by Naomi Klein
For over a year, a coalition of ranchers and Indigenous people who lived along the proposed route of the pipeline had been campaigning hard against the project. But the action in Washington took the campaign national, and turned it into a flashpoint for a resurgent U.S. climate movement.
The science for singling out Keystone XL was clear enough. The pipeline would be carrying oil from the Alberta tar sands, and James Hansen, then still working at NASA, had recently declared that if the bitumen trapped in the tar sands was all dug up and burned, it would be “game over for the climate.”39 But there was also some political strategy at work: unlike so many other key climate policies, which either required approval from Congress or were made at the state level, the decision about whether to approve the Keystone XL pipeline was up to the State Department and, ultimately, the president himself, based on whether he determined the project to be in the “national interest.” On this one, Obama would have to give his personal yes or no, and it seemed to us that there was value in extracting either answer.
If he said no, that would be a much needed victory on which to build at a time when the U.S. climate movement, bruised from the failure to get energy legislation through Congress, badly needed some good news. If he said yes, well, that too would be clarifying. Climate activists, almost all of whom had worked to get Obama elected, would have to finally abandon the hopes they had pinned on the young senator who had proclaimed that his election would be remembered as “the moment when the rise of the oceans began to slow and our planet began to heal.”40 Letting go of that faith would be disillusioning for many, but at least tactics could be adjusted accordingly. And it seemed we would not have to wait long for a verdict: the president would be in a position to make his decision by early September, which is why the civil disobedience was called for the end of August.
It never occurred to us in those early strategy sessions at 350.org, the climate organization that McKibben cofounded and where I am a board member, that three years later we would still be waiting for the president’s yes or no. Three years during which Obama waffled and procrastinated, while his administration ordered more environmental reviews, then reviews of those reviews, then reviews of those too.
A great deal of intellectual energy has been expended trying to interpret the president’s mixed signals on Keystone XL—at times he seemed to be sending a clear message that he was going to give his approval, as when he arranged for a photo op in front of a raft of metal pipeline waiting to be laid down; other times he seemed to be suggesting that he was leaning toward rejection, as when he declared, in one of his more impassioned speeches about climate change, that Keystone would be approved “only if this project does not significantly exacerbate the problem of carbon pollution.”41
But whichever way the decision eventually goes (and one can hope that we will know the answer by the time you read this), the drawn-out saga made at least one thing absolutely clear. Like Angela Merkel, Obama has a hell of a hard time saying no to the fossil fuel industry. And that’s a very big problem because to lower emissions as rapidly and deeply as required, we need to keep large, extremely profitable pools of carbon in the ground—resources that the fossil fuel companies are fully intending to extract.
That means our governments are going to have to start putting strict limits on the industry—limits ranging from saying no to pipelines linked to expanded extraction, to caps on the amount of carbon corporations can emit, to banning new coal-fired power plants, to winding down dirty-energy extraction projects like the Alberta tar sands, to saying no to demands to open up new carbon frontiers (like the oil trapped under melting Arctic ice).
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In the 1960s and 1970s, when a flurry of environmental legislation was passed in the U.S. and in other major industrial countries, saying no to dirty industry was, though never easy, an accepted part of the balancing act of government. That is simply no longer the case, as is evident from the howls of outrage from Republicans and many Democrats over the mere suggestion that Obama might reject Keystone XL, a moderate-sized infrastructure project that, by the president’s own admission, would create so few lasting jobs that they represent “a blip relative to the need.”42 Given how wrenchingly difficult that yes-or-no regulatory decision proved to be, it should not be at all surprising that broader, more forceful controls on how much carbon should be extracted and emitted have thus far been entirely elusive.
Obama’s much-heralded move in June 2014 mandating emission reductions from power plants was certainly the right direction, but the measures were still much too timid to bring the U.S. in line with a safe temperature trajectory. As author and long-time climate watcher Mark Hertsgaard observed at the time, “President Obama clearly grasps the urgency of the climate crisis and has taken important steps to address it. But it is his historical fate to be in power at a time when good intentions and important steps are no longer enough. . . . Perhaps all this places an unfair burden on President Obama. But science does not care about fair, and leaders inherit the history they inherit.” And yet as Hertsgaard acknowledges, the kind of policies that would be enough “seem preposterous to the political and economic status quo.”43
This state of affairs is, of course, yet another legacy of the free market counterrevolution. In virtually every country, the political class accepts the premise that it is not the place of government to tell large corporations what they can and cannot do, even when public health and welfare—indeed the habitability of our shared home—are clearly at stake. The guiding ethos of light-touch regulation, and more often of active deregulation, has taken an enormous toll in every sector, most notably the financial one. It has also blocked commonsense responses to the climate crisis at every turn—sometimes explicitly, when regulations that would keep carbon in the ground are rejected outright, but mostly implicitly, when those kinds of regulations are not even proposed in the first place, and so-called market solutions are favored for tasks to which they are wholly unequipped.
It’s true that the market is great at generating technological innovation and, left to its own devices, R&D departments will continue to come up with impressive new ways to make solar modules and electrical appliances more efficient. But at the same time, market forces will also drive new and innovative ways to get hard-to-reach fossil fuels out of the deep ocean and hard shale—and those dirty innovations will make the green ones essentially irrelevant from a climate change perspective.
At the Heartland conference, Cato’s Patrick Michaels inadvertently made that point when he argued that, though he believes climate change is happening, the real solution is to do nothing and wait for a technological miracle to rain down from the heavens. “Doing nothing is actually doing something,” he proclaimed, assuring the audience that “technologies of the future” would save the day. His proof? “Two words: Shale gas. . . . That’s what happens if you allow people to use their intellect, and their inquisitiveness, and their drive, in order to produce new energy sources.” And of course the Heartland audience cheered earnestly for the intellectual breakthrough that is hydraulic fracturing (aka fracking) combined with horizontal drilling, the technology that has finally allowed the fossil fuel industry to screw us sideways.44
And it’s these “unconventional” methods of extracting fossil fuels that are the strongest argument for forceful regulation. Because one of the greatest misconceptions in the climate debate is that our society is refusing to change, protecting a status quo called “business-as-usual.” The truth is that there is no business-as-usual. The energy sector is changing dramatically all the time—but the vast majority of those changes are taking us in precisely the wrong direction, toward energy sources with even higher planet-warming emissions than their conventional versions.
Take fracking. Natural gas’s reputation as a clean alternative to coal and oil is based on emissions measurements from gas extracted through conventional drilling practices. But in April 2011, a new study by leading scientists at Cornell University showed t
hat when gas is extracted through fracking, the emissions picture changes dramatically.45
The study found that methane emissions linked to fracked natural gas are at least 30 percent higher than the emissions linked to conventional gas. That’s because the fracking process is leaky—methane leaks at every stage of production, processing, storage, and distribution. And methane is an extraordinarily dangerous greenhouse gas, thirty-four times more effective at trapping heat than carbon dioxide, based on the latest Intergovernmental Panel on Climate Change estimates. According to the Cornell study, this means that fracked gas has a greater greenhouse gas impact than oil and may well have as much of a warming impact as coal when the two energy sources are examined over an extended life cycle.46
Furthermore, Cornell biogeochemist Robert Howarth, the lead author of the study, points out that methane is an even more efficient trapper of heat in the first ten to fifteen years after it is released—indeed it carries a warming potential that is eighty-six times greater than that of carbon dioxide. And given that we have reached “decade zero,” that matters a great deal. “It is in this shorter time frame that we risk locking ourselves into very rapid warming,” Howarth explains, especially because huge liquid natural gas export terminals currently planned or being built in Australia, Canada, and the United States are not being constructed to function for only the next decade but for closer to the next half century. So, to put it bluntly, in the key period when we need to be looking for ways to cut our emissions rapidly, the global gas boom is in the process of constructing a network of ultra-powerful atmospheric ovens.47
The Cornell study was the first peer-reviewed research on the greenhouse gas footprint of shale production, including from methane emissions, and its lead author was quick to volunteer that his data were inadequate (largely due to the industry’s lack of transparency). Still, the study was a bombshell, and though it remains controversial, a steady stream of newer work has bolstered the case for a high rate of methane leakage in the fracking process.III48
The gas industry isn’t the only one turning to dirtier, higher-risk methods. Like Germany, the Czech Republic and Poland are increasingly relying on and expanding production of extra-dirty lignite coal.49 And the major oil companies are rushing into various tar sands deposits, most notably in Alberta, all with significantly higher carbon footprints than conventional oil. They are also moving into ever deeper and icier waters for offshore drilling, carrying the risk of not just more catastrophic spills, as we saw with BP’s Deepwater Horizon disaster, but spills that are simply impossible to clean up. Increasingly, these extreme extraction methods—blasting oil and gas out of rock, steaming oil out of tarlike dirt —are being used together, as when fracked natural gas is piped in to superheat the water that melts the bitumen in the tar sands, to cite just one example from the energy death spiral. What industry calls innovation, in other words, looks more like the final suicidal throes of addiction. We are blasting the bedrock of our continents, pumping our water with toxins, lopping off mountaintops, scraping off boreal forests, endangering the deep ocean, and scrambling to exploit the melting Arctic—all to get at the last drops and the final rocks. Yes, some very advanced technology is making this possible, but it’s not innovation, it’s madness.
The fact that fossil fuel companies have been permitted to charge into unconventional fossil fuel extraction over the past decade was not inevitable, but rather the result of very deliberate regulatory decisions—decisions to grant these companies permits for massive new tar sands and coal mines; to open vast swaths of the United States to natural gas fracking, virtually free from regulation and oversight; to open up new stretches of territorial waters and lift existing moratoriums on offshore drilling. These various decisions are a huge part of what is locking us into disastrous levels of planetary warming. These decisions, in turn, are the product of intense lobbying by the fossil fuel industry, motivated by the most powerful driver of them all: the will to survive.
As a rule, extracting and refining unconventional energy is a far more expensive and involved industrial process than doing the same for conventional fuels. So, for instance, Imperial Oil (of which Exxon owns a majority share) sank about $13 billion to open the sprawling Kearl open-pit mine in the Alberta tar sands. At two hundred square kilometers, it will be one of the largest open-pit mines in Canada, more than three times the size of Manhattan. And it is only a fraction of the new construction planned for the tar sands: the Conference Board of Canada projects that a total of $364 billion will be invested through 2035.50
In Brazil, meanwhile, Britain’s BG Group is expected to make a $30 billion investment over the next decade, much of it going into ultra-deepwater “subsalt” projects in which oil is extracted from depths of approximately three thousand meters (ten thousand feet). But the prize for fossil fuel lock-in surely goes to Chevron, which is spending a projected $54 billion on a gas development on Barrow Island, a “Class A Nature Reserve” off the northwest coast of Australia. The project will release so much natural gas from the earth that it is appropriately named Gorgon, after the terrifying, snake-haired female monster of Greek mythology. One of Chevron’s partners in the project is Shell, which is reportedly spending an additional $10–12 billion to build the largest floating offshore facility ever constructed (longer than four soccer fields) in order to extract natural gas from a different location off the northwest coast of Australia.51
These investments won’t be recouped unless the companies that made them are able to keep extracting for decades, since the up-front costs are amortized over the life of the projects. Chevron’s Australia project is expected to keep producing natural gas for at least thirty years, while Shell’s floating gas monstrosity is built to function on that site for up to twenty-five years. Exxon’s Alberta mine is projected to operate for forty years, as is BP/Husky Energy’s enormous Sunrise project, also in the tar sands. This is only a small sampling of mega-investments taking place around the world in the frantic scramble for hard-to-extract oil, gas, and coal. The long time frames attached to all these projects tell us something critical about the assumptions under which the fossil fuel industry is working: it is betting that governments are not going to get serious about emissions cuts for the next twenty-five to forty years. And yet climate experts tell us that if we want to have a shot at keeping warming below 2 degrees Celsius, then developed country economies need to have begun their energy turnaround by the end of this decade and to be almost completely weaned from fossil fuels before 2050.52
If the companies have miscalculated and we do get serious about leaving carbon in the ground, these huge projects will become what is known as “stranded assets”—investments that lose their projected value as a result of, for example, dramatic changes in environmental policy. When a company has a great deal of expensive stranded assets on its books, the stock market takes notice, and responds by bidding down the share price of the company that made these bad bets.
This problem goes well beyond a few specific projects and is integrated into the way that the market assigns value to companies that are in the business of extracting finite resources from the earth. In order for the value of these companies to remain stable or grow, oil and gas companies must always be able to prove to their shareholders that they have fresh carbon reserves to exploit after they exhaust those currently in production. This process is as crucial for extractive companies as it is for a company that sells cars or clothing to show their shareholders that they have preorders for their future products. At minimum, an energy company is expected to have as much oil and gas in its proven reserves as it does in current production, which would give it a “reserve-replacement ratio” of 100 percent. As the popular site Investopedia explains, “A company’s reserve replacement ratio must be at least 100% for the company to stay in business long-term; otherwise, it will eventually run out of oil.”53
Which is why investors tend to get quite alarmed when the ratio drops below that level. For instance, in 2009, on
the same day that Shell announced that its reserve-replacement ratio for the previous year had ominously dipped to 95 percent, the company scrambled to reassure the market that it was not in trouble. It did this, tellingly, by declaring that it would cease new investments in wind and solar energy. At the same time, it doubled down on a strategy of adding new reserves from shale gas (accessible only through fracking), deepwater oil, and tar sands. All in all, Shell managed that year to add a record 3.4 billion barrels of oil equivalent in new proven reserves—nearly three times its production in 2009, or a reserve-replacement ratio of 288 percent. Its stock price went up accordingly.54
For a fossil fuel major, keeping up its reserve-replacement ratio is an economic imperative; without it, the company has no future. It has to keep moving just to stand still. And it is this structural imperative that is pushing the industry into the most extreme forms of dirty energy; there are simply not enough conventional deposits left to keep up the replacement ratios. According to the International Energy Agency’s annual World Energy Outlook report, global conventional oil production from “existing fields” will drop from 68 million barrels per day in 2012 to an expected 27 million in 2035.55
That means that an oil company looking to reassure shareholders that it has a plan for what to do, say, when the oil in Alaska’s Prudhoe Bay runs out, will be forced to go into higher-risk, dirtier territories. It is telling, for instance, that more than half of the reserves Exxon added in 2011 come from a single oil project: the massive Kearl mine being developed in the Alberta tar sands.56 This imperative also means that, so long as this business model is in place, no coastline or aquifer will be safe. Every victory against the fossil fuel companies, no matter how hard won, will be temporary, just waiting to be overtaken with howls of “Drill, Baby, Drill.” It won’t be enough even when we can walk across the Gulf of Mexico on the oil rigs, or when Australia’s Great Barrier Reef is a parking lot for coal tankers, or when Greenland’s melting ice sheet is stained black from a spill we have no idea how to clean up. Because these companies will always need more reserves to top up their replacement ratios, year after year after year.
