence one is that it was clean oil less CO2 and the other was that it was going to be cheap oil the Berence is not ice bound so it's relatively shallow so he was making the argument that actually the oil to come out of the Berence will probably be cheaper than oil from elsewhere on the continental shelf of Norway and therefore on my arguments on my cost optimal arguments in the model it should be it should go ahead and in fact he was very critical of our modelling because we didn't go down to a project by project basis because he said just saying Arctic oil is expensive he says it's nonsense there's lots of cheap Arctic oil up there which is worth having so that was absolutely fine how about I can see the economic rationale so who's not going to produce their oil to make in order to give you that extra bit of carbon budget and of course his answer was the market will dictate and so we come back to the points that Richard has made which is there is currently no institutional framework to say Norway can produce that and that's the compensation for the guys down the line who will not produce it we know that in the current circumstances if Norway produces more Arctic oil that will be more oil and more carbon just as the same as the coal thing is and that's really what the debate revolved around anything you want to add to maybe on the question of demand side versus supply side approaches I don't think here anyone on the panel would say that it's one or the other I think most people would agree it's either the demand side or the demand side together with supply side the problem is when it comes to supply side there's a whole variety of options that might be considered like we saw this morning but to me the problem remains what kind of commitment device what kind of credibility and commitment device can countries put in place to ensure that they don't mind so some of you are saying that the rents the higher rents due to scarcity would be enough to consolidate the cartel but I still have my doubts personally I want to leave time for the many hands that are up there I think there was one question directed directly to you Shivan was that correct? I would definitely agree that the finance sector has an important role to play in any economy especially in the capitalist economy finance sector has a huge power in determining whether their investment assets are allocated and so the question is do they see themselves as having an ethical responsibility or do they see themselves as having only a fiduciary responsibility and their sole objective being to maximize their profits if it's the latter then we have to rely entirely on issues like carbon asset risk disclosure and things like that to try and enhance the pressure on them for realizing this may not be a cost effective response there are also roles for civil society in trying to emphasize the ethical roles that the finance sector has as well as they rather effectively did during the apartheid struggles for example or currently in issues like fair trade or slave labor or things like that so I would say it's a combination of the two and civil society has a big role to play thanks Shivan I guess it's our ethical role for short questions and short answers at this point in time so hands I saw go up earlier I saw Zepera yes is that correct and then Yvette and Michelle and then we'll work down here thank you it's really close to it's Zepora York University Canada and I'm also working to advise the Alberta Government on a pathway to 2050 on oil sands and I want to pick up on this comment you made Dr. Eakins around that there's no the idea that which assets are stranded will be decided by public policy and fossil fuel consumer countries and energy markets because I think we have a time problem there's no reason to believe that this will happen in time to keep us below two degrees I think it's pretty clear that we need restrictions and supply side regions and that's not going to come certainly from the experience of Canada with a high enough carbon price quick enough so there are two ideas that I don't think you mentioned Michael when you kind of listed some of the ideas for supply side regions that I wanted to put on the table and hear what you're thinking about one is the idea the expansion of the kind of climate test or a global market economic analysis consistent with 1.5 degrees applied to both infrastructure and fossil fuel development within for example environmental assessment processes at a domestic level and the second is your thoughts beyond high biodiversity areas and developing countries and I was really excited by your proposal Maria but to constrain carbon within the UNFCC process and what kind of rules that would require and I think if arguments can be made for permanence and additionality and forest offsets I think they're good arguments but why aren't we looking at constrain carbon because if not increasingly we have supply side regions like Canada committing to 1.5 but only really having an incentive to reduce production emissions to meet their INDCs please keep your questions as short as possible please good morning my name is Yvette and I work with the Global Subsidies Initiative of ISD I have a comment which is very short but I think it's important that the line between supply side and demand side is sometimes very fine and this is also to respond to France because for instance in the electricity sector if somebody is building a large coal plant well clearly it's you can say it's on the demand side but at the same time it's looking in a market for supply and ultimately trickles out the supply side so we find in our work it's sometimes very confusing with the electricity sector how to classify that good morning I'm Kier Kühner with leave it in the ground initiative Lingo I would like to thank Richard and Chivan for reminding us of the moral case and when thinking about the challenge of keeping 80% or more of the fossil reserves in the ground I believe in a civil bullet it has to come from different bits and pieces and I think we already have a lot of things that we can work with we have communities resisting pipelines getting built and that has stranded tar sands in Canada and just comment on Maria Rosas and Carlos proposal countries have committed in 2000 to legally prohibit extraction from protected areas all the governments have signed that and I think if we support local communities if we support implementing that commitment we might not have to pay governments on top of that's to keep it in the ground in biodiverse areas okay thank you so Paul I heard questions for Paul and Maria and then if anybody else wants to quickly add on to that yeah I'd really I think it to some extent is a false dichotomy between supply and demand and I still think it will be the demanding nations that will lead initiatives at the global level I mean I think toughening up environmental impact assessments trying to get these kinds of criteria into trade is all very important I don't see enough happening on either the supply or the demand side to make me think that we're going to come anywhere near two degrees at the moment and we clearly to me need all of that I find the moral arguments obviously very important but in other contexts and we've heard about apartheid and slavery the one I would draw attention to is the arms trade the arms trade has not been campaigns on the supply side including in this country which have not been particularly effective and I think for as long as that there is no demand side agreement that these weapons will not be purchased then they will continue to be purchased and I think the analogy with fossil fuels on the supply side is going to be very similar some of that will come at a national level some of that I hope will come eventually negotiated at a global level and will then affect the supply side and that's where Richard and I I think we join each other but I still think the demand side and the demand side countries are the ones where the big action is going to have to take place so it's fast to Maria and I know Frankie wanted to make a quick comment too Maria I just want to get everybody okay I think one very important thing to understand when we talk about demand and supply side is that the way we account for emissions biases towards demand side policy so if we are going to implement supply side policy we have to develop a new way not the old way but have also a way of accounting to emissions of emissions that favors supply side so that would have to happen definitely and in terms of additionality of the projects if we had this accounting system the projects that would be financed would be projects that are economically viable I mean if we finance projects through the fund in places where there are fossil fuel reserves not reserves but resources that are not reserves we are not creating additionality so this is a very important point when we choose the deposits to be left in the ground and something I must add because of something Richard said is that we're not paying to preserve biodiversity rich areas the funds would go to a low emissions development path a whole transition an economic transition in the country towards lower emissions and a different way of organizing the economy so it's not just to preserve because otherwise they would be the most expensive forests in the world no we're making development countries leaders in economic transition towards a low emissions economy and about commitments to not exploit fossil fuels in biodiversity rich areas it doesn't seem that legal commitments are enough because some countries commit some companies commit but definitely not all of them and one process that does happen is that protected areas get delimited differently in order to allow for fossil fuel exploration sometimes they get listed they get changed in categories in order to allow for this and sometimes even where it is prohibited fossil fuel extraction goes on anyway alright thanks Maria I'm going to have to be strict I'm going to give it to Frank gets the last I know Richard I know everyone's ignored him Richard be equitable Richard Frank you get the last word here conference on supply side policy okay so demand side policy as soon as you got everyone on board right the ones who don't restrict demand will get their fossil fuels very very cheaply unless there's supply side policy right that's important to keep in mind I think in terms of complementarity in a not perfect world right if it's perfect world you can have perfect supply only or demand only policy but if there is anyone not in the tent then you need supply side policy and then just the moral case I think the moral policy is very strong and it is very ineffective as well and hence you know I see a lot of merit in attempts to to identify policies that can deliver economic and distributional benefits to fossil fuel supplying countries alright I want to thank the panel so much we're taking this off here we're going to have to be brutal about time sorry I know there are a lot of questions take them at the break and then I'll tell us where we're going next some practical remark so there will be 20 minute break please stick to the time so we can start on time there will be a session on strategies and options for fossil fuel producers in this room and there will be a session on the deep the carbonisation project in the other room which is the memorial room in case you can't find it follow Julia over there but it's basically in the back court which is roughly in that direction and it will be signposted thank you okay so 23 oh okay right then that will be number two actually that open so just click on the explorer I think it's called Windows Explorer right on this there's the one two three or could we open all three of them and then I would just click that should be possible as well of course my name is Mark Jackard I'm a professor in Vancouver Canada and I'm the chair of the moderator for this session welcome and we'll get right at it we've got we have three speakers but they're divided into five speakers so you do the math and I think they're doing it to befuddle me on time limit constraints and things like that but I've written it all down and each of the speaker of the three speaker groups has ten minutes and I'm going to keep them really close to that and so some of them have split up their time after each group has spoken unless you have a question that really focuses on something you didn't get you know explanatory about one of the slides like a very very focused question about what they said otherwise I'm going to move us on and so ask you to save it to the very end so I possibly will entertain questions after individual units of speakers but I won't let I won't give you a long leash with that all right so now I would like to start right away then with our first speakers and that's Jenny Liu who's with the Science Policy Research Institute at Sussex where she's a research fellow and then followed in collaboration with Ashton Pong who's with HSBC Global Research Department the Climate Change Center so Jenny please go ahead. Thank you very much I think we had a very engaging and interesting conversation earlier so I'm not going to try to repeat elements on our slides that we already touched today and try to focus on more detail components as I only have five minutes so this presentation is a collaboration of industry and academia and we came together and the first part of the presentation we're going to really give you a moral and ethical understanding of what divestment means so this is a branching off a little bit of the discussion that we had earlier from Sivan and then we'll go into the economic arguments and taking a look at a bottom up approach so divestments the framing of that first section we're going to look at the social and environmental motivation so as we spoke earlier this morning there is the policy drivers at the national international and at regional levels at the European so we won't go into that area but we're going to focus a bit more on the economics the materialization of the economy and this is something that Maria brought up earlier so what does that mean we want to develop economically with using fear and fear resources so this means that we might need technology to help us alongside with that this could be new technologies energy efficiency low carbon technologies carbon capture storage so it's a huge option that we have this huge problem of climate change and the scale of transition that we need is massive we need deep social and institutional changes to drive the underlying motivations of all parts of our economy so this technological paradigm needs to shift from a current high carbon intensive which is the ICD paradigm beginning from the 17s till now to something that is green what does that look like so we're just going to explore well possibly divestments might perhaps offer a potential opportunity where there could be opportunities and investments and profits of a very broad history divestment is not something new it's happened in the 1900s early 1900s motivated by ethical and moral arguments from the church this started in Europe Nordic countries the US the UK onto the mid 1900s you have a discussion more so of ethical industries that you're trying to avoid sin industries so back arms and later on the apartheid in South Africa but this evolved from social and moral issues and to broader environmental issues in the late 1990s and this became particular relevant with the Bluntland report our common future and the definition of sustainable development so divestments began to look into something a bit broader than just social 2011 the divestment movement started from the bottom up actually from university students and it was an issue of mountaintop coal removal and it began to spread across universities NGOs picked it up and very renowned environmentalists and then such as the United Nations began to capture this divestment movement is something significant we're actually going to mobilize private public funds in order to transition globally into a high carbon energy model that we have into something that's clean and sustainable a lot of numbers out here I just want to focus on a few components in the last two years we've seen this divestment movement from probably 70 different institutions non-profit and for-profit institutions over 500 and this has been notable since the Paris Agreement and it's not just this non-profit sector that has been really interesting but the for-profit which we're going to discuss in the last half so the Rockefeller Brothers Fund this is worth millions Nord's Bank this is worth billions AXA redefining the AXA insurance worth over trillions in terms of assets management so these are not insignificant players that are divesting we see that there's a growth of over 8% in for-profit institutions and there's also from the individual scale over 5 billion have pledged to be divested so this is just from the bottom up movement it's really beginning to gain traction why is this unlike any other divestment movement because in the past it was restricted to particular countries to Sudan to South Africa to Tobacco and now fossil fuels and energy is addressing an ethical issue of climate change intergenerational equity interspecies equity is no longer one sector it's cross-country, cross-sector and the cumulative campaign outflows since 2014 is 15 billion in 2016 is 3.4 trillion it is not insignificant so the questions that were asked earlier today where are we going to get money to fund low carbon sources so are we going to bank rob big players these huge institutions that have this distinct and entrenched pathway probably not but the outflows maybe invested in perhaps low carbon technology, renewable technologies so the next half of the presentation will give you a little bit more detail thank you Jenny so that was the more interesting part really ethics are one driver for divestment of course and the other factors as Jenny touched on are those really which can disrupt the energy system so if you think about energy supply and all the types of supply going to energy demand investors are really interested in what can change those flows so the speed of change the size of the change of flow where the market has mispriced assets as a result of miscalculating how quickly those flows can change the energy system is always in transition but at the moment the transition is very much focused on the fossil fuels in the supply side and on some of the demand technologies which take those in and so divestment of fossil fuels is one way of approaching that and investors have taken different types of divestment approach and we're going to look at that in a little bit of detail now with some divested portfolios so thanks so the questions for an investment for an investor are first of all what to screen out now you can screen out different parts of the fossil fuel supply chain so there's oil and gas and there's coal and you can start to look at service companies so that's names like Halliburton and Schlumberger who take all their revenue from serving oil and gas production and you can look at some of the users as well so some divestment has focused on coal fired utilities for instance in this exercise we're focused on the supply side and then this is the question of what you do with the money so do you invest it into the screened index or do you put it into environmentally positive solutions we're starting to see a bit of that coming through the fossil fuels and put that divested cash into environmentally positive stocks also AXA Group have said that they'd take some of the coal divestment money and put it into environmental stocks as well and then what about performance, what are the metrics to consider so here we look at total return which is for those that know share price performance and dividends on top and we also try to consider volatility a little bit and we use the sharp ratio here it's one measure of volatility it's essentially the performance of the portfolio minus the risk free rate divided by the standard deviation of the portfolio and of course volatility is very important to investors who need to pay regular money from an endowment or pension fund over time just to give it a quick kind of 10 seconds of real world context here in my previous role a couple of years ago I worked with Newton Investment Management it's one of the leading managers of charity and a university endowment money and we started to get a lot of questions in kind of early 2014 about divestment what would it look like for their portfolios if they'd not held fossil fuel and fossil fuel exposed stocks and so I back tested their portfolios, took in the findings to show them and indeed had some positive responses a couple of those clients have since divested so let's look at some of these portfolios now what they actually look like so the first set is a bit simpler it's divesting stocks from these fossil fuel supply sectors the first of all oil and gas then the service companies and then taking the metals and mining sector out as well now that's a more difficult one as a sector on the whole on the whole because that includes coal but it also includes other large commodities of course like iron ore looking at these results we can see I thought that would be out of 4 months on a 10 year basis over 5 year basis out of 4 months 5 years is very important because it kept the 10 year basis and the 5 year period kind of starts we did this up to September 2014 and so it's kind of after the worst parts of the financial crisis and so it misses out of that period of kind of extreme market volatility the sharp ratio is also interesting here you can see that so a higher score is better you can see the bested stocks i.e. on a risk weighted performance that they score better on that ratio the next set of portfolios sorry I've gone too far these are the ones where we've reinvested into green stocks or the FTSE ET50 is a proxy for that so that's a 50 stock index which holds environmental technology stocks so a lot of renewables in there really and the results here not great we'll kind of touch on why in a minute but you can see our performance if you stayed in rather than divested and reinvested into that green proxy however there's again one of the sharp ratios a vested index over 10 years the next one the last set of portfolios are the tilted portfolios so here we've taken out selections of oil companies to do that we've used the carbon tracker initiatives research which looked at companies which had most exposure to oil production which has got a break even price of $80 per barrel or more it takes out a lot of Arctic production oil sands and ultra deep water on the coal side we've looked at the 20 companies with the largest coal production by volume and here it's a bit more interesting you can see outperformance in five years for fellows which have taken out the screen for oil and gas, selects oil and gas companies and better sharp ratios overall now the next slide pretty small detail but that huge spike out in the middle that red line there you can see a lot of froth around these environmental stocks kind of pre-crisis and then it came crashing back down over a 10 year period you can see some of that dip there but what you can see over the last few years to 2014 is that it again started kind of concluding comments very quickly oops sorry are that this the time frame is obviously crucial and the sharp ratios were probably a stronger divestment signal than total return particularly actually on the back test portfolio as a different client but this exercise was backward looking the energy systems in kind of rapid transition at the moment I would argue particularly around fossil fuels and it failed to capture the last two years of very continued suppressed oil prices a lot of people keep projecting they'll go back up for various reasons they haven't done and then we have other catalysts as well so in policy clean tech you know it was failed by Copenhagen you could argue it was supported by the Paris Agreement and then future disruption around Paris and then we get a classification this year reviews and ratchets along the way clean tech keeps on getting cheaper and cheaper and we have new technologies on the clean tech side as well thank you very much great okay hello thank you my name is Lucas I work for the Oxford Smith School in the sustainable finance program so we have a project that we've been working on with Chatham House and E3G looking at pathways for international oil companies to transition to a two degree constraint essentially and what that means for their capital allocation, their dividend policy and any business model diversification and the first step in this exercise was to really go through the grey literature of energy scenarios and outlooks to identify what the differences are between sort of the central scenarios and what the two degree scenarios are so I'm going to present sort of some of that a survey of those outlooks and just walk you through some of our findings so Ingrid couldn't be here today but I do encourage you to have a look at the paper and I apologize in advance there's going to be lots of charts and graphs as we run through the slides but we're trying to put everything together into a data pack so if you want, either the slides or the actual underlying data, please reach out and we can provide those to you so these are the scenarios and the outlooks that we looked at so you can see here I've sort of delineated all the different publication years so some of them going back quite a while what else do we have to say so the most recent ones aren't all from 2016 so some are pre-Paris some are post-Paris and this isn't a complete universe of the different scenarios of all these different organizations just the ones that are more recent that we find relevant I think we see two things immediately that there are more scenarios more recently especially since the implications of a carbon constraint have become clear and then especially since 2014 we even have these low oil price scenarios starting to enter the grey literature so we think that's a really good sign so how did we do this exercise we went through all the outlooks we collected everything from the data appendices that we could that were comparable we used data point apps to pick out the points that weren't explicitly in data appendices and we did the conversions and other conversions to make sure that everything was side by side comparable so we'll start just with a couple of these macroeconomic uncertainties and the different scenarios so GDP growth and population growth these are fundamental drivers of final energy demand so the different scenarios have different outlooks on these two factors and there's some discrepancy between the different scenarios as to whether these are endogenous to the different scenarios or whether they're exogenous assumptions so that kind of information is really useful to have but almost all the scenarios have this total primary energy demand outlook and we collected everything and mostly they're through 2040 and so I think the story of the near term decline of coal in low carbon scenarios is very clear but what wasn't clear to me at least until putting everything side by side was the role of efficiency and actually reducing total energy demand in the near term and the story that that has in between the sort of central scenarios and the low carbon scenarios on a more regional basis we can break that down and look at what it means for energy GDP decoupling almost all the authors had some view of decoupling and the main discrepancy there was how fast India and the non-OECD, non-China rest of world decouple energy consumption from GDP so moving over now specifically to oil demand we're going to look at oil and gas because these are most important for international oil companies the difference here you can see is between the amount of oil for transport and we think the big story of especially the last year has been on light duty vehicle electrification so you can see here there's quite a spread of outlooks from the different publishers we've had a lot of news in those last year we've had 400,000 pre-sales in a month of the Tesla Model 3 we had Ford just a couple weeks ago announce that by 2020 they were going to introduce 13 new electric vehicle models and you can see here that the outlook for Exxon and OPEC for instance is very very different than the outlook for some of the other authors so what does this mean for oil production so in the near term oil production in low carbon scenarios declines rapidly and obviously not all the central scenarios agree with that outlook but also particularly for OPEC portion by combining and comparing all the scenarios we get a bit of a consensus that a low carbon scenario or a low oil price scenario means an increase in OPEC production we can kind of flip that around and look at what that means for a long term oil price and here we have the sort of existing grey literature for oil price and we see that low carbon scenarios represent this lower for longer outlook of the oil price being below $100 per barrel through to 2040 switching over to gas demand quickly we see lots of uncertainty around the amount of gas demand for industry and power we look at the future generating mix purported by these different outlooks so gas here competing with coal competing with low carbon which is nuclear and CCS and competing with renewables and the one thing that we would like to see more information on is the role of LNG infrastructure in actually enabling this competition for gas we have a recent McKinsey report that says that LNG is going to be oversupplied for the next decade this means that infrastructure might not get built so the ability of gas to actually make these gains in the overall energy mix we think is still quite uncertain this is the big one obviously carbon dioxide emissions you can see here almost all the scenarios show us bursting through any 2 degree limit quite quickly and even scenarios that purport to be faster transition or advanced technology scenarios still break through those 2 degrees limits and the only ones that explicitly stay within those limits are relatively 2 degree scenarios but what I think was interesting was looking back over the history of projections and looking at the direction of travel so we went back through 5 years of the world energy outlook projections and compared the projections for solar PV and wind capacity and we can see that they've been amended upwards every single year so the outlook for that amount of generating capacity has changed and then if we compare the or let's just say at least and then even if we compare to the historic outcome of that capacity we see that this still even looks conservative I would say to think that the future is even on 450 scenario going to be what they project we can also do that for a total primary energy demand so here's BP in 2030 and Exxon in 2040 we see we've got less nuclear year on year but more renewables and then coal and in the near term for the IA that's a very similar story nuclear we're not sure about renewables coal maybe we've changed our mind recently gas maybe we've changed our mind recently but I think here this is sort of the big story at the end of the day is that even though that interplay between gas and coal and renewables and nuclear hasn't really moved the needle very much on these emissions outlooks and sort of by definition today's new policies scenario is tomorrow's central policies scenario but we didn't really see the needle move until this last world energy outlook so I'm looking forward to the next world energy outlook which will be the first Pope Paris that's going to be in November and then we'll send out a chart like this again to see where the needles moved in a couple months time so what are sort of our collective findings from doing this exercise we find that there's a consensus now among the scenarios that a low carbon future is a low oil price future and is a high OPEC production future so this is really a perfect storm for international oil companies we see a substantial gap exist between two degrees or low carbon scenarios and sort of the central planning scenarios of some of these organizations and we say okay this reflects some skepticism on the ability of policy makers to deliver a two degrees transition and even if we accept that say fine accept that that's the base value I think that the people behind or making decisions based on these scenarios need to be mindful of the rate of change some of the direction of travel stuff otherwise I think you could have company directors very soon making decisions on scenarios that are obsolete and so sort of the reluctance to publish more ambitious transition scenarios I think will only do a disservice to the decision making as the direction of travel seems to be towards a lower carbon pathway interplay between renewables low carbon we've talked about but I think there's lots of talk about with regards to transparency in these outlooks and in these scenarios so I think just doing the exercise there are some very basic things about how annoying it is to try to scrape together the data and convert all the units and all that sort of thing but because the carbon constraint is so strategically important for these different organizations the amount of capacity in terms of what the actual assumptions are and the actual models that underlies some of these outlooks make it very difficult I think to engage on the correctness or the merits of the different scenarios so we'd definitely be interested in seeing some kind of open modeling framework or some kind of peer review process for these grey literature energy outlooks and basically if Exxon is making investment decisions based on a 10% electric vehicles in 2040 Eisen Invest would really want to know that and I think that needs to be part of the broader discussion on these topics so what is next for us is we're going to build a decision support tool that allows people to role play capital allocation and business model diversification and shareholder dividend decisions through each of these scenarios and then we're going to bring that out and role play that with different groups so I invite you to contact us about it and thank you very much Welcome to our third Good morning everyone thanks for being here, it's my pleasure to be here The starting point of the project that we're going to present on was actually a quantification of and tracing of cumulative historic emissions as a percentage of all industrial sources from fossil fuels and cement back to the original primary producers of the oil, gas and coal and in some cases cement produced since 1854 to 2013 because we're going to highlight how we can trace the quantitative contribution from primary producers as a starting point for leveraging their future action to reduce curves so if we take a look at the left hand column the seven years so investor owned and state owned oil, gas and coal companies contributed 148 gigatons of carbon dioxide since 1751 to the atmosphere if you deduct for their production of oil, gas and coal I mean if you account for their oil, gas and coal but deduct non-energy uses of petroleum in particular Now at the encouragement of Peter Frumhoff of Union of Concerned Scientists we also wanted to take a forward look at what their stated proven reserves of oil, coal and gas would contribute if fully produced so we took a look at the 70 investor owned and state owned oil, gas and coal companies and added up their future production if fully exploited and they would add up to 255 gigatons of carbon out of a remaining carbon budget in 2013 of 275 gigatons of carbon now the vast majority of that is for state owned oil and gas companies and some state owned coal companies as well that's about 76% of the remaining carbon budget and only about 16% is traced back to the investor owned oil, gas and coal companies that we all know as ExxonMobil and Peabody and such and some of that work is detailed in the paper that I published in 2014 Tracing atmospheric emissions as well as the paper I did with Naomi Reskis last year on potential emissions from reserves so if we look at some of those reserves as well as their historic emissions we see that the black columns are the historic contributions so the largest companies historically have been Saudi Aramco Chevron ExxonMobil etc but if you add the emissions from their stated reserves in the red columns plus methane and green we see that the largest potential emissions come from the state owned oil and gas companies so we wanted to look at one particular company and see how if they were to align its future emissions by exploitation of its reserves how they can align themselves with a science based target for a downward path on emissions and production so I'm cooperating with CDP in London to analyze one particular oil and gas company whose state reserves amount to 5 billion tons or so of carbon dioxide again accounting for non-energy uses of some portion of their petroleum see how they can align its investments not only in future oil and gas but in their various levels of stated reserves will be exhausted but also other investments and renewables and so forth so I'm going to hand it over to Paul Griffin to explain the model that we developed thank you so much Paul first of all the science based targets initiative by CDP ACT World Resources Institute and the product of the SBT initiative editorial decarbonisation approach whereby the science based targets were disaggregated by contribution vectors however the oil and gas sector was not included in this first version so to describe the concept of science based targets for absolute emissions the way in which a benchmark is allocated to a company is via the contraction method in this way companies historical emissions companies emissions are benchmarked according to the same pathway as the global as a global scenario the IEA 2DS in this case is simply subtracted from the global level to the company level so it's pro rata so what does this mean in terms of the implications for our company well scope 1 plus 3 emissions are looked at here and we have in 2010 nearly 250 megatons of CO2E scope 1 by the way is operational emissions emissions under the company's direct control scope 3 emissions oil and gas is primarily from the combustion of their products so the blue line is the IEA 2DS and this is science based target line and the 4DS is the orange line here and you'll see there are dots along this line the dots represent the doctrine emissions associated with the reserves portfolio of the company so that 1P emissions that would come from 1P emissions the time at which that would take for that to be realized would be as it is indicated here you'll notice that on the blue line the dots are further spread apart and in fact the 3P doesn't even feature on this chart because their 3P reserves the emissions locked in would actually surpass their entire 2050 budget for science based budget and if you were to move down this line into the towards 2100 you'd find that any reserves portfolio would account for ever increasing amounts of time because the sensitivity of that portfolio would increase as annual emissions that would reduce longer for those emissions to be realized so now to discuss the emissions intensity allocation method and in this case the company is converged with the benchmark with the science based benchmark starting from the base year the company reaches the same intensity in 2050 and in doing so those are the laggards company B would have more to do than the more carbon efficient company's company A to reach the reduction for 2050 though in terms of what this looks like we here is the base year so starting from the base year here the blue line is the intensity represented from our company and the dotted line the scenario and business as usual is how we would look as you can see the urgent path here starts from the base year and converges to the IA2DS and this is emissions intensity of total primary energy production so in terms of ways in which this company could transition to attaining this science based target possibilities were models here natural gas switching by 50% operational and gas efficiency so scope 1 emissions reducing that to 0 you see that that doesn't make a huge amount of difference because scope 1 is far by far smaller part of the total inventory and then renewable options and even a reforestation offset potentially could add something to that but even with these in place there is a significant action remaining so it is a large ask to meet that the effect of CCS is to have change episode slightly the orientation the downward path here but in this case what I have done is the amount of CCS in natural gas production within the scenario within the 2DS scenario is about 15% so applying double that to natural gas combustion would reduce over time its emissions factor and thereby increase the effect of natural gas switching and reduce the the BAU because there is already natural gas within the portfolio but there is still action remaining so linking the 2 contraction and convergence together this chart is of production mix of natural gas and oil and shown alongside that is the intensity of that production mix so we are a company to do nothing and continue as a business then what you see at the bottom there is that their budget to 2050 is exceeded and its 10 gigatons of CO2 so what ways can it stay within its budget there are two ways first of all it could simply wind down production and thereby require it would not be required for them to reduce intensity but obviously it would not be able to grow as a business in that sense and the other option is to continue to grow in terms of total output but to diversify the production to low carbon as well simultaneously and in doing so reduce intensity the implication of this is that the company follows both the contraction and the convergence together and in doing so sees itself less as an oil and gas producer but more of as a primary energy producer that one conclusions companies can begin to plan their transition around reserves locking as you saw up with dots CCS provides a range of flexibility but it is obviously not the solution alone it simply has limited effects on the total mix and oil and gas companies would need to follow both the contraction and convergence science-based target methods in order to be prosperous whilst being science-based next steps on the modelling side to extend the analysis to 2100 modify scenarios that we're looking at 1.5, 1.7 degree limit and to consider further consideration for company level allocation and for this I refer to the carbon supplied cost curve research by CTI in which the lower cost oil is prioritized over high cost oil in a marginal cost curve such that there's a variable allocation depending on the cost of the company's oil production so considering those that aspect as well and to apply levelized cost assessment so the scenarios can actually themselves be costed as well thanks for listening we've got 20 minutes for discussion number one Alicia Pugliana from Fluxo, Mexico I would like to ask Paul all those beautiful presentations do you consider as well to change the structure of the oil market and gas market since oil, gas and coal reserves are so localized and concentrated but for no renewables land its sun and air are not concentrated today oil market and gas and carbon markets are very concentrated there are not competitive markets do you assume a change in that structure? as it stands the methodology doesn't distinguish between the distribution or the concentration of resources so that's something that would want to do to develop it and be more cognizant of that and one of the things that I mentioned was the supply cost curve but still that assumes a perfect market so you know there's lots of caveats that would come with the science-based target methodology because it can't be perfect and it has to be scalable as well and simple enough that companies can follow it and that it can be measurable and impartial I think I was number two also known as Harold Winkler from the University of Cape Town my question is to Lukas if I understood you said in the two degrees there was a low oil price but high production just explain why there would be high production and whether that's for seeing not being able to sell it or what's driving high production sure yes that is correct that there seems to be some consensus in the scenarios the idea is that under a low oil price OPEC is going to be able to take more market share or at least defend their market share this is kind of reflective of a little bit a return to a bit more economic fundamentals since the oil price came down in 2014 they have the lowest cost supply base and so then under a low price they take more of the production Christoph McLeod from the International Energy Agency one very quick comment on your reviews Lukas of our projections on the renewable side the reason the new policy scenario has consistently increased the amount of renewables has been deployed is because policies have constantly been ratcheted up so if you look go back to 2011 the renewable policies that were in place were a lot weaker than they are now and that's why we see this constant rising up I more or less obliged to mention that because we are constantly criticised for for our renewable projections and then two questions I think could go to anyone in the panel the first one is are oil and gas companies really in a good position to diversify towards wind for example as was mentioned or towards non-core businesses for them it strikes me that the risk portfolio for these different projects is completely different and the oil and gas companies might be best placed and secondly kind of related to that is how do you view the whether companies themselves should be required to produce two degree scenarios and how their business will be able to handle the two degree scenario do you think this is a positive move forward or they should have to benchmark their portfolio their business towards something like a two degree scenario such as from from the IA I do think that companies should be required although that may have to come from shareholders demanding that companies do at least produce a two degree scenario but you see a division between the U.S. based on the Canadian companies as well as the European companies as to their level of investment and interest in renewables versus continuing as an oil and gas company I would say that the European companies are much more open to increasing their portfolio. Start Oil for example to start for the 200 million dollar fund and diversifying towards renewables. I would just add I think there are many strategies that they can take and just to to run for cash is a strategy or to diversify as another strategy and then they're going to have to choose whatever makes sense for them. Fourth place is notoriously the worst one isn't it so my question is for the whole panel really what would you say to a fossil field major that came back to you saying we heard various possible strategies a major could take investing in renewables runoff the third one obviously is investing seriously in carbon disposal CCS in the short term more radical means of disposing of CO2 in the long term. If a carbon major said we're going to be disposing of CO2 permanently verifiably equivalent to 10% of the fossil content of what we sell and produce by 2030 or 2035 or some date like that and after that we're going to increase the sequester traction at a rate that's commensurate with reaching 100% sequestration before temperatures reach 2 degrees or whatever global governments agree would you then leave that company alone and if you would maybe we should tell the companies that we would leave them alone if they did that they're not offering to do this at the moment but if that offer was on the table then we might get some more serious buying companies in putting their own resources behind this technology which we are ultimately going to need. I would support that Miles and if I were United Airlines I might be switching my fuel buying to that company. Yeah I suppose just to pick up where you left off and where companies want to go they can be leaders or legards whether they want to reinvest in totally new technologies such as renewables is a question but there's also incremental technological innovation so in oil stands production we already have new more efficient ways of producing and extracting oil but there is this locking and path dependency so renewables is part of the solution but there's also ways of increasing efficiency. Thanks Jenny just returning to the question of whether or not oil and gas companies should diversify I think there's a few reasons why they are well placed so I'd agree with that I think Christoph made that point in terms of cost of capital I mean they still can raise cheaper capital often but of course that relationship is changing quickly and you can see that in some of the multiples being applied to equity by the markets switching quite quickly but I guess at a more structural level there are kind of paths to decision makers and the scale of resources they have which they can deploy quickly and on a global basis and their relationships with existing utility companies all put them in a strong position to quite quickly pick up with business especially kind of building out of new capacity and new energy frameworks within countries they are quite well placed to do so and then should companies be required to show how they're positioned I think they should be I mean I think companies should show how they're managing different kind of classes of risk in terms of I mean we've kind of published on this kind of idea quite recently in terms of physical risks but kind of the transition risks and also liability risks which is possibly a kind of more emergent thing in the future as you can see with cases against Exxon and some other smaller oil and gas companies and so kind of demonstrating what the metrics are and their progress against those in terms of managing those risks would be a strong step and I mean I guess all companies should do that but particularly ones in certain sectors which are more acutely exposed to transition in the energy system Thank you Peter from Hoffa the Union of Concerned Scientists so really this is primarily a question for Paul and Rick I'm pleased to see that you're beginning to develop say the CDP at all initiative sexual decarbonization or two degree pathway for the oil and gas industry fossil fuel industry I know with the other decarbonization or sectoral reduction pathways you've had quite a lot of uptake from companies something like 180 companies made commitments to reduce emissions including some significant multinationals is the development of this decarbonization or two degree pathway a reflection of a dialogue that's now happening with the fossil fuel companies about a willingness perhaps to take on reduction commitments has that happened yet are you seeing any movement or is this really in advance of and in the hopes of being able to encourage that Paul might answer this as well but to my knowledge no there's just some study in certain companies that are exploring what it would mean for them but I haven't seen any public commitments by any oil and gas company to do so yes it's pretty sparse the only one that the only company that we're aware of that has produced something that can be debatably at least described as two degrees or science based is total but I've looked at the methodology of their approach and actually it's there someone said there's more than one way to skin a cat and basically there's lots of myriad of ways that you can sort of make the path a little bit shallower and in fact and in this case whereas I was looking at sort of the boundary of total primary energy production so how the intensity would reduce to 2050 given these options of not just all gas and coal but hydro, nuclear you know solar, wind and so on well total in their assessment decided to exclude from their options hydro and nuclear because they didn't see themselves going into that which is they may have their reasons and legitimate reasons from their perspective but what the effect of that is is that the benchmark becomes a shallower intensity reduction so there needs to be a way of standardizing it but yeah there's not much activity in the from the sector so this is starting a conversation to engage them further Bear in mind too that there might be some emerging legal pressure on companies to see the let themselves be seen as climate stewards and that might propel some action to not only study but make public amendments to lower the future emissions Hi Pete Erickson with Stockholm Environment Institute and I've heard the term science-based targets before but I admit I hadn't really looked into it much so I thanks for your presentation and introduction to it and I was really I was excited by it but it also was shocking in a way because it seemed to me that it implies it carries with it this implication or assumption that if every company just starts from where they are and you know starts reducing some that somehow we can get to two degrees and it seems to me that that's problematic for a couple reasons one is it ignores the free riders that aren't going to take that path and and then it seems like it also steps aside the fact that really some companies and some whole industries don't have anything like the same place that they have now in a low carbon economy certainly the coal industry but parts of the oil and gas industry too so I wonder if you could comment on how you address that in your communication around this or even in the work itself going forward yeah I agree that if every company had a plan and that they actualize their commitments to buy by science-based targets we wouldn't actually achieve the goal so I think it's a comment on industry to go a bit further we just see this scenario as a starting place and we want to follow up with what it means to reduce those objectives below two degrees and go on from there but I agree with your point Greg Mutthit with Oil Change International I've got a technical question for Rick which is you showed a number for proven reserves which was about 250 gigatons of carbon and I wanted to check what definition you're using there because on most definitions it's the global reserve is I think somewhere between 600 and 800 gigatons of carbon or between 2 and 3,000 gigatons of CO2 so I'm wondering is that just from your list of companies those reserves and if I may I've also got a question for Lucas which is on the slide you showed of the historic growth of renewable energies and the IEA's forecasts the striking thing there for me was that the historic growth is showing the classic S-curve shape of a new technology it's accelerating upwards we don't know whether it's going to keep going exponentially getting a steeper curve or whether it's going to grow on a straight line and at some point it will flatten off what all of those IEA projections had was it flattening off relatively soon which would imply a saturation of the power market somewhere around 10 or 20% I think and the oil company forecasts are the same so my question is have you tried extrapolating those technology S-curves to see what assumptions they're making about where renewables ultimately end up yeah thanks Greg for that question let me try to clarify the emissions I show at 255 gigatons is only for the 70 companies that have the facilities and the investments and the infrastructure able to produce those reserves and they're on their books what I excluded were at least 185 gigatons of carbon owned by countries in which companies we don't have data for the companies themselves such as all of Chinese coal production for example is outside of that column as well as Poland and Kazakhstan and North Korea for example and their coal infrastructure so I'm only looking at the investor owned and state owned companies yeah sure on S-curves so I think I invite there are people in the audience who can probably answer this question better than I can but I think there are many types of first of all for modeling S-curves there's many types of sigmoid functions so depending on which one you choose you end up with a different peak you end up with a different midpoint inflection point and they all when you have a nice little exponential curve like that you can pretty much fit any S-curve that you like to it with a reasonable degree of correlation so it makes it very difficult to choose and then particularly in renewables and the penetration of renewables I think there are other sigmoid curves that are sort of hidden within that one curve because basically we know that the peak penetration of renewables will depend on a lot of other technologies that are at that very bottom of their own sigmoid curves at the moment so we don't know when we're going to see an explosion in storage or flexible generation or high voltage DC that kind of thing that will actually impact the renewables curve. Hi, I'm Samantha Smith from the Just Transition Center in the International Trade Union Confederation I think I worked for the company that was the model for your study there so I have some thoughts but I'll corner you guys in a break and ask some questions I have another question really which can be for a few people on the panel and it's this so oil companies are primarily valued by their reserves today so as you're looking at this transition pathway do you have any thoughts about how investors might react to this move from valuing a company based on its reserves to valuing it based for example on a pipeline of wind power projects that's one question how would you see that playing out would that be something very dramatic that's a bit of the limited assets theory or is that something that you think could be managed Not specifically I mean I haven't been large scale examples yet of how the market would react because no oil companies have done renewables in any great scale I'm trying to think of precedent of where we've moved from an asset based valuation to a revenue based valuation I mean I can't is it problematic for the market to do that possibly in the short term there could be some kind of undervaluation or kind of froth on those companies but I can't see a specific problem with them in terms of managing a transition for those companies to that I mean it may be it's a time for them to communicate clearly what their company's worth based on terms of future projections of locked in contracts with utility companies or something like that I think that's important instead of just looking at countries the question is talking about oil companies what did you see in your study about the relationship not just to see them as companies but as companies owned in a certain way or with institutional arrangements different between each others specifically how they relate to the country of their origin and if you saw that how that could change the results there will be differences it's not something that I have looked at closely but it's pretty clear that government policies have a strong impact on how their state owned company will act whether it be Venezuela or Norway or Saudi Aramco so to the extent that we can pressure the national governments to institute policies that make sense in lieu of climate stewardship or the better that comes internally to the company particularly in Norway for example where this majority shareholder is the government and how it interacts with the company and the company's internal goals Hi, my name is Gertran Kramer Gertran Kramer my name is Gertran Kramer I'm recent in the academic but until early this year I worked for Shell one of the oil and gas companies I can say from working there that there is no shortage of careful analysis of the climate predicament and forward thinking of how companies can respond I think what's a bit missing in the present analysis is the notion which I'm sure is in the back of your minds that after all CO2 is a commons problem which means that individual parties find it simply difficult the way the world is to act on it that is in particular true for fossil fuel companies because companies are held to account to do the things they are good at and provide the products that the market caters for so at some point during discussion there was the remark shouldn't companies have state sort of ambitions or emissions etc I think they would very happily do that if there were actually consumers who are likely to back that up the case of CCS came to the fore I know that Shell and the others would like nothing better than to get going with it the problem is there is no mechanism to recover the cost so that is a problem that cannot be denied and I think when it comes to this aspect of morality shouldn't companies do this or that I think it is a very positive sign that I think virtually all independent oil majors now in one way or the other speak out publicly for carbon pricing it took them perhaps a long time to get towards that point but it is very good that they are there and I know from inside how the frustration is that politicians don't act on it as we think of it today there is no mechanism to recover the cost of CCS there was no mechanism to recover the cost of double hulled tankers in the early 1970s the industry collectively agreed to introduce them because they knew that they were no longer going to get a license to continue to operate unless they did so so CCS needs to become a license of operation of fossil fuel extraction until we get to that point we are not going to solve the problem so I want to ask so for the past two years I have been in conversation with five of the largest oil companies in Canada about decarbonization and two degree pathways and what I have come to realize is that when they talk about decarbonization their vision is the decarbonization of oil that they are what they are talking about is reducing emissions both at the production end and at the consumption end they are actually investing in CCS in the trunk this idea that somehow we are going to reduce emissions to such an extent that they can increase production of oil in the future and so I raise that because I think that there is a cultural and strategic barrier for the big incumbents to doing big plays into clean tech venture capital or renewable energy because they have to admit then that they will have stranded assets or that climate policy will succeed and I don't know given the valuation that they have of their companies how to overcome that barrier because I think we need them we need their capital Thank you as you mentioned between mainstream scenarios and two-degrees scenarios arguably that difference is why we are here so what are the key qualitative points between the two my question we all need to contribute personally as well as in terms of our corporations to commit to participate in the solution so that means choosing a petrol provider that makes the public stand for climate stewardship in favour of those consumers those producers sure on key qualitative points I would say one of the key qualitative points is a skepticism of policy that will actually enact that kind of pathway a little bit off of divestments but the key incumbents the energy biggest energy oil producers have a vested interest in carbon capture storage because it allows them to continue with status quo we have a question of consumers what are their choice we do see investors pulling out and saying that look we'd rather put them in another let's say low carbon pathway this is what you can say from the bottom up approach there isn't one particular approach we need all approaches we need incumbents to be involved carbon capture storage and we need more pressure on the biggest emitters lunch will be served in the hall please follow either me or Stefan and it's served right now I am I am fully are fully capture storage do you want to say anything never an hour from when we start which will start in there all right if I can ask everyone to take their seats we'll get started in just a moment welcome back everybody I'm Peter from Huff I'm the director of science and policy at the union of concerned scientists I'm delighted to be able to chair this session I want to thank our friends and colleagues at the Stockholm environment institute and other co-sponsors of this terrific conference for the opportunity to join you today and tomorrow we're going to focus this session on as the title suggests the climate responsibilities, risks and performance of fossil fuel producers focusing on companies at the base of the carbon supply chain whose products as we've heard earlier have contributed so much to the climate challenge that we're now wrestling with the you know the conference is important degree focused on climate policies in addition to formal policies at a national or international level is also the question of how non-state actors behave both producers in this case the focus of so much questions about investment and divestment and other responses to civil society engagement around their behavior in a carbon constrained world their responsibilities both in terms of their business models how do they align their business models with the carbon constrained world and as well as how they might align their political behavior, their communication strategies and their activity to shape policy in light of the carbon constraints that we all now recognize we face the three panelists will each speak for 10 minutes bringing different perspectives to bear on the question of what we might imagine a responsible fossil fuel company should look like in light of the moment that we're in and think about how that information can become actionable in the context of decisions by a range of political leaders as well as by other non-state actors so we're going to lead off with Miles Allen Professor Allen at the University of Oxford and Miles you have the floor I'm a climate scientist and I've only been recently dabbling in this whole investment question prompted largely by the students originally by the students in the University of Oxford of course came to me when they were campaigning for the university to divest from fossil fuels to talk to them about the whole principles of why we should be divesting and what a divestment strategy should look like so what came out of this was an initiative funded by a very small initiative involving these three people Cameron Hepburn a well-known economist here in Oxford and Richard Miller who's doing all the work on this and we'll be here but he's currently on a well-earned holiday in Australia so no doubt he's learning about the coal production that we heard about this morning so I just wanted to start because we had here in Oxford last week a meeting on the 1.5 degree goal a sort of multiple science oriented meeting and I just wanted to remind you of where we're at because there's quite a lot of confusion on that so we're now at about 1 degree we were briefly well above 1 degree but that was a lot of variability as part of that earlier this year but human induced warming is currently around 1 degree and has increased by about half a degree since 1980 so that's the context of the way we need to evaluate what companies are doing to be consistent with climate stabilization at various different levels of warming so I'll come back to this as we get to the end of the talk we've all heard we need to get to net zero carbon dioxide emissions in order to stabilize climate and here's one of those classic scenarios spaghetti diagrams of how different scenarios get to zero at different rates corresponding to different levels of warming in the future but it's salutary to note where we are now so this is the IPCC working group 3 family of scenarios that meets the 2.5 degree, 2 degree and 1.5 degree goals the cross shows where current emissions are which immediately illustrates a problem with evaluating companies against these scenarios because any company could say well why evaluate me against these scenarios because the scenarios are obviously wrong okay and so that's something which we do need to think about this is a slide I injected this morning the talks this morning and I do appreciate the organizers being very flexible and allowing me to update my power point almost continuously during the morning another way of plotting these scenarios these are the same scenarios but plotted now against the fraction of extracted carbon that is sequestered as a function of time okay so it's exactly the same information these are cost optimal scenarios that achieve likely less than 2 degrees of warming and you see in all cases that fraction reaches 100% of course it has to net zero emissions means 100% sequestration it's another way of saying the same thing okay the 100% doesn't tell you how much carbon we're using at that point but you do know in order for it to be net zero you need to you need to be sequestering a ton of CO2 for every ton that's released and the really important point about this figure is the color shading which is the total cost of mitigation in these different scenarios and notice the very striking separation of the most expensive scenarios the ones which frankly we're not going to achieve because the public won't tolerate spending the size of the current world economy on climate mitigation in 2080 that's what those dark red colors means dark red means today's GDP that's what that color scale leads up to if those scenarios have a spending that much in 20 of course the world economy will be bigger in those scenarios but not that much bigger they won't even notice today's GDP and those are the scenarios in which the sequester fraction goes up slowest so it's absolutely imperative we're going to meet any of these climate goals that we get this sequester fraction up and we need to place the burden of responsibility in getting that sequester fraction up onto the main beneficiaries of sequestration which are the owners of fossil fuel assets because of course if you have sequestration available the owners of fossil fuel assets can continue to use their assets in a climate constrained world this is the problem with the sort of science based targets we heard about which are starting to address this we heard about this in the parallel session before lunch they're starting to address this problem running out until 2050 they are one scenario of what has to happen and there's a whole lot of different these are all sort of power generation what happens to emissions in power generation in cement and so on and within this scenario there's a set of assumptions about how sequestration for example penetrates into the power sector and so forth just as there was in Paul Eakin's modelling earlier today and the problem with that of course is that those assumptions are contestable they could be contested by a company where you ask the company does your business plan is it compliance with the IEA 450 scenario it might be a perfectly legitimate response from the company would be we don't believe the IEA 450 scenario we don't think that their assumptions about the price of whatever are valid and so why should you complain that our company's plans are not consistent with it the other issue of course is the scenario builders are unaccountable you have the IEA is accountable to no one if you like and also as I pointed out at the beginning the scenario is also typically badly out of date by the time they even get published never mind the time they get used this is something which I would argue is more useful for evaluating what a company's doing than a scenario because it's an identity it's something which is completely obvious it's the average rate of reduction of emissions between now and the time they reach zero per degree of warming if the average is taken per degree of warming in the future has to equal today's emissions divided by the outstanding warming between now and the time emissions reach zero this is an identity in the sense that the average of a gradient has to equal the change that's just you know if I follow path from here to there the average gradient as I move from here to there has to equal the change from here to there I can talk about it afterwards if anybody wants to dispute this but it's just true okay crucially this identity applies whether emissions are expressed in terms of tons of CO2 as a percentage of baseline as a emissions intensity as a per capita whatever you just can't change the units as you go along that's important okay so once you've said as a company we would like to be measured in this way against this baseline or against as an emissions intensity metric or whatever provided you then track down towards zero you are making measurable progress towards climate towards being compliant with a stable climate interestingly if you plot that spaghetti diagram shown again on the left against future warming so the axis here if I've got a pointer never mind I've got a pointer the axis here is temperature sorry if you can't read it that's one degree that's one and a half degrees that's two degrees and these are those same scenarios that plot it as 100% of baseline 50% 40% okay notice that we sort of uncooked the spaghetti you've gone from this mess to nice straight lines going down to the temperature you end up at if you plot emissions this way if you're a company and you've got a strategy net zero it's really easy to see how you're doing you just follow the line so implications to reach zero by two degrees emissions have to fall on average by 10% for every tenth of a degree of warming from now on fortunately we're at one degree which makes the maths easy it's all going to get a lot more difficult in a few years time so it's really important to get people's minds around this now okay one and a half degrees 20% okay that's slightly more complicated maths but not that much more complicated right now a tenth of a degree of warming takes six to eight years so that's pretty quick but of course this rate would slow as emissions fall so that's why you see in this diagram these lines are straight even though these lines are curving because of course the warming is slowing down as we approach zero based on this we have crafted in this Oxford Martin initiative some questions that we think responsible investors should be asking the companies they own the first question we'd like companies to be asked is at what global temperature will your activities and the products you sell or scope one, scope two, scope three emissions if you want the jargon be consistent with net zero carbon dioxide emissions companies should be asked to declare on this second they should be asked what's your strategy for achieving net zero and crucially who do you think is going to pay for it secondly how do you propose to monitor progress to zero as the world warms let me just sort of end by I can end by just illustrating how a company might respond to these questions so to the net zero question it might reply one half degrees or two degrees if it replies then investors have a legitimate ask of that company's board given that this is a big issue for the product they're selling should they perhaps engage a little bit with understanding it so that they can actually answer that question arguably one fossil major has given an answer to this question in that Shell's mountains and ocean scenarios sort of position of the area although they haven't really divulged much about their strategy in particular the strategy for how the transition is to be paid for so if you're a fossil fuel major your strategy might be runoff we're just going to run down our minds and shut down our company before temperatures reach one and a half or two degrees that might be your strategy but of course then you have to say how's that going to be guaranteed and can we really believe you on that of course if they have got a runoff based strategy then of course there is this that they shouldn't be exploring new resources and so on so that has clear implications as well alternatively they could say we're going to make a smooth transition to 100% sequestration that's pretty much Shell's strategy in their sort of oceans mountains and ocean scenarios but then the next question has to be well who's going to pay for it and at the moment the scenario is that it gets paid for by future taxpayers arguably in an ethical world it should be paid for by the industry by its shareholders or by its current customers because these are the ones that are continuing to put carbon in the atmosphere and when we come to monitoring progress we argue that progress should be monitored best by indexing progress against actually how much warming we're seeing in the world and if you want an index we released to mark the conference last week www.warmingindex.org gives you up to the second estimate of the current rate of human induced warming we're good thank you Miles alright thank you next up is my colleague from the Union of Concerned Sciences Kathy Mulvey the head of our climate accountability campaign Kathy Thanks a lot Peter and thanks Miles for that intro so the Union of Concerned Scientists is a US-based science-based advocacy organization and what I'd like to do is start in brief context on the campaign that I lead on fossil fuel producer accountability and then spend the bulk of my time giving a sneak preview of a climate accountability scorecard that we're going to be releasing in just 10 days so the work that UCS has been doing on fossil fuel producer accountability is grounded in the carbon majors research and analysis by Rick Heady which we heard about in one of the parallel sessions which found that two-thirds of emissions since the start of the industrial revolution can be traced to just 90 entities and here for example we see the contributions of the top 20 investor and state owned companies this is in terms of the emissions that are traced to the emissions that they extracted and entered into commerce so our campaign also takes as a jumping off point arguments put forth by my colleague Peter Frumhoff along with Naomi Oreskes and Rick Heady about the climate responsibilities of major fossil fuel producers and it builds on a workshop that UCS co-convened with the climate accountability institute in 2012 about lessons that can be learned from tobacco control so over the past several months UCS consulted with a range of experts and drew on a range of initiatives and standards that are out there already to develop a set of 30 metrics to measure companies progress in five areas that we see here so we looked at CDP the science based targets initiative the Oxford Martin working principles and we consulted with many of you and other experts around the methodology itself as well as the findings and what we did was actually then score each metric for the companies that we looked at on a scale that ranged from advanced as best practice to egregious which is demonstrating severe irresponsibility and I will say that we did not assess company performance on paying its share of the costs of climate related damages and adaptation as no fossil fuel producer is yet doing so or has begun to do so so our scorecard measures the climate related positions and actions of eight companies during the period from the beginning of 2015 through May of this year and the companies in our sample are the five leading investor owned oil and gas companies ranked in terms of their cumulative emissions and then the three leading investor owned US coal companies in terms of cumulative emissions and these eight companies are responsible for 15% of emissions since 1850 so we focused on this subset of the carbon majors that have the greatest responsibility where UCS has leverage because they are investor owned and also because they have significant recognition and or operations in the US and now in advance of the release of our report I want to share with you a few of our most compelling findings and some of them actually relate to one of the one of the ingredients that hasn't really been touched on yet today which is the disinformation and deception by the fossil fuel companies so we've heard about the policies on the supply and demand side that we would like to see enacted and one of the major obstacles to that is how these companies have actually spread climate disinformation and sought to use that to block policies and several of them actually now insist that they don't deny climate science so we wanted to unpack that and we analyzed each company's direct and indirect roles in spreading climate disinformation and found that seven of these companies have failed to renounce disinformation on climate science and policy so there were two parts of this analysis direct statements and indirect statements and we found a much greater range in the accuracy and consistency of these eight companies direct public statements on climate science. The scores actually range the whole spectrum of our scale with Shell earning a grade of advanced and ExxonMobil bringing up the rear at Egregious based on statements like the one made just a few months ago at the company's annual meeting by CEO Rex Tillerson where he actually disparaged climate models and claimed that the IPC itself admits that there's no scientific basis for setting a two degree target. The second part of our analysis considered these companies indirect involvement in climate disinformation via their affiliation with trade associations and industry groups and here are the seven US groups that we included in the study based on their documented roles in spreading climate science disinformation and their use of disinformation in opposing recent policy proposals in the US. So one example you'll see here is Alec the American Legislative Exchange Council which peddles disinformation about climate science while attempting to roll back state level policies in the US that would encourage that would reduce carbon pollution and accelerate the transition to clean energy. GDP and Shell have already left Alec with Shell actually citing the difference between its own positions on climate science and Alec as the reason for its departure and tens of thousands of UCS members along with others have called on ExxonMobil and Chevron to follow suit most recently around the company's annual meetings this spring. But here are the results literally from bad to worse. All eight companies maintain ties with trade associations and industry groups that spread climate disinformation. We also looked at how these companies are planning for a world free from carbon pollution and found that only BP and Shell have publicly expressed support for the international climate agreement reached in Paris and its global temperature goals. Still none of these eight companies that we studied has laid out a company-wide pathway or plan to align its business model with the new reality established in Paris. We evaluated these companies disclosure and governance of their political activity in general as well as their support for specific US policies that would address climate change. And here lack of transparency is really a significant obstacle to any analysis of corporate political activity and influence limited in patchy disclosure requirements really restrict the amount of information that's available and particularly when it comes to payments to third-party groups like trade associations. So in terms of these companies positions on US policy action to reduce carbon emissions we found that BP, ExxonMobil and Shell publicly support at least one generic type of policy to reduce carbon emissions but none of the three have actually connected that stated support to meaningful action. We also examined companies disclosure to investors of the climate risks that they face. And we assessed company disclosure of regulatory risks, of physical risks, of market risks and their corporate governance by the board and senior management of climate-related risks. We concluded in this area that all eight companies can and should do more to fulfill existing climate risk disclosure requirements and they also need to begin to prepare for enhanced disclosure regimes in the future. And confirming this analysis the US Securities and Exchange Commission has actually launched an investigation of whether ExxonMobil has adequately disclosed and accounted for climate risks. So lest anyone be jumping to the mistaken conclusion that GDP and Shell were leaders across the board based on what you've heard so far both of those companies actually scored poor in terms of their disclosure of the physical risks that are caused or exacerbated by climate change. And previous research by my colleague Gretchen Goldman and others has documented that many companies that operate refineries are not disclosing climate-related physical risks to shareholders or to local communities. The inaugural edition of the scorecard provides a baseline assessment of how major fossil fuel producers are meeting a set of standards for responsible action on climate change in the four broad areas that I outlined at the beginning. Renouncing disinformation planning for a world that's free from carbon pollution supporting fair and effective climate policies and fully disclosing their climate risks. And in some no company scored better than it appears in all areas. And several were relative leaders in some areas and relative laggards in others. And each company scores actually range sometimes quite significantly across the four areas. But our goal in researching and releasing the scorecard isn't to confirm with data what we suspected. Our team really hopes that this inaugural scorecard will spark the public, investors and policy makers to pay more attention to the company's related positions and actions. In turn, creating a greater demand for transparency from the companies and these developments would actually help to improve future iterations of the scorecard and ultimately provide incentives for company action that can be consistent with keeping global temperature increase well below two degrees. So we really do see this as an iterative project and really expect that while we've assessed eight companies in this edition we and others can use the methodology which will be transparent and publicly available to assess other companies in the future. So our release and outreach plan begins on October 6th, that's just in about 10 days and it will culminate at next spring's annual meetings of these fossil fuel companies. And I really look forward to a robust discussion about the findings that have been previewed here as well as your suggestions throughout the conference about how we can reach shareholders, investors, policy makers, public prosecutors, scientists, legal experts and activists with the information that we've shared here. So, thank you. Thank you, Kathy. Great, thanks so much. So the final speaker before we open this up for discussion is Aniko Horvath from the Human Rights Center to speak to us about the equity dimensions, considerations regarding fossil fuel company responsibility. Thank you, Aniko. Thank you very much, Peter, and thank you for inviting us. As Peter mentioned, I will be bringing a slightly different perspective more of a human rights perspective into this discussion. My key message is that fossil fuel companies have a responsibility to act on climate change as a human rights issue and there's a growing momentum among civil society investors and companies to ensure that this happens by highlighting the financial, reputational and legal risks for companies if they don't do so. So to set the scene from a human rights perspective, who better to quote than Mary Robinson, former UN High Commissioner for Human Rights who said, climate change is the biggest human rights challenge over a time? But how does it really impact people? One of the most illustrative examples recently was Typhoon Haiyan, which hit the Philippines on the 8th of November 2013. This one typhoon claimed more than 6,000 lives. More than 27,000 people were injured and more than 6 million displaced. Now, research has shown that 80% of extreme weather events are linked to climate change and although we can't yet, as we discussed with Peter earlier, link specific events to climate change. This is a pretty good indicator of the likelihood of linkage. These events are not limited to the Philippines and can take many other forms including droughts, destroying homes and livelihoods and access to water and floods as well. So what do individual fossil fuel companies have to do with these impacts? We heard earlier today that there was a Cathy referenced as well Rick Hedi's work. He made a breakthrough study and making a link between companies and climate change clear. He identified 90 carbon major entities that were responsible for more than 63% of global industry emissions of carbon dioxide and methane between 1854 and 2010. 50 of these entities are investor owned fossil fuel companies including Chevron, ExxonMobil, and Shell. This is significant for civil society working on climate change as it allowed them to make the direct link between individual companies and carbon emissions. So let's keep this study in mind and the example of Typhoon Haiyan in mind as we go on and take a step back first to seeing as climate change is a human rights issue. Let's look at the international framework of what corporate responsibility exists for human rights. UN guiding principles on business and human rights was endorsed unanimously by the UN Human Rights Council in June 2011. It has three key pillars. First, the state's duty to protect human rights. Second, the corporate responsibility to respect human rights and the third to provide access to remedy. So companies have an internationally recognized responsibility to avoid causing or contributing to adverse human rights impacts under the guiding principles. There have been various efforts to make the linkage between the guiding principles and climate change clear including the International Bar Association's report on climate justice and human rights. It made specific recommendations on corporate responsibility including the promotion of the guiding principles, the encouragement of the Office of the High Commissioner for Human Rights to develop model human rights policies that integrate climate change as well and the encouragement of legal requirements for companies to report on greenhouse gas emissions and to establish clear standards for reporting. Now although companies have started to recognize their human rights responsibilities this hasn't been the case for making the link between climate change and human rights. So at Business and Human Rights Resource Centre we reach out to companies on a daily basis to invite them to respond to human rights allegations about their practices. Our average response rate is 80%. Yet when we reach out to companies regarding climate change impacts and when we try to make the link between climate change and human rights the response rate is much lower. For example last year we invited the top 20 companies ranked by Oxford University in a report as having the highest energy generation from subcritical coal to respond. Only four out of the 20 companies responded and none of them actually made the link between their human rights impacts and climate change impacts. So there's a long way to go. Now how civil society pushing companies to act. I'm going to talk about three different levers. First harnessing the reputational risks and benefits for companies. Next the financial risks and benefits and finally the legal well there's only risks in terms of legal. So in terms of focusing on reputational risks and benefits this is mainly relevant for companies with a public image with a brand to protect. And that's what civil society has used to engage companies can range from more confrontational public campaigns and advocacy through benchmarks and rankings similar to what UCS is doing now through the critical friends approach so combining benchmarks and rankings with the more campaign tools when relevant and all the way to joint actions by companies that are more voluntary and more engaging. In terms of financial risks and benefits this is interesting because this is what many companies that don't necessarily have a public facing image will pay attention to. What are their investors saying what are their shareholders saying it this actually matters to them. So there has been an increasing recognition more and more investor coalitions coming together and not only what's interesting is that it's not only socially responsible investors that are coming out and speaking on climate change but also more traditional investors and asset managers. For example just this month BlackRock issued a report and BlackRock is the biggest asset manager in the world it issued a report that's made conclusion was that all investors should incorporate climate change awareness into their investment processes so there is movement in this and there's a lot of course a lot more work to be done as well. Shareholder activism activism has also picked up recently we've heard about some shareholder resolutions with BP and CEL and others many many others on the way and in terms of litigation this has become a hot topic and here I will return to the Philippines case and Hedi's work. One of the major cases now that we will hear more about later today is a petition with the Philippines Human Rights Commission that Greenpeace and other NGOs and typhoon survivors have brought it's based on the link between individual companies carbon emissions and the human rights impacts caused by climate change in the Philippines including by typhoon Haiyan the complaint is currently with the Human Rights Commission and actually the deadline for companies to respond to the complaint is this week so hopefully we will hear more about it as we go forward but there are other cases that are either on the way or have been decided and there are various legal grounds for raising climate litigation cases including health and environmental laws, duty of care long term financial risks and currently human rights law is being explored as a basis but at the moment it's mostly used as an ethical narrative to back up cases and finally just a challenge to leave you with and this is something that we will hear more about later today from if we're talking about a human rights perspective we also have to acknowledge that reducing carbon emissions the way that we reduce carbon emissions also has human rights implications and this is true both in terms of the transition away from fossil fuels so the way coal mines are closed ensuring that workers are adequately trained they have social benefits in place etc. but also in terms of the movement towards renewable energy making sure that renewable energy projects win solar projects take into account land rights right to life security human rights offenders rights as well so this is just a challenge that I would like to leave with you with and I look forward to the discussion alright thank you so much alright so maybe our panelists can move to the table make yourselves a little more visible to the audience and let me actually start with you all and ask if you have any responses queries comments on one another's talks just before we open it up to a broader discussion for Eniko actually I'd like to so I know extractives is one of the sectors that the corporate human rights benchmark is looking at in this pilot and I wondered how you think that the rankings that come out of that process may intersect with what people are calling for in terms of the measures that we're talking about with regard to fossil fuels supply thank you so for those of you that don't know about the corporate human rights benchmark it's a collaboration among investors and NGOs to rank the top 100 companies including the extractive sector on human rights policies and practices coming out in early 2017 and in terms of how the issues that we're discussing here will be reflected in it I would say implicitly they will be but explicitly currently the benchmark is not looking at climate change per se in its methodology it's actually a pilot methodology and in the next iterations I think it would be great to try to link UCS's work and try to figure out how to make these clear indicators play in the benchmark as well just a comment really you mentioned that in fact we were talking over lunch about making the link between individual weather events and climate change I just wanted to clarify on that one sorry if I was misleading over lunch but we can make a link it has to be probabilistic because of course we don't tend to see events that could not have happened without humans and climate and not all the extreme weather events have necessarily been made more probable by climate change but that science is advancing pretty rapidly and I think that's actually been quite helpful to this process I hope it is anyway absolutely I think the point was we haven't done that in the case of typhoon Haiyan well I think attempts have been made and the results are ambiguous that's right there isn't a sensible question to be asked it's just that the answer is not entirely clear so alright let's open it up to the audience I'll get some maybe three questions to start us off and then see where we go yes ma'am, you and you and one in the back thank you I have a question for Katie and for Enico there are three sources at least of signals to companies the market prices civil society organizations civil society organizations and government policies to which the companies listen to the most and for Enico I think that it is important but you said about destructive destructive companies but I think from the point of view of consumption of energy we have to address as well the responsibilities of military industry because the construction of military the weaponry and so on the transport of that and the use of it do produce emissions and civil rights violations thank you if you can introduce yourself as well I'm Hugh Lee working in the coal industry you've been talking about investor owned companies what about the national the state owned companies like in Saudi Arabia or gas problem in Russia when concerned investors in this country engage in dialogue with BP and Shell they say BP and Shell reply well it doesn't really matter what we do if the state owned companies aren't going to do anything it's a waste of our time doing anything and one more up in the back hi Charlie I'm very loud Charlie Kronick from Greenpeace so I'm I work for a campaigning organization so the question I would always ask when talking about any of these kinds of engagements would be what would actually be the objective of rating fossil fuel companies and so there's a range of responses that these companies could make they could be held accountable in terms of compensation they could be just in purely financial terms as well as legal and sort of I have a hard time visualizing what a retrospective remedy would be going back to emissions to 1850 beyond a financial one but finally what do we really want is the expectation that these companies will transform themselves into a sustainable energy industry and I guess that's implied in Miles's suggestion that it's about not net zero as opposed to just zero emissions realistically are we actually suggesting that what we need is a mechanism that allows for the unwinding and ultimately the decline you know managed decline of these companies I'll jump in and first to the question about the forces at play it's they're certainly all essential at this point and I would say that civil society is one that actually they all actually interplay with each other so investors will cite to civil society actions or pressure and it can help to change the business conditions around companies civil society it's often pressuring governments to act and clearly the framework for investments so I see it as as interrelated in terms of the state owned enterprises they're you know we've chosen to focus on the investor owned companies because of the responsibility that they bear and the leverage and I think in particular looking at the campaign of deception and disinformation that's been carried out in a concerted way by several of the major fossil fuel producers that's something that it's been the investor owned companies have actually driven and so there's a particular role to play in getting those companies out of the way of policy advances and as far as the objective of ranking the companies we are looking to put concrete and specific actions and recommendations in front of these companies to which they can be held accountable by their investors, by policy makers by the public and you may look at the steps that these companies have to take and make some judgments about what the trajectory for their business ought to be at this point we are really actually looking for specific actions that these companies can and should take now that would limit the damage and start to turn things in the right direction in terms of the impact that they're having on the climate. I agree with Kathy that in terms of the signals it's a combination of everything but also it depends on what company we're talking about and this goes through the state-owned company question of course with Shell and BP a ranking might have more traction than with a state-owned company we've done a previous outreach regarding human rights when we found that state-owned companies were the least responsive to public pressure and also to generally questionnaires. So there's definitely more diplomatic action needed and more commitments needed by the governments to move those forward but at the same time it doesn't mean that we can't start with the investor-owned companies and in terms of addressing the impacts of the military industry completely agree as well that we need to look at everything together. If I could take the question from Greenpeace and the question from the gentleman in the audience because I like that challenge you're absolutely right that we need to be clear what we're actually trying to get fossil fuel companies to do I think we need to recognize and indeed campaign organizations like Greenpeace need to recognize that we will still be using fossil fuels at the end of this century perhaps for the production of cement probably not for the generation of energy and very possibly for flying around the plane unless we come up with an alternative to jet fuel or whatever there will still be economically attractive applications of fossil fuels for the indefinite future and therefore the determinant of whether we manage to stabilize the climate at some point this century is going to be whether we manage to achieve net zero CO2 emissions into the atmosphere not whether we succeed in banning the fossil industry entirely if the only option is a ban then it's not going to happen so I think we need to move on from that the objective cannot be to make the fossil fuel industry crawl away and die because it won't and arguably it shouldn't on the sort of human rights argument as well we don't have any rights to tell the people working in that industry that they should just crawl away and die but they do need to be able to demonstrate that they have a viable future in a net zero world and that's exactly what we argue for unfortunately mandatory sequestration now is a pretty horrible slogan so I'm not expecting to hear you guys shouting at any time soon but one day you will be shouting that slogan or perhaps a snappier version of it and on that day is when we start to win in the climate issue gentlemen back here and so I'm my name is Laura Merrill from the Global Substance Initiative of ISD and it's about scenario takers and scenario makers really because obviously those scenarios are out there from IPCC to give us ideas about what the future might hold and it seemed to me perhaps what you're suggesting is encouraging companies to get on a pathway and start to set some of these goals so I like that idea of shifting to scenario makers rather than scenario takers we've also tried to do this on subsidies when we've tried to model what happens when you remove the subsidies but then when you start reinvesting them back into renewables and energy efficiency and so my question is why are you just talking about sequestration why aren't you looking at reinvestment within these companies of these huge amounts back into renewables and different business models let's take the other two questions before answering that I'm Kier Kühne from Lingo I would like to mention an initiative that I perceive as that didn't get much attention globally so far that could combine the different approaches of the climate scorecard and the benchmarking and so on and that is the proposal of an economy of the common good that comes from Austria and it's basically adding a common good accounting to the financial accounting or financial reporting that companies have to do every year and there's a whole matrix where companies are evaluated against what they have done for the climate for the environment for poor people and lots of different things that have to do with the common good and by making that mandatory and incentivizing working for the common good the game is changed in a way that making money is not the ultimate bottom line any longer but it's only one element and the common good is the wider bottom line that will drive the economic mainstream in that direction and I would like to invite you to have a look at that and see how this could combine with your work there's over here Tom Tom, I'm going to see you from the climate equity reference project and I just want to to me there's something that needs to be stated that hasn't been stated which is that we're in a planet in which there's very large corporates coexisting with companies I was going to say companies and there's a prior question as to which entities are responsible for what that hasn't really been articulated and you know we're going to have all kinds of costs we're not just going to have the costs associated with reaching net zero in the core economy we're also going to have adaptation costs we're also going to have loss and damage costs we're going to have all kinds of very serious just transition costs of all kinds and I do think we need to speculate at least a little bit at this conference about which kinds of costs are associated with which kinds of actions by which kinds of actors for just one other thing to give an example of what I'm talking about there is a project called the climate justice project which has been pounding away for some years now about the fact that the carbon majors precisely because they have this history that goes back to 1850 they have some sort of particular responsibility for loss and damage costs and I don't know if there's a theoretical a political argument for that that holds water but we should at least be discussing this kind of thing thank you Tom sure I mean I can address that last point I entirely agree that there needs to be more clarity around roles and responsibilities and who's who's going to be responsible for what and there are a number of different frameworks that haven't been aligned that need to be aligned so the guiding principles on business and human rights but also Paris agreement there's no clear connection or even discussion between the different groups so we need more alignment even amongst ourselves people working in this field and I agree that there needs there's a lot more that needs to be done around that only scenario makers scenario takers I mean that's exactly what we would like there's a lot of imagination within companies that I think needs to be brought effectively to bear on this problem and if we should avoid falling in the trap of telling companies precisely what they should be doing so that's exactly what we're aiming to get here the reason I'm talking about sequestration is because this is a meeting about fossil fuel companies I mean so if you own a large amount of buried fossil energy then the only way that can be used in a climate constrained world is if we crack the problem of disposing of the CO2 I think it's and this comes back to the sort of economy of the common good idea my personal view and I'm not an economist and still less a sort of political scientist but my impression is that we solve problems environmental problems most effectively when we manage to isolate them and say this company is responsible for this thing and they need to fix it and when problems are diffused across the whole economy solving them becomes much more complicated and so one you know rather than reinventing economics we could just say well actually we're not reinventing anything here we're essentially talking about a packaging directive you want the energy contained in that fossil fuels you don't want the packaging which is the CO2 that it generates so give the CO2 back to the company that's selling you the product problem solved ok arguably the law already exists to enforce this and if we could simplify the problem simply to make providers of fossil energy responsible for disposing of the waste generated by the products they sell then we won't have a problem on the question of the very large corporations coexisting with countries and in fact some very large corporations having annual revenues that are larger than the GDPs of many of the countries where they operate it's it's precisely this reason that we need that you know the guiding principles recognize the both the state duty to protect and the corporate responsibility to respect and we you know we as a society need to step back and think about the not just the license formally that we grant to these companies to operate in our name and do business but the social license to operate and and what if companies have breached the public trust as in the case of many of the major fossil fuel companies by deceiving us there you know we need to be looking at the levers that we have to hold them directly accountable as well as to to really erode that social license and enable us to put in place policies through government institutions that we need to see happen. Okay three more questions gentlemen back here and context but I think that is the strange willingness to accommodate the notion that fossil fuel companies should continue to exist in their current form and I'm Bob Massey from the University of Massachusetts but I've spoken all over the world. And have you used the phrase in their current form? Well let me get let me explain I speak to a lot of major pension funds and finance about the long-term question we've seen dramatic change and what we're seeing is the growing number of fossil fuel extraction company with all is a fundamentally broken model led by people who don't know what they're doing. Now let me give you some example Shell lost 9 billion trying to get into the Arctic many companies are now borrowing to pay their dividends they're putting $600 billion a year into exploring for things for resources that we don't need some of the companies now are under tremendous legal pressure we have 17 attorneys general that are attacking Exxon for having committed fraud for decades that could affect their cash flow over time if that suit succeeds we have the Securities Exchange Commission just this week announcing that they believe or they're investigating whether Exxon fraudulently represented its resources when the price of oil dropped and on and on and on I mean there are so many examples now also of the companies that you examine the two coal companies Peabody and Arch went bankrupt so we've already seen the unthinkable happen Peabody go from a thousand dollars a share to two and then go bankrupt Arch is disappearing why should we be positing that this is going to continue as we expect when we see investors increasingly revolting against what is an abuse of their money all right hold that response we have two more questions thank you from the deep decarbonization by Swiss project at Etri in Paris just like to follow up on the sequestration discussion because I mean the concern is I mean what you said is completely true but the concern is to consider that as the silver ballot that will solve the problem I know that you didn't say that but I say that there is a risk to distract the attention from what needs to be done because we I mean first this is a technology that doesn't exist from now second when we look and we second we know that the IPCC assessment that we show are much too optimistic because when we start looking at what happens concretely in the country what are the potential etc. we see that there are much less potentials for the CCS in the long term which means that the real question is to go as low as possible in terms of fossil fuel consumptions otherwise we will not manage to just consider the CCS at the scale that's reasonable so the only edging strategy again this risk and this uncertainty against the development of CCS is to take the measures now in order to go to as low as possible consumption of fossil fuels and in terms of the discourse the way the IPCC was received for example there was a direct relation between ambitious climate goal and large CCS including for negative emissions which I think is a very bad message for short term action. Okay last point and please make it short with a question. Yes well Maria Marmes from Universidad Andina I was wondering along with this work you're doing of tracking company behavior, fossil fuel company behavior climate behavior if you have thought of looking into the financial sector because despite the fact that if you in conventional standard emission accounting the financial sector is a low emitter I believe that they might be one of the world's largest emitters if you look at their portfolios. I mean they basically finance economic activity around the world so would it be a good idea to have to record how much climate how many emissions are embodied in each of the projects that they finance both multilateral companies like the World Bank or the private sector. Great so just investors are increasingly concerned about these issues at Exxon and Chevron this year we saw unprecedented votes in favor of climate related resolutions approaching two-fifths of the shareholders in both cases calling on the companies to report on what the policy implications of Paris will mean for their business. That said there's still 60% of them out there that aren't on board yet so there's further work to be done on that front and I think that the bankruptcies, thank you for pointing out the bankruptcies of Arch and Peabody, those are a cautionary tale and they've also been the bankruptcy documents of the coal companies have also been a treasure trove in terms of evidence of how these companies have carried out deception campaigns so that shows what's actually still going on as we get companies claiming that they accept the science and then on the financial sector I believe Rand just came out with a study of the private banks and I think that Christian Aid actually just came out with a study of the development financing in terms of fossil fuels so those are both good resources. Last point. So on the should these companies access to toll and the role of CCS in the long term this industry which remains 10% of the world economy has already demonstrated it has formidable capabilities for reducing costs and responding to challenges you know they've dealt with a reduction and the oil industry has dealt with a reduction in the selling price of their main product by a factor of four and continue to make money very few industries could do that and it tells you something about the way they were making money before the reduction in the cost but you know it's all the same this industry you might hope it will crawl away and die but it's going to be a long time of dying and it's the assumption that the industry won't crack CCS and work out how to do it cheaply is a very strong one without any empirical foundation because the industry has never been asked to crack CCS what they've been done, what's happened so far is the industry has been said look if the government pays the cost how do you build a CCS plant and the result of that of course has been a lot of very expensive CCS plants one little anecdote which I will finish on which I was told from somebody within the industry about the world's largest CO2 disposal plant the Gorgon facility in Australia that happened not because of a carbon price or because of any elaborate climate related policy it happened simply because the government the state government of the western Australia simply told the mining companies the oil extraction companies that they had to do it in order to extract that gas and what this industry has said to me was we thought about it for about 5 minutes and said yes I suspect that the industry if simply challenged to get on with it would think about it for about 5 well they would protest about it for probably more than 5 minutes but once they were done protesting they would just get on with it and that is the only hope we have for solving the problem okay thank you all very much we've got to close questions now apologies for not putting the room name in the program but just so you know staying here will be reforming fossil fuel production subsidies with Laurel Merrill as our moderator the role of norms and legal strategies in addressing fossil fuels will be the memorial room and we'll post people out there to guide you along the way we ask that you go there right away welcome to this session it's entitled reforming fossil fuel production subsidies I'm Laura Merrill from global subsidies initiative of the international institute for sustainable development and I'm just everybody will get into depth with the fossil fuel production subsidies in their presentations but I'll just say that their subsidies to production matter and their matter in their existence and in their removal and it's basically because they're encouraging more production of fossil fuels by making them cheaper just making them cheaper to extract and to export and really combined with consumer subsidies they make it very difficult for us to disentangle ourselves from fossil fuels and from a world where our developments based on carbon so how do we extract ourselves from these fossil fuel subsidies and upstream at the producer end and how do we remove these subsidies to production some of the questions that the researchers here have asked what are fossil fuel production subsidies upstream to oil, gas, coal, electricity how are they different from and interact with consumer subsidies what impacts do they have on the environment on society and on carbon and climate and how can they be removed, what will they be replaced with if anything so we're really privileged to have panellists from Russia, from Kenya, from Peru and the US and I'm going to introduce everyone in one go and then everyone gets 12 minutes to present the first speaker is Iveta Gerasim she's senior researcher at the IISD she's a friend and colleague of mine and she's going to be presenting on unlocking supply and locking in carbon the paradox of determining which fossil fuel subsidies are the worst for the climate but I think we'll just start with you and then we'll come back to the others introduction Lauren good afternoon everyone fossil fuel subsidies have been long described as a law hanging fruit of climate change mitigation law hanging but prickly so that's why I have an image of a prickly pear here well law hanging because obviously you don't have any costs when you implement this policy on the opposite you get gains, you save public money and prickly because of the political economy challenges so our spare is this distinguished audience the definition of fossil fuel subsidies because there are people in this room who have worked on the issue for more than 20 years I have worked on this for 6 years and I can say from this experience that there is one thing in common between a fossil fuel subsidy and pornography which is it's sometimes very difficult to define also legally but when you see it, you know it I'm doing this presentation together as part of research with Andrea Bassi so we're working on and together with some people who are also in this room we're working together on a report which is looking at the climate benefits of fossil fuel reform on the produce end and it's looking at such benefits on a global level so what I'm presenting is work in progress it's the basis of assumptions we're doing also for quantitative modeling and the two key questions we had one is what are the worst subsidies for the climate and if these are the same subsidies that should be phased out or immediately removed first and these are two questions which are quite practical for campaigners who are looking to award the price to the worst subsidy for instance or to policy makers who want to deliver on the commitments under the Paris Agreement so how much a producer subsidies in the world is something we know quite a bit about but not everything so GSI a few years ago produced a work estimate of 100 billion globally then the work that has been co-published by OCI and ODI and where GSI also contributed case studies estimated just within G20 produces subsidies at 70 billion and here's a graph so for our modeling exercise we try to aggregate these numbers by fuel it's by itself not a trivial because a lot of subsidies are cross-cutting a lot of them are going to both oil and gas and it's the same industry effectively or some of them applied to all fossil fuels and on top of it also to all minerals so it's difficult job in itself just to measure, to quantify and desegregate fossil fuel subsidies we have to make some assumptions which we have done for instance we attributed numbers based on the role of each energy type in the primary energy production in the country and it shows you more or less that the more capital intensive the industry is like oil is the most capital intensive industry the more subsidies it gets and on the opposite coal is less capital intensive so it's showing up as a lower number in terms of subsidies the climate impacts of fossil fuel subsidies basically depend on three groups of factors one is subsidy design so because subsidies are there for a reason to stimulate some kind of activity there are also unintended impacts of these designs but this is something the governments can control the other group of factors is something governments cannot control because the characteristics of projects is economics of the projects and then you can say in rough terms although I'll do some caveats later about this so there are by their nature project that are viable only with subsidies so that's we are looking at the effects of unlocking them into production there are projects which are viable even without subsidies so subsidies arguably have no effect on them and finally there are projects which are unviable even with subsidies and the third group of factors here is everything else and that's what makes subsidy analysis and analysis of climate consequences of these policies quite difficult because there is such factor as oil price for instance which completely changes economics of projects there are technologies which we discussed and they can also influence the economics and competitiveness of different projects in very drastic ways so there is a lot of uncertainty in general so if we talk by design because this is something the governments can control we can talk about subsidies that give a signal very long term a very strong signal to investors, to companies and this is why for instance maybe some of you have heard before G20 group of insurers came up with a call to the governments to stop fossil fuel subsidies because subsidy gives a very strong signal to the industry to invest in particular type of assets and this of course has implications for risks and insurance costs so then there are short term signals more of temporary nature so it's in terms of cost reduction so the first group of very long like BEEP signal is the type of subsidies that reduce fixed costs at the very beginning of the project so the BEEP the short signal comes if it's the reduction of operation costs then also consumer subsidies fall in this category because of course from the sales perspective you can only start selling the product once the project becomes operational and it's longer into the future and finally arguably there can be subsidies that give no signal to the industry and I'll come back to this later so I already mentioned this time value of subsidies value of money I'll not go deep into detail on this but basically capital in the industry is scarce investors are very myopic they are looking at the present value of projects and this value depends on discounting and then you have the tier in your discount depending on which discount rate you select you will get a different value of a dollar in this case a dollar of subsidy in this present year or 10 years from now or 20 years from now very roughly if you take project life cycle in the industry at 25-26 years you take 5 years for project development this more immediate costs and then you have all the costs coming from the 5th year to the 25th 26 years so you have a difference by a factor of 3 if it's the discount rate of 10% and it's a factor of 2.5 if a discount rate of 8% so this is the cash flow of the project very typical coming from a textbook of the oil and gas industry and discounted in this case so we have the majority of costs here in the negative coming at the beginning of the cycle and that's where capital costs are incurred so that's why basically the strongest signal which is sent by governments is if the companies for instance get accelerated appreciation if they get free infrastructure in terms of pipelines, in terms of roads so this type of subsidy will unlock the investment into projects immediately so the moderate signal comes at the later stages when the project starts producing so it either reduces the operational costs of running the project for instance labor costs or health insurance costs for coal miners things like this or it will increase the revenue at the producing stage for instance by guaranteeing the market for oil, gas or coal-fired electricity and that's why consumption subsidies can also have a lock-in effect on high carbon assets and finally theoretically we can say there are there are projects which are viable without subsidies and we at JSA we have done a comparison of two projects for instance in the Arctic part of Russia so with subsidies one project became commercially viable and went ahead, the other project we looked at the pre-Islamic platform was actually viable even without subsidies so you can say subsidies have now no impact on unlocking new capital new assets but in this case it still increases the revenues of the industry, you can ask questions what about the opportunity cost what if other industries receive the same level of support you can ask questions about the investment of this profit recycling of this subsidy within companies so it's quite precarious to say that some subsidies have no impact although in theoretical framework like we are doing for macro-modelling because we have to differentiate so there is also a frequently asked question about coal subsidies are they worse than oil and gas subsidies short answer is on production side no because everything depends on the characteristic of an individual project so there is a percentage of costs of said by subsidies and as we said in the coal sector the capital costs are lower than in oil and gas and then a lot of coal projects are viable even without subsidies so which brings us back to okay so we have some kind of ranking of subsidies we can say some of them are possibly worse for the climate than others so can we just already step forward so can we just cut one quickly pair and feel good about it so unfortunately there is leakage effect and what happens is that once you cut one the political economy can make subsidies reappear in different places in the same country or in a different country so in this case coal for elimination of certain types of subsidies is much weaker than coal for elimination of all types of subsidies and that brings me to conclusions that if you want to answer this question about which subsidies are the worse of course the best is to look at project level but not everyone has this luxury and then you have to do a tradeoff between detailed analysis and assumptions that prioritization is possibly still not the best way forward because of political economy challenges also because of economics such as leakage, such as fuel substitution and the best coal for those who want to eliminate fossil fuel subsidies is the coal to eliminate all of them to all types of fuel and both consumption and production we are releasing the new report around Marrakesh and if you have any questions we are very much looking to your feedback, thank you Thanks Avetta and now we're going to hear from Kennedy Inverva he's a research fellow at the African Centre for Technology Studies Act based in Nairobi and Kenya, welcome Kennedy Thank you Laura Ladies and gentlemen I'll be making a presentation trying to explain the variation in fossil fuel subsidiary forms across country because the case has been made for fossil fuel subsidiary forms as an important climate policy tool but we know if we apply it across both do we find some variations in some countries or not to give a brief outline of my presentation so first have a brief overview of fossil fuel subsidiary forms and how they've been related to climate policy secondly I'll share the research questions and the methods that I use in my analysis finally share the findings and some conclusions from the research so the main focus of this research was on looking at fossil fuel subsidiary form as a climate policy tool because there have been many arguments that have been made about using it for instance removing fossil fuel subsidies, the G20 for instance is looking at inefficient fossil fuel subsidiary reforms so the debate is emerging towards adopting it as a climate policy instrument but I think as you've heard from much of the research a lot of research is focused on the demand side and not much on the supply side so this research will look at supply side of course and also look at the conditions which might lead to those reforms taking place so there's a lot of theorizing so trying to generate a broad theory to try to explain so as all theories maybe in some cases it might work in others it might not so I stated the main question was looking at under what conditions can fossil fuel supply side reforms be successful or unsuccessful so the main focus was looking at time to an event and time to that event is undertaking a reform so I developed an original dataset and the main variable that I was looking at the dependent variable was how long does it take for a country to undertake a reform and by reform I mean developing a national legal framework whether it's a law or policy that has direct impact on energy supply and climate policy and I got a very good data from a database developed by the London School of Economics called the Globe dataset and it has national legislation laws and policies that actually have a direct relevance to climate change whether it's adaptation or mitigation and most of the national laws and policies that I looked for at the all the I think I looked at 95 countries which produce fossil fuels many of them had to deal with energy supply so that was a very convenient convenient dataset to construct trying to look at the different factors that will lead to that event happening which can be a very good proxy to a reform happening related to energy supply and climate policy and so the main hypothesis that I had is that the higher countries preference to climate policy they had the probability of reforms and by measuring climate policy preference I looked at the number of laws in that database that a country has so if a country has a higher number of laws then there's a higher probability that it will take undertake a reform through a law that is related to climate change so that was a proxy and I also looked at other factors that have been put forward in literature and I looked at political for instance like do the different types of governments or governance have an impact will reforms be maybe more successful in countries that are democratic or less democratic or in countries that have a federal system or less of a federal system or a centralized system and I also looked at the economies that the size of an economy have an influence on maybe if a country will have a higher probability of taking a reform or not so those were the three main three main hypothesis I was testing and of course the statistical analysis I used was a time to event model trying to measure the time to that event which is a reform happening and I took the years 1992 to 2013 1992 because it was a water shed year for global environmental politics and many of these issues gained a lot of traction especially in the international front and 2013 because most of the data that I got was limited to 2013 would have been better to go maybe all the way to 2015 but that was a bit challenging so one of the findings I took from that global database was the national laws and policies for those 95 fossil fuel producing companies are countries looking at what was the cumulative number of those laws for those countries over the years as you can see there is being quite a steep increase so some of them might be positive or others negative but that can show you some activity in the climate preference and these laws include adaptation and mitigation but it is a good proxy to look at the preference overall and the key findings so one of the key things was one we looked at a growth of greenhouse gas emissions in percentage like looking from 1992 because it's been argued in literature that climate policy if you have a fossil fuel subsidy reform as a climate policy tool it's a cheap or a low cost tool to when you addressing climate policy issues so we tested that hypothesis and found that there was evidence although weak it can be used as an option one of the low low cost tools I'm not an economist but that was one of the main arguments secondly the number of climate related laws national laws this measures the preference to climate policy so there's a very strong evidence that countries that have more laws and policies that are related to climate are more likely to enact reforms so when I look at carbon emissions I have high emissions maybe consider using reforms as a tool to address those so the theory suggest that that will happen although with weak evidence so one asterisk is for 90% confidence two asterisk is for 95% confidence while three asterisk is for 99% confidence so looking at the politics aspect of it I didn't find sufficient evidence to that's a post that the variation in the types of government actually has a strong impact on leading to reforms because if you look at for instance like democratic governments by whatever definition you use you'll find that there's a lot of representation of many actors and that's where a lot of contestation happens you'll find people who are very forward looking pushing for climate policy but you'll also find the fossil fuel companies represented there so there's a lot of contestation when you also look at democratic governments you'd expect most of them based on literature have been very antagonistic to climate policy mostly because they rely on fossil fuels so the probability or chances of them undertaking reforms is almost there so I didn't find much evidence to support it in this broad theory so looking at the economy aspect of it I found evidence that an increase in the size of the economy would increase the probability of the reforms happening because when you look at the GDP maybe one of the explanations might be that big economies are more diversified and maybe they have access to alternative technologies to replace that fossil fuel technology so that might be one explanation and it was actually very strong for developing countries when you look at the figures in the parentheses they represent developing and developed, least developed countries because I only had from the 95 countries 11 least developing countries which is a pretty small number to some degree so I combined it with the number of developing countries which are 52 in the sample and you can see there's a very strong evidence that an increase in the size of the economy would maybe reflect the diversity or availability of technologies to some degree and just a note number higher than one shows a higher probability like an increase in that factor leading to higher probability a number less than one means the opposite so another interesting thing was looking at official development assistance so I specifically looked at that variable because in the past development institutions have been channels for passing through norms, different norms of development, sustainability et cetera so I looked at the percentage of countries income that comes from ODA and it was very interesting to find that an increase in ODA leads to a higher probability maybe it's because of the channeling through norms and the influence and leverage that those development institutions or rather those aid institutions have especially on developing and least developed countries and finally I looked at fossil fuel rents as a percentage of the income a country gets and you can see there's a strong there's a significant evidence especially for developing countries that the more they rely on fossil fuels the less likely they are to undertake reforms so moving on to the part that answers to the first question that I posed you can see in blue is a combination of developing and least developed countries and in green is developed countries and you can see developed countries are exiting from the sample really fast because that shows like they're making a reform so developed countries actually have a higher probability of undertaking these reforms than developing and least developed countries and you can see this for example through the OECD through the pointy the other ones who are sort of like the past movers in this issue so we'd sort of expect that so finally back to the question so the question we looked at under what conditions can supply site for fossil fuel subsidy reforms be successful or unsuccessful and my broad theory suggest that countries with a higher preference for climate policy are more likely to undertake reforms secondly the type of government does not have a major significant impact on other reforms will happen or not and thirdly country with bigger economies are more likely to undertake reforms so putting this in the broader context of the discussions today brings about the question like one there are countries which depend on these fossil fuels but if you tell them to live in the ground what is the alternative countries have very ambitious climate plants especially in the INDCs how do they reconcile the two so it opens up again the issues that were debated before how do you have a just transition how do you have an equitable transition because this entire like the processes are various across different country groups so that is the main presentation of the theory of course there are many other interesting variables that could be considered but just to test the broad ideas these were the ones that were considered in this ok thank you Kennedy next up is Suclari she is from the environment ministry from Peru and she is going to be talking about measuring the impacts of eliminating subsidies and assigning taxes to energy products in Mexico through a general equilibrium model better thanks I would like to present one of the results of my PhD dissertation that was about the Mexico situation about avoiding subsidies specific production subsidies and also carbon tax and transport tax for Mexico it is important to be one of the countries that develop different climate policies and activities about mitigation and adaptation of climate change also we have a climate change law with an aspirational goal to reduce emissions 30% for 2020 so we have the aspirational goals but how we are going to develop these activities or how we are going to reduce emissions so they propose different tools, MRB system national emission register that is a specific difference in the case that they are just going to know about the emissions and they are not going to do a transaction during a trade in the register so the other part is we already have an energetic reform we are trying to change to having just one oil company to different companies, private sector and best in oil and gas then a fiscal reform when we include a carbon tax so this is the national context also this year we ratified the price agreement so we have more agreements to follow in the next year so the idea is to know what about production subsidies these are not important at all because most of us think about the consumption subsidies they are bigger, these are more important for us and the production subsidies are also important in this case. I developed a general equilibrium model considering the full economy we also consider 10 different types of consumers and we are not considering the benefits of emission reductions that are the result of avoiding these subsidies. Another thing that is important of this model is that allow us to compare between different sectors and also between different policies. Most of the time we have specific models for each sector or for each policy and in this case the model allow us to compare the different sectors and policies with the same database. So I consider the sectors that are related to oil, gas and electricity. The producer sectors and also the sectors that boot as different inputs for their activities. Well I developed two different models, one is a static model, I'm just going to present some of the results and why it's important for us to consider the production subsidies. If we can see these are the amount of the production subsidies and these are the consumption subsidies. So it's a small quantity compared between both but also this amount are the same that some social programs in Mexico and it's important to consider that we need to invest more in education and health so in poverty programs. So these are not just little quantities, are important for us if we want to invest in other programs that help the country. The results about eliminating these subsidies, we have the results in three different variables. These are emission reductions, these are the additional income to the government and here is the welfare of the consumer considering a equivalent variation. So the electricity has a significant impact if we avoid the subsidy. It's less than the 1% but it's more important in the emission reductions also in the government income and if we consider the part of the consumer welfare we have just when we avoid all subsidies the 0.50% so it's not a big amount the impact that we have and also we can use that money to another programs or activities. The other path was to a second in taxes into different points. One is trying to simulate the carbon tax that it's different for each kind of pool considering the content of carbon tax. The other path is to provide transport tax that it's just for the products that we transfer from another cities to the capitals to provide food or different vegetables anything. So the government income increase in the carbon tax more than the road transport tax with a carbon tax than the transport. The important thing here is to consider that the lower of the styles have more impact with the carbon tax than the difference between the transport the first design to the last one. So the carbon tax sometimes will consider that it's better because you punish the people who use their car and in the Mexico case not exactly that the people who don't have a car or a public transport and everything and it's expensive for them if we assign a carbon tax than another kind of taxes. This is the part of the static model and also we develop a dynamic model considering just the different scenarios about taxes in a period of 10 years. This is the result of the period in the principle variables that are emission reductions, government income and welfare. First, if we assign taxes from 2% to 10% we don't have a big emission reductions or bigger difference between them but if we want to have important emission productions like 3% is when we assign carbon tax. So that's the first point. But also the impact to the welfare is 3.5. So we have to consider what is better or worse. Also the government income increased just around 2% and this gave us the opportunity to make transferences to the first five decils of the population. We have to consider high taxes and also to make transference to a population. It's one option and well, the general results about the difference with it shows the no, the more important thank it the government income increase more when we have a bigger tax considering the reduction of emissions. It's a bigger impact for them if we remove the gas subsidy and not the other subsidies and the emissions will also attacks on production have the better impact in reduction of emissions. Well, some reflections for us is that if we want to reduce emissions have to consider many factories not just we need Mexico is an independent country so we have to change a little bit our energetic metric so also we can invest the amount that we have with taxes or the amount we have without eliminating subsidies to any technologies also renewable energies or the other thing that is important is that government tax has to be focused to something to do it's not just another new tax that we can use for all the things that we use like health or everything we have to focus that amount in specific activities so that's the only way we are going to go to our aspirational goals of 30%. So please welcome Doug Koplow founder of his company who will be talking about fossil fuel in the United States impediments and opportunities Doug. Thanks very much it's nice to be here I want to cover three things one a little bit of discussion of the history of fossil fuel subsidy reform in the US and go a little bit into the impediments that we faced and some ideas for addressing them and then also to introduce some work that I've been working on with SEI that's trying to unroll the subsidies at the field level and see how it changes the investment returns and we're fortunate that we have Mike Lazarus, Pete Erickson Adrian down in the audience so there are questions that come up I can't answer they're here to help. So we've been dealing with this question for a long time this political cartoon is actually from 1889 the fat guys in the background are actually money bags for big industries at that time there was a big concern that they were intervening with the Congress getting control of government to direct money to the individual sectors and keeping the public out which is pretty much what happens with oil subsidies a lot of these industries have gone by the wayside but the ones with yellow arrows we've got coal, oil and gas they're still around so that's 1889 this here is 1927 okay so one of the big first tax breaks for oil and gas in the United States came in in 1924 or 1925 it was a percentage depletion allowance that allowed firms to deduct from their taxes more than they actually invested in their oil wells and only a couple years later we had the division of investigation of the joint committee on taxation kicking in with the report trying to assess why was this happening was it fair was there any basis for these subsidies and in fact there's a great quote down here from the senator who sponsored the legislation acknowledging no there wasn't such an economic basis for it in fact they plucked 27.5% out of the air because it was big and they wanted a lot of benefits but also because it seemed scientific because it was so precise so this type of manipulation of facts I think is something that anybody who tries to deal with subsidy reform addresses on a regular basis this isn't to say that we haven't made improvements in the United States we actually have on tax and tax expenditures 1974 that's quite a while ago we made federal reporting of tax expenditures mandatory this was actually picked up over time by most states in the country the problem was the states don't always assess it in exactly the same way but they were assessing it and that's a good thing and in fact the government accounting standards board has now issued a formal rulemaking disclosure which will kick in next year so we will have standardized reporting required for all levels of government in the United States so that's a big improvement credit subsidy reporting again we started kind of early 1991 federal efforts to have credit reporting in the budget kicked in it was complicated the states really haven't stepped up in this area and even the federal metrics are not very good so they ignore the cost of administering the credit programs but most importantly they benchmark it against the treasuries cost of borrowing which is very low risk capital and what they should be doing is benchmarking against the riskiness of the ventures that the government is supporting so a lot of improvement there state owned enterprises we've actually got some of them in the United States not as many as other countries in the energy sector but we do have things like the power marketing administrations when there are commercial activities by government owned entities we've got pretty good rules so we require standard financial reporting it has to be independently audited those audits are made public there is accountability but there's a lot of blurry lines of government involvement so we have the federal government maintaining the inland waterways and it just so happens that 50% or more of the tonnage that moves through the inland waterways is oil we have a strategic petroleum reserve which is billions of dollars of stock-poiled oil these are blurrier issues of state-owned enterprises and the data is pretty bad they don't do the accounting properly and therefore we often don't know how much we're spending to provide these goods and services to the fossil fuel sector there are some positive trends in the US for sure ten years ago it was kind of the line agencies environmental protection agency in Afghanistan energy subsidies kind of from the policy angle today it's very much coming from the treasury and the president this is a pattern that I've also seen happening in other countries the Obama administration put in fossil fuel subsidy reforms in most of its budgets none of them got through but they were putting them in growing data OECD other international agencies NGOs some of them are here oil change overseas development doing a lot of great work to have more frequent reporting broader coverage of countries broader coverage of the US and that's been a great help and even the G20 is moving a little bit a little bit more than I thought it was going to we'll have to see how that plays out but ten years ago or fifteen years ago when you talked about the importance of removing fossil fuel subsidies there was sometimes a question as to whether people thought it was important but now it's very broadly viewed I don't think of any type of greenhouse gas reduction strategy and I think that's a very positive improvement yet when I pulled my colleagues on the issue of how we're doing with subsidy reform in the US I got universally negative responses I mean things like you got me what reforms or in crying lines mud and no I can't remember the last time the US successfully reformed a fossil fuel subsidy so this is you know not optimistic stuff and it's kind of aligned with my view of the situation as well in some narrowing over time of subsidies oil and gas some reduction in the levels they can get some restrictions on international operations or the largest companies can't tap into everything but even in the very broad based tax reform act of 1986 most of the oil and gas subsidies survived when lots of other things were cut and the industry is very active and it's always important for more so we see refinery expensing the use of the private letter ruling process to expand their ability to use master limited partnerships to escape corporate taxation we've seen royalty gifts on the Gulf of Mexico big push now to have large subsidies for carbon capture and sequestration in the US even though most of the captured CO2 is going to be re-injected into oil and gas wells to pull out more oil and gas so this is a very challenging process we've seen more success on the administrative front with leasing and royalty modifications regulatory improvements particularly following accidents and we've seen a couple of cases where people have figured out how to use tax subsidies in interesting ways and the cost ballooned to billions of dollars and Congress was actually embarrassed and got rid of it but these are far and few between part of the problem I think is numerical so in the lower left corner is a little smiley face that's right at the zero API is American Petroleum Institute which is the largest trade association in the US and according to them there are no subsidies to oil and gas the official estimates are EIN Treasury a little bit higher then we got OECD's work and OCI higher still but there's a pretty big spread here so clearly people are using different definitions in what they're picking up and we can see that as well that when you break out these numbers by type of intervention that the spending and tax expenditure bars over the left here so grants and tax breaks is a vast majority about what we're picking up if that were the only thing that the fossil sector was getting fine but there's all these other ways that governments transfer value to private industry that we're simply not measuring very well but one of the challenges that we face going forward is how do we start picking up these things so we can see the full picture of what's going on this is just another view of that same issue here with the concentration of direct spending and tax expenditures another important lesson I think is the importance of subnational subsidies OECD has done tremendous work Jehan back there knows the suffering that it took to get it through all the states and provinces to try and tease out what's going on at these lower levels of government turns out it's pretty important in the U.S. about half of the measure benefits are at the subnational level and we need to do a better job making sure we build that out why are we having these struggles but clearly the power of the groups we're up against is a big issue here our friends the American Petroleum Institute have a budget of almost $1 a year that dwarfs even some of the largest environmental groups in the United States so oil change is doing tremendous work improving transparency here but easily outspent by the big guys and they're not the trade associations like API really aren't interested in the earning it's a political organization and this is their head tax policy guy basically coming out and saying all these things that we get everybody gets them they're not really subsidies and it takes a lot of work to try and contest that process on an ongoing basis the other important point is that we sometimes focus on subsidies that are specifically targeted oil and gas but the guideline here needs to be subsidies flow to power and if you're in a part of a country where the fossil fuel industry happens to be powerful you got to look at everything this is a review I did of Harkin Katrina tax-exempt bonds Harkin Katrina hit the southeast United States it wiped out large parts of a couple of states Congress put through a whole bunch of money to help them rebuild nearly two thirds of those bonds were captured by the fossil fuel industry and that's a great indication of the challenges that we face and the importance of not narrowing what you look at too much and now I want to shift to some of the work that I've been doing with SEI I've got these all marked draft why are we coming up with draft stuff for this meeting, number one because it's cool we want to talk about it, number two because we actually welcome input from you guys so if you see things, if you see ways you'd like us to present the data differently we would welcome that input so what we did here is we took data at the project level on the projected production levels and economics of oil and gas fields around the country, concentrating in a number of basins and then we synthesized removing the subsidies to see how it affected the rate of return and the baseline rate of return on average was about 7.7% over here is the intent which is widely viewed as the most significant subsidy oil and gas but what we discovered is there's some little stuff that no one pays attention to that actually matters quite a bit the yellow bar in the middle is actually the excess road damage that heavy fracking trucks due to the roads in Texas and it turns out Texas cares about this they've done some pretty detailed studies it's about $4 billion per year so when we run it through our models it increases the baseline IRR by about 1.9% which is a boost of about 25% so this is a big deal and again it illustrates the need to go to the sub national level and to look carefully before concluding that there's no problem this is a great map that shows the field by field level data where the blue dotted lines on the bottom are what the return is on these fields with no subsidies the fat orange dots I'm sorry it's a little hard to see are the projects where they went above their hurdle rate because of the subsidies so I've kind of tagged these things the leakage zone which is over to the left projects where public money is going in and it didn't really make a difference in the outcome so it's sort of largely leaking away to the people who own the fields or own the resources and what I call the abetment zone see carbon abatement, carbon abetment it's not actually trademark I just want to say if it catches on you heard it here first so this is an example where taxpayer money is unlocking greenhouse gas emissions potentially significant greenhouse gas emissions that otherwise would have stayed in the ground without the subsidies so you can see that it's sensitive to the price the more expensive the oil is the less important subsidies are but along the boundaries of for barrel of oil roughly half of the new oil that's not producing is dependent on subsidies so this is a big deal there you are so this chart is a little bit less beautiful but it's basically saying the same thing so 47% across the US is subsidy dependent we tried to ballpark what that might mean in terms of carbon emissions about 9 gigatons a gigatons of CO2 within the US less obviously if you look at the net reduction because there's some foreign oil that will flow in as you start removing these subsidies but still it's a significant lever point to look at when we're trying to deal with very difficult challenges on climate change so finally where do we need to go we got to fill in the data we've got to have the data more quickly so that we can be responsive to the policy debates be more relevant in decisions as they're being made and ensure that we have fiscal alignment with our environmental goals and also this idea of policy contestability so we always hear justifications for existing subsidies that say it's supporting development it's supporting jobs a lot of times there's lots of ways to bring jobs or to bring development to regions we need to be able to come to bear more quickly and say you're choosing a pathway of subsidies to energy that's causing all these problems but actually there's all these other things you can do instead for your state, for your region or for your country thank you very much thank you Doug I mean those are all really interesting presentations dealing with policy with Mexico they've included energy sector reforms actually and there has been reform recently and that huge figure from Doug Bear to oil and subsidy dependent oil which is extraordinary and the fact that your research didn't find so much Kennedy all these very strong links but one of the points that came out from one of the other presentations around government revenue savings and sort of social impacts and then the final third thing sort of being this co-benefit of emissions so perhaps it's not just about climate policy and it's a bigger picture around government policy and so on and so forth but we should open this up to the floor and take questions and let's take four to start with up here thank you Henri Weisman from just to follow up on what you just said because this is a question to Kennedy but that echoes a lot for example with your very last work Doug your starting point your assumption that there is a direct connection between climate change and reform of subsidies which I'm not completely convinced of I'm not convinced that climate change is the primary reason for reforms of subsidies what we see there are some examples like what happens in Indonesia for example where the main reason for reforming subsidies is that it's regressive it's not an efficient way to reduce the inequalities just because the richest consume more and so benefit more from the subsidies and when under a constrained budget it's a very inefficient way for the governments to use these resources to reduce what is their main concern which is inequalities and then the emission reductions is obviously a benefit of that but I'm not sure that it's a primary reason for the governments to take that into consideration so to go to your analysis I wonder whether you could reframe it to start differently with not climate change as an entry point in other dimensions at least that you could include in your regressions in order to take that into account I'm Fernando Tudela from Mexico the Centre for Global Change and building upon the last presentation I think we have a fundamental difficulty there because we are not just measuring ways but we are measuring different things when speaking about subsidies and there seems to be a lack of symmetry in the positive taxation taxes, we all know a tax when we see one it's legally framed in a way but there is a lack of definition in terms of what the subsidy is and even we saw the data G7 G20 APEC OECD IMF you name it they have all said that we have to phase out the subsidies and nothing much has happened this is an understatement but even if you consider IA National Energy Agency and OECD which are sister organizations they have different ways of measuring subsidies IA is focusing on the difference between the domestic price and the international price a very simple way of defining subsidies although restrictive in the extent and while OECD is achieving some kind of bottom up consideration of different programs that may help production of fossil fuels much more come the question of the panel is are we ready for a discussion on achieving a shared definition of subsidies so that we can measure the subsidies in a harmonized way across countries is it feasible would it make sense in the sense that we cannot manage what we cannot measure and do you think collectively the panel we can achieve that a common definition of what the subsidies any other questions in the audience okay it's more a comment to respond to what we just said just to say that I think people tend to underestimate the extent to which this agreement on definitions most countries are signatories to the WTO agreement on subsidies and countervailing measures where article one has a definition most countries have signed off on the definition of a subsidy and secondly in the context of the G20 peer reviews the countries that participate have signed on in terms of references that define a subsidy and it's pretty close to WTO definition and last just to say that the IEA and OECD they just that IEA focuses on developing emerging countries and price driven subsidies and the OECD measures other things the fiscal cost in developed countries mostly so it's not incompatible and the two organizations actually working together the IEA doesn't have a the price gap method of the IEA is not a definition it's a method they have a definition method actually broader and encompasses all sorts of budget transfers and tax breaks Jehan didn't introduce himself but Jehan Sauvage at OECD and he's done a lot of the work in building the OECD's data set and working on the G20 stuff so he knows what he's talking about so do you want to go to some of the questions then do you want to start are there any more should we take any more okay Alex go for it so I was going to say something about definitions but I feel like we've got it covered and you know my counter question actually to your question is doesn't matter if we have complete harmonization agreement on definitions or can we proceed with trying to achieve reform without that but the real question that I'm going to ask since I think that's been covered already is I'm always interested in because Oil Change International we do some analytical work on subsidies as well as campaigning and advocacy work around subsidies and I'm a couple of you on the panel I know and a couple of you I don't but I'm very keen from the perspective of people who do a lot more focused and analytical work on the issue is you know what's the upshot of your analysis for actually achieving change in the world in terms of advocacy and campaigning and I know that's something that is the job of the campaigning community to some degree to figure out but I'm always interested to hear the insights of people who are doing deep analytical and scholarly work on this about you know what's the missing piece if we don't have a lot of reform that's happened so far from your perspective from where you said what do you think is missing okay let's go to the panel we'll have time to come back and so save your questions it's coming back so I think I'll take the first question which was a very interesting question about like the assumption I used just to be clear I did not assume like direct causation between like the reforms being used especially for climate policies but it was because the theory it was more hypothesizing because it has been put forward for instance that it can lead maybe that's not the primary reason in most cases why like you know you have the reforms for climate policy but it has been identified as a tool so the major assumption was suppose it was used as a tool what conditions you know would lead it to be successful or not so there's a big trade-off because it's a general theory that looks across a number of countries so in some cases it might hold in some it might not but I think what is most important maybe is now getting country-specific studies which give us now the causal reasons or the causal links exactly to that but this was more of getting an approximation of if it was used as a climate policy instrument so I think it doesn't have like a strong direct link because it's very difficult to establish that unless you get very empirical like country or sub-national case studies. So there are a couple of questions here first I see subsidy reform as beneficial for many reasons one of which is that it helps align your price signals with concerns over climate change but I also don't see it as the major reason to reform subsidies it's an important benefit of it in terms of the definitions subsidies go along and continue on so in the center you have government grants it's a cash transfer from one party in the state to one private entity there's really no definitional problems it's easier to measure as you start going to the more complicated transfer mechanisms it becomes more difficult because you need to have a baseline condition that you're comparing it to in order to assess the subsidies sometimes those baseline conditions will vary from country to country but I certainly believe you can make important progress without full consensus on those it's also quite important to recognize that probably half of the definitional problems people raise are politically driven that they are trying to basically inject the money into the process in order to slow things down because when you have information out there it makes it harder for them to defend what they're getting and sometimes what they're getting is a lot so I think definitionally we're certainly workable in some of the margins in terms of tax expenditures across countries or benchmarking credit subsidies or indemnification and insurance that's an area where there can be improvements and there's a lot of missing data but I think we're doing okay well I started my presentation with saying that I don't think that discussion of definition is useful moreover subsidy definition is being discussed when people basically want to sidetrack the conversation as Doug said for political reasons and that's exactly what some countries are doing in G20 and that's why it got stuck but at the same time I think one of the major lessons learned is that reform happens at the national level not necessarily at the global level I mean if you want to play to the gallery for domestic purposes for countries like US that may work like you're not the only one who is doing the reform but in practice all reform always happens at the national level for reasons not related mostly to climate change mostly related to budgetary constraints of course and the other upshot of the research is basically that if we're looking at supply side mitigation measures it's about the lock in of high consumption and in this respect it doesn't matter if it's production subsidy or consumption subsidy they should be viewed together and dealt with together and again the opponents of this approach the opponents of subsidy reform would do exactly what the Romans did or the British Empire did so they would divide and start arguing about details so I think for campaigning organizations just to make a very strong blanket statements about all types of subsidies well I think that we have to think outside the box it's not just that subsidies are important for climate change are important for different sectors affect the prices, affect the markets and in developing countries the climate change is not the only problem we have so avoiding subsidies can help to other problems to the economy, to a market, to prices so maybe it's important to develop policies considering different aspects to be more rentable for the people talking about poverty or markets and not just climate change four questions try that and then one at the top I radix Stefanski from University of St Andrews and the Oxford Center for the Analysis of Resource Rich Economy so I just want to ask you maybe you might know about this a little bit more measuring fossil fuel subsidies is just one type that's just one type of subsidy is there some mechanism around the world in the United States that measures other types of subsidies and that might help us also understand whether subsidies like that are big potatoes or small potatoes so I'm sure we're subsidizing fossil fuels a lot but maybe we're subsidizing other stuff as well it would be interesting to compare I'm Neil McCulloch from myself, independent consultant I wanted to ask a quick question to Kennedy I missed your definition of what fossil fuel subsidy reform actually entailed and so therefore it was difficult to interpret your odds ratio results but the most peculiar result from your odds ratio was that it seemed that the provision of overseas development assistance gave rise to a 90% reduction in the chance of a fossil fuel subsidy reform maybe I misinterpreted your graph but that would be surprising and interesting and there must be a story behind that I also had a second question for the whole panel which was really to do with what are the sort of circumstances that give rise to fossil fuel subsidy reform I think it would be fair to say I'm a development economist and I think it would be fair to say that climate change does not feature at all in the thinking of most fossil fuel subsidy reforms I've lived for eight years in Indonesia and was heavily involved in the analysis around the Indonesian fossil fuel subsidy reform and I assure you that no one mentioned climate change is the reason for doing it one of the reasons that these things get done is because of fiscal crisis the initial discussions about the fossil fuel subsidy reform in Indonesia happened under the SBY presidency when they were spending 30% of their budget on fossil fuel subsidies and they realized that really wasn't sustainable other reasons might be because you wish to shift resources into the things that you like for example Jokowi's fossil fuel subsidy reforms are primarily because he needed a mechanism for funding his health card and education card reforms which are key platforms key components of his political platform so I'm wondering whether you can give some hints as to the sorts of things that actually drive fossil fuel subsidy reform when it does actually happen Franz Matzner with NRDC in the US and I'm really intrigued by how we mix the campaign element of this and so as a campaigner in the US just one observation is one of the reasons we don't make the progress is because subsidies make a great political weapon but we've and so both sides use them and we mix and match our terminology of this you know one person's subsidies is another person's incentive so I do think that the definitional aspect of this matters to some degree because we've run into this problem a lot like it's a subsidy when it's going to something you don't like in our case fossil fuels and it's an incentive when it's going to wind and solar and we don't have a great way to distinguish those pieces and both sides like to use that as a political weapon but nobody really wants to do the forms because the scale of the money at stake that's being identified is usually too small at least in the US to actually pay for that thing that they want so it becomes just a horse trading and so so putting that together as an observation I'd love to get some advice from the panelists on how we could distinguish incentives from subsidies and also find a way to kind of as a community have a bigger number to play with because the bigger the number the more that's been the problem the president identifies $4 billion and it sounds like a lot of money but it doesn't pay for healthcare reform it doesn't pay for the big ticket items so how can we make that number as big as possible and distinguish it from the good stuff and one from Laurie sorry and one down here okay, Laurie that's two ODI and this one from down here and then we'll stop so it's Laurie from ODI thank you very much for your interesting presentations it has to be quick yes, so for me fossil fuel subsidies both to production and consumption really raised questions about the distribution of the benefits and costs of fossil fuel production activities and also about who carries the risk of investing in these industries and I think that in many countries there are still very big misperceptions around this for example in the UK the government is now providing a net subsidy to the industry while a lot of the big share of the population still thinks that it's a big source of government revenue so how do we actually shift the narrative how do we make sure that we get a wider understanding of the distribution of costs and benefits of fossil fuel production and consumption sorry, back to back ODI Sheila Whitley I'm with the Overseas Development Institute I'm very quickly I'm wondering if actually shooting myself in the photos I've started to work almost exclusively on fossil fuel subsidy reform if actually in the case of countries where climate is important that we may have leapfrogging over subsidy reform where it becomes much more of a focus on moratoriums climate tests other tactics to actually undercut fossil fuel production that might make the subsidy fights irrelevant in the context of climate and then here did you or I may misunderstood perhaps considered among other things prices and interest rates I didn't see interest rates if not do you think that it will change the calculation of the present value of and for so do you think that the reduction in subsidies so called subsidies will help in the reform we see that perhaps the reduction of subsidies will be compensated with reduction in taxes and royalties so go for it who wants to start do we need a mic down there there's a lot of stuff out here so I'm going to do my best to respond I think there's some themes that I was hearing so there are measures for all types of subsidies that was your question and indeed you want to do that you want your fiscal system you want your treasury you want an integrated budget that's looking at the ways government is using its power to redistribute resources and you want to be able to measure it so tax expenditures are credit stuff that cuts across sectors it's not granular enough you can't see which sector you can't see which projects that would be a huge improvement but that relates to the big number issue some other industries also have pretty negative effects also contribute to climate change and if you could get an integrated metric of the subsidies to energy plus energy intensive industries it would be quite useful I disagree with this whole question of differentiating incentives and subsidies I think it's not a useful discussion when in solar gets subsidies those subsidies are put in place for a particular reason just like the subsidies to oil and gas were put in place a hundred years ago for a particular reason and you know then everybody says well you know you're treating this sector differently than that sector it's fine to just say I believe this group should be subsidized and here are the reasons and then fight that battle and I think you're going to end up in a better place than trying to pretend that somehow you're different in terms of this moratorium and spending cuts I think it's an interesting strategy when you start winning all those battles maybe you can step back on the subsidy front one concern I have is that moratoria work best for publicly owned resources and lots of production is on private lands I'm also concerned that if you have a state owned energy company it's going to be very difficult to get that state to cap down on your supply so should be pursued could be useful but I would continue to work on both fronts so in general fossil fuel subsidiary reformers of course it's not by itself a game changer so it should be viewed as part of a suite of policies which also include mitigation measures for the losers of this reform which include green economy transition which include other sources of revenue for the government not just the fossil fuel industry so it's quite a big package of measures and the beauty of fossil fuel subsidiary reformer is that it's self-sufficient in itself in the sense that if you implement it you save money so you don't need climate change you don't need other arguments and that's what has worked in the past so the narrative this is rather to your question the narrative about fossil fuel subsidies has been historically very strongly influenced by agricultural subsidies and the definition we use in the WTO has been designed with other industries in mind so agricultural subsidies are not a very inspiring example but we can possibly learn something from them and it's billions and billions dollars as well so with your question with interest rates so there is a very wonky aspect of fossil fuel subsidies which is a concessional element of credit support for public finance it's very difficult to measure there are conceptual approaches how you can do it but yes companies especially state-owned enterprises very often get access to cheaper finance so this is an area where we can hopefully do more research bring more transparency of course this will increase the number and talking about increasing the number I think the best way is to treat both production and consumption subsidies together but there is a danger of increasing the number to the level where it stops making sense and unfortunately this is some of the criticism of the IMF estimates that includes externalities into their definition it's not like it's devoid of sense but it's not money that you can reallocate for other purposes so in this sense getting a bigger number can shoot itself in the food so we have to be careful about this well considering that in Mexico the company who produce oil and electricity are a national company so when they give the subsidy they are going to the subsidy to their own companies just the transfer of the well they sell the input in a low price so that's a big problem and maybe the first impacts are going to pass when the electric reform begins and the activity is because the private companies I'm not really sure that they agree to sell their input in low prices so that will be very interesting to analyze the first oil prices that they sell to the other companies and the impact in electricity prices so I think that's the most important impact so I think I'll respond to the very interesting question on how I defined a policy fossil fuel subsidy reform taking place so my conceptualization had two qualifications so one it looked at it as a national law or policy that is a national legal framework and number two from the database that I got it all the laws that were there had a relation to climate change whether implicitly or explicitly that was qualification number one qualification number two was because that database has the laws and policies disaggregated in different segments whether energy demand, energy supply red plus etc so I looked at the energy supply one so for those two qualifications we could get a strong approximation not a perfect fit but a very strong approximation to the hypothesis and secondly the peculiar thing about ODA was very interesting because one of the very strong arguments in literature is that the reforms are a very cheap economic tool or rather low cost economic tool like you remove the subsidies from maybe especially for developing countries you remove the subsidy from oil and you invest in more pressing needs like education, health etc but if someone else is paying for that why should you and secondly so that means like if you have government assistance to pay for health to pay for education there's little incentive to take that money from fossil fuel subsidies and put it there and I think secondly as well reforms are a very political thing and they're very much linked as well to the political cycles so most of the time and I think it was rightly said so the reforms are not especially for like climate change related things but they're more political in nature for example the politicians will have low cost energy which is better for them especially for their election prospects so for me that was my tentative argument but I'm very much open to better arguments as to that peculiar finding thank you Thank you very much Kennedy and I think I would encourage everybody it is an academic conference and part of that is about peer review and learning so speak to the panellists and talk to them about their papers and help share ideas I'm just going to say very quickly to wrap this up that yesterday we found it really hard to get to the pub that you'd organised for us to go and have a drink at before this conference because they were filming transformers and they were filming it here in Oxford and when I was a kid it was robots in disguise transformers robots in disguise now production subsidies are a bit like those transformer robots if you can find them and if you can identify them and you don't really know their impact on them on the outside you really have to sort of get under the hub to figure them out and to work out what reserves they unlock upstream and how to undo them so like transformers we also know we've heard here today there are goodies and there are baddies as well and some producers subsidies are much worse than others especially the ones up front that Yvette talked about but not all producers subsidies are bad and you know this is what you raised as well about subsidies for solar and renewables and so on so that's exactly what our panellists have helped us to understand today get to understand these transformers producer subsidies they start right at the beginning of the energy chain and help us to understand how we can beat them and how we can change them so let's really thank the panellists in a traditional manner also get them out later in the 70's the movie comes out in 2018 so we can be here at 4.25 for today's last session I'd like to start this session which is on equity by paying a small tribute and in fact by dedicating the session to Paul Bear who is a friend and colleague to several and maybe even many of the people in this room Paul was a deep and passionate and insightful thinker on climate equity and his ideas have infused the thinking that went into putting this session together and indeed his ideas have infused the climate community with a deeper understanding of climate equity and so with the will to carry on the struggle that he was fighting so passionately for I'd like to open the session so this session is on equity and just transitions and the first question that we're going to try and elaborate on a bit is what is equity in the context of climate policy and specifically supply-side policy we're going to try and bring into focus across the course of the several panelist presentations what are the various dimensions that arise how can we make it more concrete and understand it a bit better and the second is we can define what equity is does equity matter we like the idea of equity but even if we can define kind of a broadly satisfying understanding of what equity means with supply-side policy so what does it matter so here I'll cite the IPCC because we always like to cite the IPCC it's kind of comforting in a Pavlovian sense they said to paraphrase agreements that are widely seen as fair are more likely to actually work and that gets back to a point that was made at least once maybe a couple times this morning that climate change is a commons problem no country can solve their own climate change problem any country's reduction in their emissions or reduction in their supply of fossil fuels doesn't go very far as far as solving their own climate problem even if you're a big country even if you're a US or China what you're really trying to do is engage in a global cooperative effort because a global cooperative effort is the only way we can solve the problem and if you want to try and help bootstrap a global cooperative effort you're only going to be successful if you're seen as doing your fair share and if you're not then other countries will see you as a free rider and their more most sensible course going forward would be to invest in things other than suppressing their emissions and suppressing their supply and instead focusing on their own development and dealing with the increasingly inevitable impacts of climate change so with that I'd like to start with our first presenter which is Navroz Dubash Navroz is one of the leading thinkers on climate change in India he's the director of the climate program at the center for policy research he's a lead author in the most recent IPCC assessment in the chapter on national policies and in the synthesis report which I'm really glad that we're dedicating Paul in this session so I am going to in the time that I have can we get so what I'm going to try and do is give some content to this idea of equity through the lens of one country which is India not the only sort of country that deals with equity issues by any means but one of the sort of bigger perhaps countries that have a big role in shaping the debate now I want to start actually with a it's the PDF it seems to have messed up sorry folks maybe I'll use the arrows in that it's messing it up but I'll do what I can with what I have okay where I want to start is to talk about and I hear this in this discussion here today as well what seems to be an emerging very important global narrative around the fossil fuel transition and in that narrative what is the role of India right so the kinds of stories we're seeing in very important research articles I'm going to give you a few of these quotes the growing use of renewable power sources but rising emissions from China India and other developing nations are swamping that progress this is from science a very nice paper by Stecco and all I think he's here actually today which says a global renaissance of coal driven by poor fast-growing economies and then of course we have the Indian minister who sort of plays into the story by talking about how we're going to target a doubling of coal production to a billion tons in the next in the next five years now there's also sort of research that backs all this up so what I have here is a slide from BNEF and this was shown actually in an earlier session in the afternoon which shows that India is on track to actually increase its emissions by about 112% compared to 2010 levels so what this kind of narrative is growing towards apart from the very important point about fossil fuels is a story that says the only thing that's really important is what happens from here on out what happened before doesn't really matter what the context is need not necessarily matter and so I think what I when I've seen this over the last couple of months I've been trying to ask myself what makes sense in terms of narratives that emerge from developing countries that take seriously both development but also climate change that kind of bring those two things together so today I'm going to try and give you four elements what I think a useful narrative might be for India and I might be hamstrung by the fact that the bottom of my slides are being cut off but I'll just tell you what they say so the first part of this is what Shivan started by alluding to what happened before today 2010 which is the year in that BNEF study actually does matter and there's lots and lots of work on this the most important of which is actually the work that Shivan, Tom and Paul have done together which is represented here and the India story looks very different by this graph so these are the green part of these graphs are fair shares and India's INDC projections are comfortably within those fair shares and it looks a very different story if you look at this graph versus the other graph Indian research the yellow slice here that's cut off is India Indian research on the carbon budget says well India should get about 17% of the future carbon budget if we get 17% it would more than accommodate the kinds of numbers that the BNEF analysis shows so obviously we all know there are many ways of slicing all this up but the point is that story about historical responsibility and responsibility the UN FCC principle of responsibility understood as culpability is still very much sailing to the discussion and some of the new narratives I think are at risk for getting that the second, this is a more problematic cut off but we'll try and deal with it is that the context in the starting point matters a lot so what I tried to do here is I said okay what if you take on this axis is per capita, mean per capita income of various countries and on this axis down here which you can't see is greenhouse gas emissions per capita and essentially what we did is we looked at this for a number of years so at the bottom you have to imagine the axis down here that's 2003 2011 down here so let's start up here this is the US and the per capita emissions have been decreasing but of course at a very high level and the interesting thing is the decrease in per capita emissions doesn't do a whole lot to income whereas all the countries down here and India is actually down below this in the black border down here the lines are pretty much vertical which means that a unit of additional GHG is giving you an awful lot more in terms of income so where you are on this kind of plot really matters if you're down here perhaps you do a lot more with every unit of every ton of fossil fuels so that has to play into how we think about the sort of immersion narrative in a sense it's a different view on the old capability part of the CBDR RC principle so this is the second point that I want to want to make the third point then is to turn it around a little bit and say okay it's not okay to only talk about the context, history, the fact that India is in a difficult position but to also say what are the hard questions a country like India has to ask about its own future so we basically have been looking for the last year or so and what Indian researchers and other researchers have been saying about this future so this is now a different gloss on responsibility so responsibility as culpability versus responsibility understood as duty so we're trying to look at both sides of that responsibility concept and interestingly in this slightly confusing graph all the solid lines refer to basically reference scenarios for 2030 or 2031 or 2032 somewhere in that range the two green lines represent the envelope of policy scenarios and we looked at about eight studies and multiple scenarios so the first thing you see is just the enormous range even in the reference case this is actual current emissions so according to this India's emissions will double or maybe triple depending on what study you look at which again sort of echoes some of the the points about the quite correct care with which one should interpret model results that we talked about this morning the policy envelopes some of them actually overlap the reference envelopes and the reason we broke the reference envelopes up into two is because there are two different time periods when people when the modelers use current use scenarios so the current policy circa 2011 or the current policy circa 2014 with the latter being much lower now in the policy scenarios you see one all the way down here which is the only one that shows a slight increase in greenhouse gas I should say this is just carbon from energy and industry most the rest are up here right so what what this seems to say is very few people think that India can get to 2030 without at least some carbon emissions probably close to a doubling this is where everything is clustered and if you have and and and the other point that you take from this is maybe you can do a lot better than that say 150% increase with some very serious policy measures and it's unpacking those policy measures that I think is the hard work that we have to do how much time do I have left all this said you know well let me let me make one point when I go back when we look at all these the big difference between all of these different lines is actually the demand side if you actually can bring down your demand levels then India's quite ambitious renewable energy targets take you a long long way if you don't bring down demand there's really no way other than a lot more coal and how much more coal so this is those same model results with the coal numbers in grade pulled out and again coal according to the reference cases goes up two and a half times give or take depending on the more modest rate reference cases maybe doubling in the policy cases you're still looking at at least very close to a doubling or a little bit more than that so this is again the question is are these models the best we have probably not but this is the current state of the knowledge and I think this is the kind of questioning that's going on in India the other point I want to make is these are sort of top down models these are the folks who basically say let's look at capacity that's under that's being planned and under construction and the numbers vary enormously depending on what you start with so this is the proposed line I think this is carbon action trackers proposed coal plant line and this in here 134 gigawatts is the approved projects what's unfortunately lost down here is I have a separate set of separate bullseye for 2022 and that's very interesting because it shows a projection for 2022 that says if you start with serious demand side measures you can keep it as low as 65 gigawatts and if you include increased RE uptake it's as low as 50 gigawatts whereas if you look at it just in terms of the number of plants that are on the anvil in some way or shape or form it's 110 so my point is there's an enormous range and we have a lot of studies out there right now talking about how sort of the coal bomb and so on and so forth we have to put that in context and we have to talk about in particular the uptake of that amount of coal because I think some of these discussions about stranded assets and so on are very salient the fourth element of all of this is the story about equity at home which often in the Indian discourse tends to get set aside and I won't go into this is work in progress but it's basically an update of quite a famous study by Chakravarti and all this 1 billion large emitter story I get the message so but this basically updates that with much more fine-grained data and shows that you'll actually have a lot more high emitters than you otherwise thought on the order of 10 million now and on the order of 20 or 30 at least by 2030 and this is probably going to go up as we get some new data so I'm just going to end here I want to just make a couple of points I think in the post-Paris world equity is about the stories you tell the idea of getting some sort of everybody agrees to this as our version of equity that's long gone and so people are basically weaving equity into a whole set of different narratives and how we tell those stories and how we support them is really important internationally I really think this fossil fuel transition story that's emerging is a very important one the supply side story is very important if it is not leavened with some considered attention to equity I think it could really backfire because what it does if it says it's in the ground and that's true of all fossil fuels everywhere irrespective of context and history what are you doing you're basically creating an incentive to grandfather yourself and join China for India the obvious thing would be to do would be to say look all of this keep in the ground stuff will take another 5-7 years to get some momentum let's dig it up as fast as we can and let's lock in as much coal infrastructure so we have the flexibility you really risk creating that kind of dynamic and I think that's very problematic and then the national narratives then is to both locate country in historical and comparative context and ask these hard questions about the future including the internal equity story excellent thank you Noah please stay here if there are any clarifying questions hold them and you can catch the rose and the breaker and the reception and I'm going to use moderator's privilege to ask a question one of the main points you're making is that really there's a whole span of different fossil futures for India and more and more we're hearing a framing that really we're in a post-carbon development world the coal benefits are huge of going away from carbon the bus-bar costs of wind and solar are going through the floor and they'll be coal anyway so to what degree is some degree some amount of continued use of fossil fuels and maybe expansion of coal actually necessary for development in India and if there is another path what would make that possible this came up again this afternoon and as you know Shivan and many of you I've been banging on this co-benefits drum for a few years and I believe very strongly in it the challenge really is that I think that looking at 2030 and out if we haven't solved this problem by then we haven't substantially transitioned we're done anyway the real difficulty is can you make the transition over the next 10 to 15 years and that's where it starts becoming hard so for example a non-fossil fuel based electricity strategy and India has put these frankly quite outrageous targets out there of 175 gigawatts nobody's sure whether they can actually be achieved at home but even if you do achieve them we'll make a lot of progress towards them based on the kinds of numbers we have now it doesn't look likely that you could meet India's development needs and the big story in India at the moment is a job story right so India is going through this demographic transition we're talking about having to generate between 10 and 12 million jobs a year no other country has done anything like this without a serious manufacturing push manufacturing means industry, industry means steel cement and so on and so forth a lot of energy so the ask is really tough and renewable energy but the project at that pace seems difficult challenge we did a back of the envelope calculation and said that if India does its 40% fossil fuel free target for the INDC it would basically displace somewhere between 5 and 7% of India's 2030 greenhouse gas emissions that's it on the other hand that 5 to 7% is about 60 to 70% of South Africa's entire INDC okay so that's the kind of dilemma that we face in India our next presenter is Neuma Basi former director general of friends of the earth international, current director of the health of mother earth foundation in Nigeria and oil watch international and also I should say recipient of the right livelihood award which many of us may recognize the alternative Nobel Prize for his steadfast support of the very honor to have you join us thank you very much good afternoon brothers and sisters don't respond to greetings all right that's okay now I'm sure you've seen enough graphs for today so determine not to use not even one graph but I love those graphs especially the one sitting above the roof now the fossil fuel industry is incapable of operating in any sense in a way that's equitable there's no equity with the sector it's a sector that depends on exploitation without responsibility is it was form of extraction was form of relationship with people with the environment and with mother earth generally so talk about equity with regard to fossil fuel industry or dependence on fossil civilization is neither here nor there see something is operating in the climate negotiations because the climate negotiations as epitomized by the Paris agreement has nothing to do with equity the cardinal point is the nationally determined contributions and as said earlier this is not based on a global scientifically calculated requirement or action that needs to be taken to keep the temperature at other 1.5 or well below 2 degrees there's nothing it's just a shot in the dark you do what you feel like doing and I do what I feel like doing and so it's business as usual in a way that is so nice and so it's a real problem we're confronting to have a big big problem and it has historical roots because it appears that mankind always looks for the cheapest source of energy and if you can take it either through negotiation or take it by force and so whether it's energy from humans or from fossil fuels or whatever is the same paradigm the same mentality and the worst thing is that because of the world including where I come from we are forced to adopt the catch-up mentality without interrogating whether this is where we want to go who defines development, who defines growth the GDP service has been called by an intellectual gross domestic problem because it does not really measure up the truth about what's going on in any country and so that's the real problem we have this problem of the narrative and the historical realities and so oil, coal gas as I said earlier exploitation without responsibility resulting in massive human rights abuses in massive livelihood destruction and just this morning during the first break time I got information from Nigeria that there's been a massive pipeline explosion in the capital of Goni land in a place that at a point just a few meters away from where the military surveillance team is camped and it really really broke my heart because the governor of Nigeria just agreed to share with a major corporate in this area to begin a cleanup of the territory but at the same time we're still having these explosions on such a regular basis which are maybe worse than this by this time but it's not only Nigeria, I spent a lot of my time going around Africa and some parts of the global south just encouraging communities that the hopes they have when extractive activities about to start in their territory will be dashed and so I tried to get people prepared for the worst scenario and I've seen it in the global north I've seen a community in Rhineland where the whole community has been relocated where church was desecrated so it could be demolished for mining coal so when you find an industry that doesn't take anything sacred, doesn't respect territories, doesn't respect people it's just concerned with profit it's very difficult to deal with this kind of industry except I mean you cannot you cannot find a way to say okay we can do this responsibly, it's impossible there's no responsible mining I'm sorry to say that I'll take that back I have to get responsible mining now three cases Lake Tukana is the biggest desert lake in the world and it's located in Northern Kenya the environment is almost like a lunar landscape, beautiful pristine and guess what, when you look from the air it looks blue on the ground it's green and oil has been found around there and it's a UNESCO heritage site the Rift Valley of Uganda is a national reserve where mining should not take place and these are the same places where the oil industry is busy trying to extract they're extracting already in Uganda and luckily for Tukana as my friend would agree with me I think the people have managed to I get the government to say no drilling in Lake Tukana but in the whole region they're drilling exploration and without any barrier being extracted we're already having some environmental issues there in Ghana half a city it's the name of the territory along the coast fisheries purchase Ghana for one billion US dollars a year oil has been found where a lot of the species are endemic and fishermen cannot get to those areas anymore because it's a military that doesn't allow fishermen to get to where they should catch the best fish and so we're forced to compare the economy of oil and fisheries and oil is not going to bring Ghana one billion US dollars a year anytime soon oil will not employ up to 5000 Ghanaians but millions are dependent on small scale fisheries keeping their families and livelihoods and all this is going to be destroyed because somebody is looking for crude oil and so we some of us we've seen that because in Africa you have to search very hard to find a country where oil is not being either prospective for or is not being explored or extracted already and a lot of this is offshore except for those who are even the inland those who are landlocked oil is found around lakes and rivers and so we're thinking of building resistance around with the fisher folks around the continent and all across the continent so there's a movement that is growing on fish not oil using the example of Ghana and this is what we believe can be replicated around the world because I know some friends in Lofoten, Norway a very high fisheries area they don't want drilling offshore Lofoten either and so the movement against extraction can be built from different strands and different perspectives other from the economic argument or from the livelihoods argument from agricultural arguments we have all the arguments to stop extraction the only difficulty is how do we how can we survive in a fossil fuel civilization a former foreign minister of Saudi Arabia once said that the stone age did not end for lack of stones oil age would not have to end for lack of crude oil now we talk about keeping the oil in the Ghana family believe in this we've been campaigning on this even in my country that depends almost 80 percent 85 percent on fossil fuels we've been campaigning on this very strongly people have succeeded in keeping oil in the ground since 1993 more community the first shell out of their territory they still have explosions and pollution because there are pipelines crossing their territory but a small set of people have succeeded in keeping a big multinational corporation for taking oil from their territory I believe this shows to me that it can be replicated around the world don't you think so think so now thank you for agreeing on that now Yasuni ITT was defective in formulation in the sense that it was about exchanging keeping crude oil and getting half of the money now keeping crude oil so it should not be dependent on funds on I mean I have some because of the global fund proposal that we saw this morning the real thing is to preserve mother it preserved life we are kind is brilliant enough to look for another form of civilization so the economic consideration and all this we're just going to keep us locked into the same trap now so always international proposed our next zero countries in line with our next one of the former formulation in the Kyoto protocol so our next one are the rich polluting industrial countries such as UK can feel the pollution you can't feel it okay of course you can well come to a go and you see the pollution if you come to the bottom of the pipe where shell is extracting you look at the whole lake the whole water is covered with crude oil and it stays that way for years and I don't have time to talk more about that but our next zero is proposing that the UNFCCC should recognize territories and countries and communities who have kept or make it possible to keep fossil fuels under the ground I mean this is real climate action it's not artificial carbon capture sequestration and storage you leave it where it belongs don't bring it out and capture it just leave it there I think I believe I'm so happy that the international criminal court has decided that first extractive industries and those who destroy the environment cannot be brought before it and I think it's time to take the chief executive of these corporations before that criminal court thank you thank you your work has had its impact and had its power because you're bringing the concerns and the voices of people in these areas where extraction is happening to a level where decisions and policies are being made in part there are also within these communities well I ask you within these communities do you also see local, fully legitimate voices of people who are being impacted who feel compelled to support extraction because of livelihoods or because they see it as their way to expand their energy access do those voices exist and to the extent they do how do you reflect those voices I don't ask you a fair question that's my job okay yeah of course there are some voices in communities especially in places where fossil fuels are just discovered people always believe that look we're going to get the best of everything economic improvements, livelihood improvements we're going to have all the fastest we need, we're going to have the best of everything and I just give it a few years and all is gone so those voices of course everybody has a right to demand whatever they want to but it never plays out in reality and so my own unfortunate job is to continually douse the hopes of communities and individuals who think that they can be sustainable extraction of fossil fuels I'm not seeing it anywhere I'm not seeing it in Canada, I'm not seeing it in the US I'm not seeing it in Germany I'm not seeing it in Nigeria in South Africa people are working coal mines on fire for decades and people are having sinkholes and all kinds of things happening to the environment so anybody who thinks I agree they have a legitimate right to think they want to think about it's all leading nowhere Next speaker is Samantha Smith very happy to have on this panel she's currently the director of a new Just Transition Center but she has a very interesting past this work is in collaboration with ITUC previous lives she was with World Wildlife Fund heading up their Climate and Energy International Program in another previous life she was with Stat Oil Energy helping develop CO2 projects and wind projects so Sam we're very happy to have you on the panel and I don't know how you'll manage to balance all those different tasks but please do so thanks for that Siobhan it's true I have lived a few different lives but I'd like to think that they add up to something consistent so as you mentioned I am the director of a new center that's been established by the ITUC and the ITUC is the peak body for almost all of the world's unions so its union affiliates represent over 180 million people in 165 countries and I wanted to just for many people especially my brothers and sisters from North America unions aren't so familiar right I grew up in the US I studied unions at university and when I moved to Scandinavia and there were real life unions it was really exciting for me as a person so I just want to be sure that we all understand what we're talking about when we talk about workers and unions so for many people in the climate field when we think of workers and unions we think of coal miners for example we might not remember that coal mining was and in many countries still is one of the most dangerous jobs around with many large scale industrial accidents average working life for coal miners it's really quite short because of people's exposure to coal dust and injuries but actually unions encompass almost every kind of formal and informal worker and labor that you can think of so everyone from women who are working in the garment sector to financial analysts to environmentalists parts of WWF unionized to people working in the industry nurses teachers people working in shops the list goes on and on and of course where people don't have the right to organize and to be represented they nonetheless organize themselves so you have agricultural workers waste pickers who are in informal associations that are like unions so that they can have a collective voice and so that they have some power over their working conditions so when we talk now about the just transition I hope we can have all of those people in mind because the just transition as you'll see in a second is not just about people currently working in coal mines or in coal fired power plants it's about everyone who works because climate change is about people and it's going to affect all of our jobs in formal as we try to bring down emissions in a fast way and have industrial transition at a speed that has never been done before so there are many definitions of a just transition all are welcome you know it's a big tent but from the labor movements perspective this is a term that they came up with over a decade ago and what it really means is the social dialogue the tripartite dialogue between workers businesses governments and communities that produces then the plans at all levels from the workplace all the way up to the UN at the national level for sectors for communities that are going to bring down emissions but be sure that people still have jobs and that people whose jobs are disappearing are going to be treated fairly last but not least it's about making sure that no one is left behind so we've talked a lot about stranded assets and as I was listening to that I was thinking about something that we're starting to say in the labor movement about stranded workers in stranded communities and you don't have to look too far to the north of England or to coal towns in the US to see what that's all about so it is not a just transition is not something that we're going to get to through just economic modeling or through a top down discussion people need to be at the table it's their lives and communities that are involved and it's also I keep stressing communities because one of the things that we're hearing very consistently from union members is that they want jobs where they live right so it's not so helpful if your job is disappearing if all the cool new jobs in the wind industry are halfway across the country and far away from the place where you might have a house or have raised your kids now I'm not going to go into the sort of detailed policy driven stuff because as my brother Numa said we've had enough graphs and charts and policy so I won't try to do that but I will say that the international labor organization is social dialogue at the UN level so that's employers governments and workers and they have negotiated guidelines for a just transition to environmentally sustainable economies and societies for all so my presentation is in drop box please don't share it I don't think I have the right to all the pictures but you will find the links to these guidelines and I suggest if you want to know what the just transition is take a look there it's also in the Paris agreement it's in the preamble which discusses the imperative for the just transition of the workforce and finally there is goal 8 of the sustainable development goals also negotiated last year which is about decent work and has elements of just transition so again with all of those 180 million union members in mind I would say most of the trade unions they're members and leaders that I at least have encountered they want action on climate change just like everybody else and people who especially work in sectors that are going to be affected by climate change they really want action so everyone who is a first responder we know we're going to have more natural disasters more climate emergencies everyone working in emergency relief is affected by climate change health workers are seeing the impacts of pollution use of fossil fuels they care about climate change public transport workers really want action on climate change because they think there will be tons of jobs for their sectors and they have high union density so just to say that the interests of workers are a bit different depending on the sector but most workers including people in fossil fuel unions understand what's happening people aren't done and their main concern is what are they going to do in the future how will they have secure lives now workers have demands on just transition and the demands you might be surprised to see are not just about retiring coal workers it's actually about the new jobs investing in the opportunities for decent work the sectors where young people can be trained where they can have careers most importantly that those jobs are good quality and organized jobs so it's not so helpful if you're going from a highly skilled job with a secure contract in North America if that includes benefits for example to a job on a zero hours contract part time not skilled no opportunities to skill up so when we talk about the creation of new jobs also as environmentalists it's important to think about the quality of the job and is that job organized so that people can push back corporate power they want respect for people who built our prosperity because whether we like it or not and living in Norway I can certainly attest to it fossil fuel companies built prosperity in some developed countries and so we should respect the contribution of those workers not throw them away when they're old and their industry is dying but instead be sure that they have pensions and medical medical care we should have a social floor it's important for everybody a social floor that includes unemployment insurance that includes healthcare that includes all the things that make it possible for people to transition from one job to another without fear and finally we should try to formalize jobs so that all of the vast majority of jobs in this world are actually not formal people don't have contracts they don't have rights they don't have laws so especially in the fields of agriculture but also everyone who's going to be a first responder in disaster relief those jobs need to be formalized now I see the signs so I'm going to try since I know we're almost done I'm just going to try to be really fast I just wanted to say a few words about the ethical dimension of calling for leaving fossil fuels and for this very fast transition you should know that as I said many people in the labor movement are completely on board with that someone who's worked for social change for a good part of my life it's very exciting to see that things are starting to change and despite some of the things we've heard today I actually believe we're in the middle of a gigantic transformation but having said A having called for divestment having called for an end to fossil fuels we should also say B and B is about making sure that opportunities new opportunities are available for all the people who aren't in work today and for people whose industries are going to have to be phased out because of climate change I'm not going to say that there's this wonderful world of opportunity and climate change is only about co-benefits and opportunities it's not right you're talking about real transition transformation and very difficult decisions but we must be brave enough as environmentalists to take those hard discussions and to come up with the kinds of plans to support people in developing plans for their communities their companies their sectors and their countries plans that don't just talk about emissions and cost curves but that talk about what are people going to do in the future and how can they have safe and decent work thank you Sam what you say it makes so much sense it's so compelling we need to worry not just about climate impacts but also the impacts of the climate transition itself and how to help those who will be affected but it almost feels like there is a conspiracy of silence there's a real blind spot in the climate community who loves to talk about co-benefits and loves to talk about all the jobs in the green economy but arguably who have been really silent on the issue of workers and just transition and I just wonder if you could speak to why is that what dynamic leads to that so it depends which part of the climate community you're talking about so if you're talking about people from social movements or organizations that work a lot with social movements like Friends of the Earth they're very active on the issue of just transition and jobs job justice and community justice right but if you're talking about mainstream environmental organizations like my former employer WWF I think a lot of it is actually a class issue and an unfamiliarity issue because many people who are employed by green groups especially in the north are like myself middle class or professional background if you're from the U.S. as I said you don't really haven't seen too many unions and you might not think of yourself as a worker as someone who could and should unionize and you might not think of workers as people that you know people in your community people in your family so I do think that that is to some extent a barrier I also think that it's when you start to get to fairness and what's the right thing to happen we see it all across the climate shop then the questions start to become very hard it's easier to engage with numbers and with modeling so I think that now that we're at the point of implementing now that we actually have to do where we have five years to get emissions down really quickly we must be courageous enough to push away these barriers of class discomfort and to have the hard discussions the last two things I want to say about unions is conflict is not always bad if you're a trade unionist I mean people use strikes and walkouts and so forth as methods of negotiations they're not afraid of conflict but the point is that you can have conflict and then you can reach agreement afterwards and the second thing is that unions are democratic so all of the positions that I've talked about on just transition and climate change those have been adopted through voting of members of unions and adopted all the way up to the highest level union leaders are generally always elected and they're elected on a platform so you know when you're negotiating with unions that's the basis for their positions fantastic thanks Sam thank you very much our next panelist is Simon Keeney who's a professor here at Oxford in political theory and really has written many of the seminal pieces on climate inequity and in fact I consider him very much to have influenced the way that I think and the work that I've done so Simon, I'm honored to have you on the panel thank you very much Stephen for that kind introduction and for the invitation thank you also for mentioning Paul Bear who's work with Tom Athanasio and yourself I greatly admire so what I want to do in my so 10 minute slot is do three things firstly I want to say why we can frame the issue about stranding fossil fuel assets in lots of ways a scientific way an economic way a political economy way I think those are legitimate important ways but it's also a question of ethics and justice and I want to bring out exactly why that's the case and then the second and the third bit are to put forward some principles for what you might call supply side ethics so why should we frame it as an issue of justice justice by which I mean distributive justice is about the fair distribution of burdens and benefits so whenever you get a policy decision which confers benefits on some and disadvantages on others like it or not whether it's inconvenient to point it out that's an issue of justice and one thing we need to consider then is what's the justice distribution of those burdens and benefits if we take as a given which I think we should that we have to keep a lot of fossil fuels in the grounds then we have to confront a series of questions about just rights to extraction who has the rights to extract the remaining fossil fuel reserves how much on what basis who has denied that and why and should there be compensation for those denied rights to extract just fleshing this out a bit more when we allocate rights to extract on what basis is it an optimization basis which was mentioned this morning Professor Eakins is it a function of past extraction if you've used a lot in the past or extracted a lot you should have less now is it to do with the level of development is it some other criterion these are questions of justice the second one is compensation if you're told there's an opportunity that you were relying on to pull yourself out of poverty are you entitled to compensation then there's a question of whose rights you know who actually owns the fossil fuel reserves is it the private land owner or a company is it the government so it can sell them off and then pocket the gains is it the members of the country or is it the world as a whole are we going to be cosmopolitan and think these resources belong to humanity now my point here is my first contention is however one likes to look at it as an issue of justice because we have to confront these questions we can ignore them we can not give answers to them but they're still those questions so I don't think we should ignore them I think we should have an ethics for the extraction side or the supply side so a lot of climate ethicists have taught a lot about the demand side so who has the right to emit how should we distribute emission rights these trading schemes how should permits to emit be distributed if we have a carbon tax system what should be done with the revenues generated those are all kind of ethical issues on the demand side but we clearly have supply side ones but I think the kind of values that people often invoke on the demand side apply here in a different format the one and this follows on very nicely from the previous presentation is any just transition must honour human rights so if we're going to have an outcome which we will where some people's assets are stranded and they can't use them then we need to find a way of stranding them such that their human rights are honoured now what would be the implications of this when first thinking about this it struck me that some people will say will people have a right to develop we have this limited resource we should allocate privileged access to extract fossil fuels to those living in severe poverty so fossil fuel rich developing countries though in other words if we appeal to things like the right to develop should we allocate extractive rights primarily to those in developing countries so there's a couple of reasons why I don't think we should go down that route or at least it's a lot harder to make that argument than you might first think the one is this argument assumes that if you respect the right to develop it entails a right to extract natural resources there but if you're thinking about extraction because of domestic consumption because you want to use the coal for domestic use so this argument only goes if you haven't got access to other sources of energy so if we think of hydroelectric or solar or geothermal or wind or other renewables as soon as we put those into the equation you can't just go have a right to develop therefore have a right to extract you can't for a reason 1b which is there might be other ways to enable people to develop that don't involve using the natural resources country so it's already been mentioned several times already but the soon the ITT kind of initiative could be used as a way of facilitating development but delinking it from extraction the other comments I just want to make are if anyone thinks that appeals to development ground extraction rights then remember the first principle is about human rights and those are rights of individuals and so they have to ensure that any proceeds and this is true whether we have a soon the ITT type approach or another approach would have to to individual human beings not political elites who can pocket the money so for this to genuinely uphold the rights it has to be done in a way that meets people's rights to food water employment so forth the other comment is this could only be a short term approach so what I'm trying to say here is I think the right to develop has to be a fundamental part as indeed are other rights of a transition to a low carbon or zero carbon world but it doesn't entail necessarily that we just allocate extraction rights to fossil fuel rich developing countries but what about another principle historical responsibility now we're used to a kind of a extractor pays principle that says if you've polluted a lot you should pay or if you've omitted a lot you should pay I think there could be an analogue which is on the extraction side which is the extractor pays principle lots of people give you graphs and other people give you pictures I give you bodies of text I'm sorry about that but the gist of it is the more that an agent like a given society has extracted from extraction in the past then the lesser claim they have to the benefits of the remaining fossil fuels the less that a party has benefited from extraction in the past then the stronger they have a claim to the existing fossil fuel reserves or the benefits from them and I just want to stress and the benefits from them because I think this is an intuitively plausible principle if someone has been using a crop and they've received lots of benefits from it and there's someone else who hasn't had the opportunity to at any point it seems a principle of natural justice that the other person who's been denied usage can have a go but what it doesn't I think mean in this case is that they receive their entitlements in the form of extraction rights it just means if you've been denied access to the benefits of this resource in the past you're entitled to use and receive benefits from it in the future it's an ethic of sharing so again I think there are different ways of spelling out this intuition but one of them is compatible with just keeping it in the ground but it says to those who keep it in the ground who've not had the opportunity to use them in the past you can receive financial support and investment because you're forgoing an opportunity to which you're entitled okay so this sums up where I want to end really there's three points one is the stranding of fossil fuel assets inescapably raises questions of justice second is we do need an ethics then for the supply side and then third is I've given you two principles that I hope will resonate one about rights including the right to develop and one about historical responsibility and then try to tease out what that might mean for practical policies up there thank you thank you Simon I find this very compelling not only because it's grounded in basic fundamental ethical principle but that's also how we often act within politics we try and respect human rights and we try and hold people accountable for actions they've taken but in the rough and tumble of international negotiations where where the ethics seems sometimes anything other than an ethical ethic where to paraphrase Andy Warhol's comment that art is whatever you can get away with equity is sort of whatever you can get away with and so how does this link to what we might as a global community come together to agree on right thank you yeah I knowing that you were going to ask something like this I should have plugged this here are like three kind of replies that people have when I was young they used to be a cookery program and someone would do something and then they'd say and here's one I prepared earlier but it's not quite the answer to the question some of it anyway what I want to say is something about the role of ethics then in this because yeah people do stretch ethics and this idea of common but differentiated responsibilities and respective capabilities is a very nice doesn't trip off the tongue but it's a nice framing but and it's an ethical framing but then what turns out is people just twist and bend it to suit their interests the three things I kind of want to say when this are don't dilute the ethical principles here because people fail to comply with lots of moral norms some people kill, some people rape some people steal, some people torture what we don't do then is say okay well a little bit of rape or a little bit of torture is fine we stick to the ethical principle so I want to say let's keep the ethical principles demanding the next thing people sometimes can say is sometimes these do motivate people you know I agree that you know with Keynes here in the general theory where he says economists and political philosophers I'm a political philosopher their ideas both when they're writing when they're wrong do shape ideas and one illustration of this actually is the idea of dangerous anthropogenic interference or dangerous climate change many people who think of themselves as hard-boiled real polity think there's an overwhelming imperative to deal with this I can't make sense of that except as an ethical norm or an ethical value because why on earth would you do this that the best explanation is you think it's just wrong to mess up the planet maybe in itself and for future generations now here reply three is I think the best way to deal with this which is to say look people often do have ethical motivations and intentions to put it and harness it so there's this idea in international relations of norm entrapment people sign something thinking this is meaningless and then what civil society actors can do is latch on to that and say will you promise to transparent governments what are you doing about it or you promise to responsibility to protect what are we doing about it and so I think things like article 14.1 of the Paris Agreement or the dialogue part are kind of opportunities that people can have to say well politicians profess these moral norms here are four of which we can try and hold them to account for those I'm not starry-eyed I don't think this is going to revolutionize them but I think you can kind of tap into some of these moral motives and thank you very much and our final panelist is Greg Mutit a senior advisor at Oil Change International and also author of a report just out The Sky's Limit I think there might be copies out there but if not Greg can provide a URL which is a fantastic report some of which we'll get a glimpse of in this presentation thank you very much Greg I'm going to give you advance warning I do have a couple of graphs but I understand I'm the last presentation of the day so if you can just get through this one and I hope you've all got as much from today as I have I'd like to add to the discussion at this stage the first is to share with you this research that we published last week which haven't mentioned which tries to translate climate limits into what it means for the supply side and then the second is to begin to reflect on the equity dimensions of those limits now probably most of you have seen graphs like this before in fact we saw one like this this morning in Paul Eakin's presentation we compare the world's reserves of oil, gas and coal with how much we can afford to burn we find that it's three or four times as much now the key question that this graph asks is which of the left hand column sits in a green box within the carbon budget and which sits bashed red box as being unburnable but in the limit now we took a different approach to Paul and Kristoff to answering that question and we focused just on the reserves whose extraction is locked in by existing physical capital so we focused on existing coal mines existing oil fields, existing gas fields where the wells have been drilled, the pits have been dug the pipelines constructed so those are what will come out that's because of the capital that's already been invested and we found this quite striking result that the oil, gas and coal just from existing mines and existing fields where everything has already been built would take us beyond 2 degrees C only beyond 1.5 degrees C now the obvious conclusion from that is perhaps we should stop developing new mines and new fields now let's just think this through a little if companies or governments were to develop new coal mines, new oil fields new gas fields what it will do is it will add to the left hand column and that can only lead to two possible results one is it drives us further past 2 degrees C larger committed stock of fossil fuels or alternatively we find governments and others and people in general find a way to limit emissions keep within 2 degrees or aim for 1.5 degrees and a lot of what's in the left hand column becomes stranded assets and remember these aren't just reserves these are reserves that have been unlocked by physical investment in steel, concrete and so on now either way there is no significant social and economic disruption neither is an attractive prospect and so perhaps the most reasonable solution here is when in a hole you stop digging and so that's why we think that's why we propose a managed decline of the fossil fuel industry this oil, gas and coal we're not suggesting shutting the taps overnight as some of our critics like to caricature it what we're suggesting is if we run down the existing reserves of oil, gas and coal that gives us time to conduct an orderly transition a just transition while staying within climate limits now I'm going to move on towards equity my first conclusion there is that we need to stop developing new extraction infrastructure but that immediately raises an equity question which is what about those countries such as India for example which were counting on extraction to drive their development and so how do we square this you know when we look at this chart it suggests there's no room for anyone to develop any rich country or poor country perhaps a way to square this is by requiring richer countries to support a transition in those countries that have less resources of their own the third conclusion it also raises an equity concern which is the left hand column is actually bigger than the 2 degree budget it's a lot bigger than the 1.5 degree budget that implies that not only do we need to stop developing new fields of mines but some existing ones might need to be closed down but again we have the question of which ones I think Nemo pointed out very well that extraction can often have a negative impact on development for the communities who live there so a key element of any solution on equity must be to stop extraction where it violates people's rights and finally as Sam talked about a just transition is an essential part I'm just going to focus a little bit on the second and third of these and think about how equity relates to them now on the emissions side there is a very well accepted and very elegant approach to dealing with which has been developed by Paul, Tom and Shiven primarily and what that does is it looks at each country's capacity to cut emissions each country's historic responsibility for causing the problem and in proportion to those it gives each country a share of the effort that it would need to take and that allows conclusions such as the grey boxes here what would be a fair share for each of these countries marked on the map and compared with their Paris INDCs now Shiven and I have been talking over recent weeks about how could we develop this for the supply side if there is going to be action on the supply side of fossil fuels then equity has to come into it and can we work towards a similar framework to what has been developed on the demand side we've got some very initial ideas on that which I want to share with you but I'd strongly welcome any feedback as to whether this is a useful frame whether it's going in a good direction but firstly I want to observe that there are a few difficulties with the supply side when we think about equity the first is that some countries have geological resources of fossil fuels and others don't and if we're talking about equity why should countries that happen to have resources deserve any advantage from that that's the first problem the second problem is that the economic benefits are less closely correlated with past extraction than they are with past emissions this leads me to wonder about whether the historic responsibility for extraction is as useful in the supply side case let me give you an example that I know a little bit about which is Iraq now Iraq in the 1970s nationalized its oil industry at almost exactly the same time that oil prices went up as a result Iraq was able to develop the best healthcare and the best education in the region it developed its infrastructure and Baghdad became prosperous during the latter part of the 70s Saddam Hussein increasingly used that revenue and the political power it generated to repress much of the Iraqi population in 1980 he started an 8 year war with Iran that did considerable damage to both countries and then 10 years later he invaded Kuwait the Iraqi people suffered a lot as a result of a regime that benefited from the the rents from oil now I wouldn't look at Iraqis as having benefited from those rents so perhaps we need to question the linkage on the supply side the other point of course as Nemo has pointed out is that many communities suffer negative impacts of development one other problem I'll just raise here is that when we in the emissions side what we're doing is we're comparing with the baseline now when we move to the supply side there's another problem with that which is that if we set a baseline it's going to be somewhat influenced by how many reserves a country has and we run the risk of what's called the green paradox that lots of countries will want to explore more so as to set their baseline higher before any negotiation happens how do we approach this I think the first thing to say is that there's no right to extract per se any more than there's a right to pollute but there are economic rights and arguably a right to socioeconomic development the way we approach this is that as climate changes a global problem everyone needs to do their part and it has to be solved cooperatively and the way to solve it cooperatively is for each to contribute according to their capacity to carry that load and so when we look at those two requirements from my earlier slide we need to stop some of the existing extraction to move the committed volume back down towards the carbon budget and we need to forego future extraction equity can help us with both of those finally I'm just going to show you some rudiments of how do we begin to think about this the first is that it's crucial that where extraction violates rights it needs to be stopped or alternatively unless it can be reformed in a way that no longer violates rights but protection of human rights is a fundamental value when we come into how do we share the effort in proportion to the country's capacity we need to think what is it we're sharing how do we measure this effort and our proposal is that we measure it in relation to the cost of going through a transition here I've identified three different ways in which the costs of a transition occur first is that some countries forego export revenue Nigeria might be an example of this second is that some countries forego fuel to drive their own industrialization and India might be an example of this and the third is that there's a potentially socially disruptive transition for the existing fossil fuel production in relation to workers and communities so to conclude based on our analysis of the numbers we propose that no new oil fields, gas fields or coal mines should be developed no new extraction infrastructure built we propose that financial support should be provided for poorer countries to enable their transition to enable a non-carbon development pathway some fields and mines will need to be closed before they're fully exploited and equity should also help us in identifying which those are we stop extraction where communities rights are violated and we ensure a just transition for workers and communities my final slide is an advertisement for the report we released last week it's on our website at priceofoil.org thanks thank you Greg that was clear and brilliant and I have no questions since we've been talking much and working together I'll forego my moderators privilege so that we can get to the round of questions because we're being squeezed for time since we started late we have to end in a little bit less time than we had expected it's not equitable even though it's not equitable yes I'm going to take five questions I'm going to exclude the extroverted males who raised their hand early I was advised by Bob Massey to do this and then we'll just go one by one down the panelist and they can respond to what they want to one two three four thank you thank you very much there were all excellent presentations I have to leave the question open I don't know who to ask really it touches upon I think a very absent actor in the presentations the petrol state Greg mentioned it I think in equity discussion it has to be presented as a petrol state and the question is what would you do with this actor in terms of the unions in these states not being maybe under the model the NGOs maybe following rentist motives sometimes and the politics and the institutions of these states being very much historically bad dependent created around this thank you your question is relatively short and unfortunately we also have to ask the respondents to keep them wonderful presentations thank you very much I would like to ask Simon and Greg maybe for the historical responsibility which is the time frame because exploitation in Iraq was before Iraq was an state and it did not benefit Iraq before that at the beginning of the 20th century then what is the frame and the second is if there is a moral responsibility then we have to depart from the Pareto efficiency that nobody that everybody has to be at least the same of status keeping moral thank you so my question will go to the last presentation by Greg I'd be very much interested to know your argument for your preference to clean energy finance and not compensation given that compensation would look more ideal and green finance has inherent challenges that have been in climate finance for instance if it's loans over burdening countries that already over burdened we'll be very much interested to know your argument for the distinction thanks so my question is to Sam really because I think we need some examples of what this just transition is going to look like because so many communities just get left behind from post industrialization steel, coal changes in technologies so some good examples of where this might work and also for positive examples of how this could actually work in practice speaking in as an expert here look the TCFD is looking at financial recommendations on scenario analysis and what to do there's a strong movement to try and get them to come out with some reference cases at least the IEA now we found it hard enough to get these companies to look at the IEA so I just want to make the point where I totally understand this but in practical terms this could really like what reference case have you got the fossil fuel companies are looking for every excuse to say why they're not going to do this stuff so just sort of that my commenters might be aware that this is a tricky moment in terms of scenario choosing sure so I think three of the questions were directed to me and I'm going to do them in reverse order the first is about finance versus compensation just to clarify by finance I don't mean only loans and you raise a lot of important problems with that it can also include grants and in fact that would make more sense since it's carrying out a responsibility the reason I don't talk about compensation is because of the sheer scale that would be required to replace the revenues that come from the fossil fuel industry I mean we would be talking about trillions and I don't see a way of doing that instead I look at the opportunity cost and hence investment in transition rather than compensation for lost revenues I think there are also political difficulties with compensation related to why should a country that happens to have done well geologically deserve compensation on the question about Iraq the situation now is that since about six or seven years ago multinationals have been operating the majority of the oil fields and ever since they arrived corruption skyrocketed again I think the interesting thing about that is that it raises another dimension of the difficulty of connecting extraction with benefit given that high level of corruption over inflated expenses claimed by the companies and so on the benefit aspect of it becomes muddled and then finally on the question of petro states let me just throw out a nascent idea on this which relates to OPEC OPEC is often thought of as a cartel I don't think it's a very good one insofar as it is a cartel it hasn't been very successful at keeping prices flat during the time it's existed it can shift prices in the short term but doesn't have an ability to fight long term trends where OPEC I think was really significant was in the 1960s in its first decade and into the early 70s where there were the one of the most important aspects of international relations was the demand for permanent sovereignty over natural resources and in that OPEC facilitated its member countries renegotiating first with the European and American multinationals that were running the oil industries there and ultimately leading to the nationalizations in the 70s now the interesting thing for me there is that OPEC as a coordinating and facilitating body important transition for their future and an interesting idea for me is can OPEC play a similar role in relation to climate change wrap up right after this frown also feel free panelists to make any parting comments that you'd like okay can I respond to the question on the time frame and relationship to efficiency I mean it's a good question but it's a very hard question and time is limited so can I just say I think the way to think about the time frame is it does depend on what you think is the unit so if you think it's a country is the moral unit then you go right back to whenever Britain started or France today started extracting if you take an individualistic approach and you just look at individual human beings then you don't go back that far I think the further you go back that far the harder it is because you deal with those people who say what's it got to do with me I didn't go back then one comment on efficiency I'm pleased you raised that because I think you could combine it with an equity approach because you could say and I don't know if this will work but I'll say it and then I can get shot down is you might say that who could extract should be done on who could do it in the most efficient way possible but then if you are denied access to extraction and you're a developing country you're entitled to compensation for that so in other ways you separate the question who extracts from who should receive benefits you don't want to give it to someone who's very inefficient at extracting it's very leaky it doesn't make the best use of it I think could I just say a couple of things in relation to some things Greg had said because I think we're closer than he might think on this so what I'm calling the extract to pays principle doesn't say Iraq benefited therefore contemporary Iraqis don't because it denies that contemporary Iraqis have benefited it looks at it from the point of view of individual human beings so if there's been extraction in the past and it hasn't improved the quality of people's lives then the principle doesn't apply to them this also applies to countries like Eritrea Swaziland which don't have as I understand it fossil fuel reserves what it does says if you benefited if you genuinely benefited from the extraction in the past you have less claim now to the benefits from the remaining ones if for whatever reason whether it's corruption or you just don't have the stuff in your lands if you didn't benefit from these resources in the past then you have a stronger claim to the benefits of these resources now because others have had a go so contemporary Iraqis are not people who have benefited from it political elites thanks Simon to see if I can muster my voice for a couple of these questions so to start with your question about Petro states right several of us in this room are from Norway which we must say is a Petro state about 50% of the economy depending on how you count is related to oil and gas and and there's a tight nexus of power between the oil companies particularly the ones that are state owned the government the unions and the political elites now it's a small country of 4.5 million people so everything is tightly connected but but nonetheless we really are talking about this concentration of power when you're going to have a transition in countries where so much of the economy depends on fossil fuel then you have the question of the rents that the state is getting from extraction which are critical income for the state that's not only true for Norway it's true for any fossil fuel exporting country you have the effects on the currency of the loss and value of their assets you have and you also have the general instability of the economy as you start to go through transition now and that from a union perspective yes specifically about where are unions on this they're where you might imagine them to be I mean people in energy unions understand the changes coming they might disagree exactly on when it's coming and should they be affected and is the right you know time for the end of oil and gas 2050 or 2100 but they understand the changes coming and especially young people who are working in the oil sector they want to work on renewables in fact it's a recruitment issue for oil companies and for unions for oil unions to get younger people that's why the industry as a whole is aging young people want to go into the green part of the companies or work in a green job it's true everywhere how do you break up that power well some of it's happening from outside right the drop in the price of oil has lessened the financial power of the sector on the government on workers on different regions and I think that trend is just going to accelerate the other way you break up the power is through the efforts of civil society which even in Norway in these conditions has done a great job trying to illuminate and pull apart this nexus of power and we're going to get kicked out of this room okay so let me just give one good example you asked for a good example on just transition we have almost none that's the problem so when you say transition to workers they think job loss and stranded community but in Canada there's the start of a process I can't say it's going to be result in perfect outcomes but the government the Canadian Labour Congress are starting a process to appoint a task force on just transition come up with a national just transition plan there's going to be money attached to it there's going to be a massive infrastructure coming out in the first part of the year where some of it's earmarked for green things like public transport so we must see if that turns into the best example we have so far then there's some others I can tell you about later thank you I'm very much given hovering ominously so I'll be right thank you that helps let me just make a couple of quick comments I want to actually Greg and Given's work where they ended up make a quick comment on that and tied to one of the questions or the comments rather on scenarios so I think you all ended Greg by saying well really what this needs to be about then is financial support to enable to enable countries that will have foregone sort of industrial opportunities to make the transition that was one of the points you made and I just worry a little bit that we're falling into this game that economists have played with policy makers for so long which is well yes of course winners could potentially compensate the losers and therefore it's better to improving and then the compensation never comes and really that is we don't have a credible response to that right I mean so let me just give you and tie when you tie that to the scenarios story right the games people are playing with scenarios which I've I'm not a scenario model type guy but I've had to engage with it because I've been frustrated by what I see let me just sort of spell out a possible story the scenarios for India that I am seeing getting credibility and resonance in the international era are uniformly the IEAs there are six different Indian modeling groups never cited in the international literature so the IEA says here's the story for India here's the baseline story you combine what that new with the new carbon economy which again has a lot of muscle power money power behind it got a lot of traction and the new kind of carbon economy says you know what co-benefits are so massive that you don't actually have to pay much compensation you put IEA and NCE together that's very little money on the table and that's what's dominating the discourse right so there's a so in the political economy we really have to worry about that where I find the more where I really think the action is right now is in India there is a fertile debate about how much coal we need there are social groups there are grassroots groups asking this question pushing back against mining here's my worry this global discourse provides a reason to suppress that dialogue and that's my real worry that the perverse incentive politically is that the domestic political process gets skewed by a perception that you know all the stuff I tried to say about grandfathering and so on and so forth so I think just quickly one then the reflection on Simon's point I think we actually see eye to eye on a lot of this I don't think that disadvantage necessarily necessarily leads to a right to extract I think you have to absolutely ask the questions can you get there another way that's what I meant by saying ask the hard questions are you actually going to use any gains to bring about development for the global equity question but that's where the conversation has to happen at the national level and I think we have to find ways of making the international narrative supportive of that and be cautious about it undermining it thank you close it up alright two things number one is that it's a very strong link between fossil fuels and war in the world today in a narrative about Iraq would not only end with Saddam Hussein but also aim and also a refer to the invasion and the destruction of the country as well as the Libya and other places and so when you talk about equity and responsibility look at oil and war and the petrol military complex is so strong that fossil fuels don't feature at all in the climate negotiations in the Paris agreement somebody suppressing it even the military missions are not sure they are being completed in terms of carbon emissions and the carbon budget we are talking about so these guys are completely outlaws I would say and then I've not been able to bring myself to a campaign on transparency issues mostly because I believe there's a big gap in the campaign I applaud those who do it to follow the money and all that but a lot of people want to know what the oil companies are extracting they should publish what they extract when I know what they extract I know what they're paying they're not publishing what they're extracting these guys are stealing the world blind thank you I have nothing that I want to add because I don't want to stand between you and the reception which will occur directly across the quad except oh no just here directly across the directly out the door the only thing I want to say is thank you very much panelists you made for a fantastic discussion