 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 space 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 the 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 this agreement which is quite a momentous 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 the low carbon economy. So it's definitely 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 what we're calling is 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 burnt 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 policymakers and so on. Thanks Harro. Harro then asked 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 Harro 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 attacks 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. If 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. So we had 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 the, 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 falling objects, duck. All right, so with that... Oh, yes. I mean, uneven surfaces. 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 and deputy director of the UK Energy Research Centre. Has been involved in leading energy policy in the UK for some time. So it's with great honour. 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 bore 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, ah, 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 with not 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 realise 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 there. 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 Markham 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 input assumptions before you get the results and where the data quality is high. It was as high as Christof 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 Christof did an enormous number of sensitivities around those input assumptions. 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 then 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 so 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 and 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 require 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 have 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. 2DS is our central 2 degree scenario. 5DS is essentially no climate policy so not even INDCs so we hope we're already beyond that. 3DS is constraining the model to 3 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 there on top of these reserves and you can see that Canada eats 74% of its oil unburnt 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 the 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% remaining unburned so some pretty challenging stuff. The model generates an implicit carbon price so that's the kind of policy 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. 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 the 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 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 our profinding reserves and if the implication of that if we're 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 should 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 had been very busy with 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 while 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 ten 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 the wind have fallen much more quickly than anyone was anticipating overall the IEA thinks that something like a hundred trillion dollars is going to need 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 ten 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 for coal-fired power station 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 and that means that 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 and production investments over the last year or so since the fossil fuel prices fell but also they obviously deter or 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 unless 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 Agent Conference will explore 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 externality 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 in 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 low carbon energy sources and fossil fuels huge push for sustainable urbanization if we build cities the way they've been built best and especially in the United States it would be quite impossible to get anywhere near to but 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 the risk of stranded assets is positively related to the stringency of carbon emissions mitigation policy and it's very 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 so you've got ExxonMobil 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 they're fascinating to see what the various central bank and other task forces come up with once the report comes 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 not by Arabia or Russia or any of the other guys with those assets and say okay we won't produce these I was up in Tromsø a week or so ago 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 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 to produce fossil fuels today but it actually doesn't need to produce fossil fuel resources and yet the Norwegian Oil and Gas Corporation is absolutely determined to go and do that so there's a huge debate in Norway and I was sort of caught between the crossfire and the Norwegian NGOs that didn't want to produce fossil resources and the industry that did so I think it's going to come from consumers energy markets will only push low carbon they're cheaper than fossil fuels 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 have 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 concerning 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 left of 1.5 and I hope this conference will give us a bit more momentum on that one thank you very much 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 a 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 should we have time I think yes thanks 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 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 is there a bias one way or the other Mark hold on next there were two hands that just came up before you depends up so we were debating which okay so I believe it's you yes Miles right okay so the main policy discriminant between scenarios where we meet two degrees affordably and those in which we cannot afford to meet two degrees 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 five 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 we'll do 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's what is driving production 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 the street first as far as I'm aware there's not a lot of that going on in the US but I'm not terribly subject to policy in the US what I do know is that in Europe we do still subsidize high cost coal to quite a large extent the 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 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 I'm 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 department in 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 our 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 talked to say you can't do just industry because it doesn't justify the infrastructure investment 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 other emissions so that is a significant part of the carbon budget in 2050 and on 1.5 degrees yeah no you can imagine that having got this beast of a model with a dead king to use it under all possible circumstances where it's appropriate 1.5 degrees is a push though the model doesn't like 1.5 degrees it will produce lots 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 fact in some studies that suggest bioenergy is more carbon intensive than some 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 all right we have time for one more round of questions we can see hands hands yes Mark or 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 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 for this was really groundbreaking that it was about modelling 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 so 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 Himbis 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 that they definitely scale back but they're planning to build in the future only marginally, okay so that cause of excess optimism has just 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 got against being a polyana to say these new technologies can actually drive a new industrial revolution you will know the language you'll have read the new climate economy reports 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 two or 1.5 degrees but it was the 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 other 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 renewable 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 allowing the model to allowing the model to choose that I didn't touch on the Bloomberg thing about 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 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 you know 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 well be inundated even at 1.5 degrees so I don't think anyone believes that we can keep below 1.5 degrees firing some catastrophe to civilisation 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 if I may thank you so much Paul we are now going to transition to our panel we are going to have that was great to sort of set the greater challenge that we face in the broader context here of what is possible through the main supply side policies still get us beyond what the standard pallet of efforts and the signal and the ambition and the breakthroughs can get us on so to that I would like to invite up Frank Giotso from the Australian National University and the way we are going to work this panel by the way is we will be up here we will have a little a few back and forth questions Frank and I will go sit down we will bring up the next person then we will have about 20 minutes or 30 minutes for conversation at the end between the panel and the audience so Frank the title of your abstract is the case for supply side policy how timely and you are going to talk to us a little bit about a coal tax as well that's right so Paul already said it coal falls off a cliff under 450 or two degree scenario just how far off the cliff very much depends on national approaches and our friends from the deep deep carbonisation 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 very well 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 you try and shift the rents from countries that import and use coal that gets scarcity rent out of a carbon tax to producing 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 and it's very likely that that coal eventually is going to go the way of the sheep having constituted a major share of exports and not doing so anymore in the future now that is of course a difficult transition but I think 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 for industry 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 okay alright so good explain to us how 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 you know analysis modeling 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 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 who subsidize 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 are going to analyze as part of our contribution to a new project called the global coal transitions project and so we are aiming to do a suite of market modeling economic modeling and distribution distributional modeling exercises to investigate to what extent it will in fact be possible for redistributive policies of that kind to achieve a majority of the population of coal producing country better off what 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 and would that really do it alone and would there be benefit so Australia or any other single major coal producer could not do it alone 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 there is of course one large historical precedent and that is OPEC so really what we're talking about here is OCHEC but 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 a different issue I mean gang theoretic literature tells 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 so have you spoken to any policymakers 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 okay to the extent that it doesn't even cause a great stir because it's considered so way out there okay but you know if you think back five or ten years then a domestic transition away from coal use was 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 down 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 these things alright well thanks, thanks Frank and hopefully 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 and 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 a new 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 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 we're currently planning to build but 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 that you really there is no scenario in which a world that's tackling climate change needs a 40 kilometer 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 okay and we of course supported one and a half degrees okay of course we'll agree with anything you say okay that's what's going on and then we go off and subsidize the construction of mines bigger than any city you live in that's what's happening and no one's turned any pulling no one left Paris and went maybe we shouldn't double our coal output we 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 subsidize 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 port 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 so what about this moratorium? well if you want here's the thing like it wasn't it wasn't whaling companies countries 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 to stop stop modelling it modelling it there is no evidence that we're going to stop 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 with 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 it's not imaginary this is what we're doing and my point is why a moratorium because we're not going to stop we're not going to stop we don't want to stop us that's ok 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 here's what we're doing and I hope Australia will come to the party just look at the scoreboard 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 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 ok 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 right low fossil fuel prices are because we've failed to prevent a flood of supply and China, America and Indonesia benefit from a moratorium 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 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 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 of 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 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 to countries like India that face a huge development challenge or Mozambique who have yet to develop 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 not 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 okay, the key idea which is if we're going to keep active the areas in 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 31% of World heritage sites have extractive threats there are either concessions or oil production in them and in some areas like 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 wetlands of international importance man and biosphere reserves and areas labeled as critical for conservation by the World Wildlife Fund that are entire regions and in those regions we did a quick survey of the 18 regions littered critical for conservation for global conservation 12 of them have fossil fuel production so there's reasons that there are enough or many areas of high conservation value that are at risk of fossil fuel production so this would come under supply site theory 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 basically 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 with 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 theories such as coalitions where a group of 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 okay so how would the global fund work what we think is that 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 well under Yasuni Yasuni is a national part that's one of the one of the biggest concentration and a few years later President Correa cancelled the initiative but it has a very interesting institution 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 apply to the global fund and just to keep, how am I on time just one more minute ok 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 country submissions would have social support but we're not claiming that this will solve the climate problem that if we keep all the 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 what we think is that if we are to limit fossil fuel production there's going to be a transfer of 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 of rent should be tasked because it's an earned fund just because fossil fuel prices will go up and that could be captured in a sense you're creating a scarcity rent as much as Frank was 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 two 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 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 that 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 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 transitioning once 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 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 or developing 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 central issue here, central question plus I was asked to actually set the stage in this session so I want 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 is 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 producer 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 dollars a year crude oil is still the number one traded commodity in the world well ahead of cocoa or coffee so whatever else I'm just 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 to human life that's 4% containers like the cliche image of trade it's like the container ships with iPhones many China and the containers or the cars whatever that's 15% so well trade is in large part fossil fuel trade right 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 oil coming from North Dakota to the south and the Gulf of Mexico I was talking about the volume now let's look at the value so I've done some little 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 four dollars of whatever else that's really huge so that's why I think trade ought to be discussed here so in your abstract you 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 and other things like renewable energy equipment considered for example import tariffs you may know that currently import tariffs on crude 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 like wind turbines 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 plurilateral 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 very discussed in the press which is local content requirements which is when you impose on someone the use of a locally made equipment or input and there's been a lot of that 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 if you want to be 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 and successfully so so WTO said you have to remove these fine I mean 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 on those a third example would be subsidies like I mentioned subsidies already but you've heard about countries like Germany for example 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 that much sun in Germany so it doesn't make sense to subsidize solar there at the same time we still have a few subsidies that are above $100 a year so again why the different treatments why this blind spot last example, last one I was going to take 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 US won in WTO against China who was restricting its exports of rare earths countries have export restrictions on fossil fuels including the US until 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 in the case of crude oil in the US 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 elsewhere and 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 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 we've got the international treaties and we've got the dispute settlement mechanisms I know that some countries 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 the US and other other Pacific countries including Japan and Australia and Mexico etc there was an earlier draft of the agreement that 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 essentially okay political will that's our job so thank you so much Jehan we'll come back to as mentioned talking about subsidies shortly this afternoon once you join our panel and our last panelist thanks Jehan last panelist is Shivan Kartha my colleague at Stockholm Environment Institute and some of you may know Shivan as 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 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 what are some alternative frameworks for beginning to think about rights to produce 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 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 to 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're at the beginning of the supply chain and their product ends up leading to pollution and it's that kind of 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 the firms or governments involved in it are exposed to but then even further than that there really is also a sentiment among some 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 for 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 a part hide or slavery there are few articles written on that and then there's a whole other perspective which is that it's not extraction is pollution extraction is development is apply 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 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 really different perspectives that we'll need to start thinking about if we start thinking about supply side policies listen you know 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 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 that's a very good question historical responsibility has clearly been a very salient political issue in the climate negotiations the issue of historical responsibility is actually it's written in the framework convention itself as one of the fundamental underlying equity principles and in on the supply side that'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 in so far 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 kind of on the coal thing that have 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 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 cost 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 just 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 and all that kind of stuff so 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 but 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% but I don't think there's any evidence of markets geopolitical 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's stuffed 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 like 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 you can pay a high price up front and have cheap calls you 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 and poor people generally do pay the low price up front and high price high price going on so in your model does every country have the same discount rate does every country rich 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 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 it is Oxford and I see many debates 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 then I see just show me hands in general so I get an idea of where you are thank you my name is Tina Sultvitt from Nordea 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 you know 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 Kata you talked about moral and ethical responsibility from the producing countries or producers fossil fuel producers but what about the financing of it should we also have 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 that the fossil fuel companies at the moment 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 they'll 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 just 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 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 on 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 and we'll also keep our questions 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 given 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 is says a lot about how economists think about problem solving rather than what is an effective suite of policies to move forward but you know 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 modeling 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 my argument to that was absolutely fine how about you know I can see the economic rationale so who's not going to produce their oil in that in order to give you that extra bit of carbon budget 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 yeah Norway can produce that and somehow there will be 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 is going to be about I don't think anyone on the panel would say that it's one or the other I think most people would agree it's either the men's side or the men's side together with supply side promise when it comes to supply side there's a whole variety of options that might be considered like we saw this morning and but to me the there's a whole variety of options that might be considered but to me the the problem remains what kind of commitment device what kind of credibility commitment device can countries put in place to ensure that they don't mine or drill and so some of you were 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 to you Sheva 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 where our 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 try and enhance the pressure on them for think for realizing this may not be a cost effective response but there are also roles for civil society in trying to emphasize the ethical role 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 Sivan 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 Ivetta and Michelle and then we'll work down here thank you it's really close so it's Zepera 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 the 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 in 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 of 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 in 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 in forest offsets not that I'm saying they're good arguments but why aren't we looking at constrained 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 I'll please keep your questions as short as possible please Good morning, my name is Yvette Gerasimchuk and I work with the Global Subsidy Initiative of ISD I have a comment which is very short and the comment here 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 you can say it's on the demand side but at the same time it's looking in a market for supply and ultimately it trickles out on 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 Sivan 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 there won't be one 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 I'll 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 to keep it in the ground in biodiverse areas thank you Paul I heard questions for Paul and Maria and if anybody else wants to quickly out on to that I think to some extent there's a false dichotomy between supply and demand side but 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 there have been campaigns on the supply side including in this country which have not been particularly effective and I think for as long as 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 then I know Frank you wanted to make a quick comment too Maria I just want to get everybody to watch 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 displaced the old way but have also a way of accounting to 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 finance 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 are not paying to preserve biodiversity rich areas and the funds would go to the 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 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 delisted 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 Frank gets the last word Richard I know Richard be equitable Richard right you get the last word here conference on supply side policy demand side policy as soon as you haven't got everyone on board the ones who don't restrict demand will get their fossil fuels very very cheaply unless there is supply side policy that's important to keep in mind in terms of complementarity in a not 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 case for supply side policy is very strong and it is very ineffective as well and hence you know I see a lot of merit in attempts to identify policies that can deliver economic and institutional benefits to fossil fuel supplying countries alright I want to thank the panel so much