As Arctic Melts, Business As Usual

Record melting of Arctic ice has alarmed climate scientists, but the extraction industry and shippers are thrilled at new business prospects.

Having drained the world of most accessible oil, companies see in the Arctic Circle a most striking source for long-term fossil-fuel development. Shipping companies plan direct routes to Asia. It’s high time governments wake up to real danger.

A recent UN report projects Arctic summer ice to be non-existent by 2020. Climate researchers warn that the rapidly melting ice, with darker ocean waters that absorb the sun’s heat, will contribute to a shifting jet stream, creating new and unpredictable volatile weather patterns.

International oil companies acknowledge the melting is an effect of global warming. Yet instead of being alarmed, countries such as the US, Norway, Russia and even China are using the melting as a pretext for strategic benefit from global warming to gain new fossil fuel supplies. Global-warming skeptics, free-market adamants, major companies and governments have quickly come to accept future climate change as a new normal.

Few deny that climate change is underway. Whether governments and humans can take steps to stem their addiction and help the planet recover is the real issue.

In his 2006 environmental documentary, An Inconvenient Truth, former US Vice President Al Gore shows a scale. On one side is the earth, the other side, a sum of gold bricks. He presumes the world’s long-term health is considerably heavier than the pile of gold bricks of economic interests and that world governments would take concerted action to stop it. He was wrong. Most countries remain silent to the risks of climate change, and their non-policies continue to ignore it.

Short-term economic interests outweigh long-term economic security. Recent policy enactments, such as the EU imposing a carbon tax on airlines, were quickly shot down by China and India as a sovereignty infringement. Yet, air travel continues to grow exponentially with significant fossil fuel emissions.

If the severe droughts, firestorms and floods of 2012 have not convinced policymakers of a creeping problem, not much more can. This is a conundrum in today’s ecology and sociology: nominal recognition of a problem with changing weather patterns, yet governments quickly pushing through new and wider roads, airports, bridges and coal-fired plants to power their economies and meet surging demand.

With fossil-fuel demand skyrocketing due to rising incomes in Asia and Africa, two correlated and disastrous scenarios loom without changes in government energy policies: 1) With less than 5 percent of the global population, the US economy depends on 25 percent of the world’s energy. Other nations are in a hurry to catch up to the US. It’s likely that the current rate of 400 ppm of atmospheric CO2 will rise to 450 ppm, 2) Within 16 years, or sooner at current fossil fuel burn rates, the world will breach the earth’s 565 gigatons absorption capacity of CO2. The International Energy Agency predicts that either situation can trigger a global increase in temperature of more than 2°C.

A progressive carbon tax would dampen world demand, argues Cornell University economist Robert Frank in a New York Times op-ed. Frank’s suggestions won’t resonate with current world leaders who are committed first to attending to their economies. A quick rebuttal by the National Review showed more concern about any increasing gasoline costs for US consumers – who compared with much of the world pay low prices for their fuel – than climate-change issues. Recently, due to the March 2011 triple tragedy in Fukushima, Japan has announced a moratorium on nuclear power, Germany has also banned nuclear by 2020. Both democratic industrial powerhouses must regress to burning more fossil fuels to make up energy shortfalls, adding to exponentially growing world demand!

In developing Asia, increasing fossil-fuel demand is apparent everywhere. Societies are not only addicted to oil, but their economic-growth projections and social paradigms revolve around expanding its use far into the future. A few examples of growing living standards and fossil-fuel consumption in Asia should suffice: China, with a soaring automotive industry growth rate of 20 percent per year, is now the largest car market in the world, surpassing the US in 2009. China has more coal-fired electric power generation plants than the EU and US combined, and is building more yearly.

Noteworthy is the electricity generated by coal-fired plants for so-called clean- energy high-speed trains, which creates a zero-sum game.

Coal remains the cheapest way to generate electricity near distribution grids. While the Three Gorges dam is a brilliant harness for China’s voracious demand, the distribution of electricity from that project on the current grid supports only about 1.7 percent of total demand. China has considerable thermal coal reserves, and is importing more from Australia, Indonesia and Mongolia. Even though China’s coal-fired plants are increasingly more efficient than their Western counterparts – China’s plants are 44 percent efficient to US plants at 40 percent – there is no such thing as “clean coal.” CO2 emissions from coal remain consistently large and twice as high as natural gas-fired plants.

India is similar to China in population size, fossil-fuel use and electricity demand, but as the world’s largest democracy, any conversion to nuclear or renewable energy, such as dams, will be subjected ad nauseum to endless discussion and NIMBY, or not-in-my-backyard issues. Change will come slowly or not at all. India also faces growing traffic jams in the megapolises of New Delhi, Mumbai and Chennai. Due to a lack of emissions controls and enforcement standards, pollution soars. The fuel subsidy in India today is essentially a payment to the oil industry to keep the economy humming. Yet, the Indian subcontinent has a long coastline and depends on consistent monsoonal rains for agriculture. More than half India’s workforce depends on farming, and climate change, if not addressed, will disrupt life patterns for many.

The contradiction of climate-change impact and increasing fossil-fuel addiction is more paradoxical in Indonesia than in any other country. Indonesia has an economic boom fueled by its vast exports of coal and crude oil to other countries. This boom has created domestic demand for cars and air-travel that require huge inputs of fuel. Petrol-wasting traffic jams and decrepit infrastructure are legendary in Jakarta, Bandung and Bali. There’s little reliable public transport. The poor travel via heavy-polluting motorcycles and private buses.

Indonesia has no plans to lessen its fossil fuel obsession, where economic activity is supported by fuel subsidies. Government responses have been to lengthen freeways, build higher overpasses and “supersize” airports, thus exacerbating fossil-fuel addiction. Education levels remain low, so nuclear power is out of the question, and profound distrust of government policies remain, thus developing alternative energy will be slow and possibly non-sustainable. Jakarta, with more than 20 million people, lies on a coastal plain and is susceptible to annual monsoonal flooding.

Politicians consider global warming as an abstract concept far into the future, primarily concerned about pleasing constituencies economically.

Additionally, the power of the oil and mining companies to shape economic policy, the gold bricks in Gore’s documentary, is formidable. Hypocritically, the energy industry acknowledges, by way of Arctic ice melting and considering it an economic benefit, that global warming exists, even while paying lobbying groups to deny it as unscientific and attack any who claim a looming problem.

As our world hangs in the balance, policymakers must aggressively confront climate change issues.

(Will Hickey whickey@solbridge.ac.kr is an associate professor of management at Solbridge International School of Business in Daejeon, South Korea. Reprinted with permission from the Yale Center for the Study of Globalization.)