So much for Paris

Around​ fifteen years ago, a new term entered the climate change lexicon: stranded assets. The concept was straightforward enough. If global warming is to be kept from getting out of hand, there is a limit to the amount of greenhouse gases that can be emitted into the atmosphere. Yet the fossil fuel reserves currently held by the world’s energy and mining companies would, if extracted and burned, emit far more than this amount. The problem is carbon dioxide: CO₂ accounts for roughly three-quarters of anthropogenic greenhouse-gas emissions, and the combustion of fossil fuels in turn accounts for roughly three-quarters of CO₂ emissions. Either we exploit our fossil fuel reserves and the planet burns, or we don’t and some of the reserves are left in economic limbo. These unexploited reserves are known as stranded assets.

In 2011, the think tank Carbon Tracker estimated that in order to keep the probability of exceeding 2°C warming to 20 per cent or less, the total amount of CO₂ emitted before 2050 would have to be limited to 565 gigatonnes. Yet known global fossil fuel reserves at the time contained the equivalent of an estimated 2795 gigatonnes of CO₂. In other words, only a fifth of the existing reserves of coal, gas and oil – not to mention the vast new reserves that continue to be discovered – could ever be ‘safely’ combusted. Four-fifths would have to be left alone, and that’s without taking account of the quarter of emissions from sources other than fossil fuel combustion.

The notion of stranded assets was soon taken up by climate campaigners, who argued that fossil fuel assets needed to be actively stranded. ‘Keep it in the ground!’ The owners of these assets were unlikely to strand them voluntarily but other solutions were suggested. Governments could prohibit extraction and combustion beyond certain levels, impair profits through carbon taxes or dampen demand by reducing consumer fuel subsidies and supporting competing sources of energy, renewables in particular. Investors could divest; after all, they risked losing out if and when stranding took place. Some campaigners have argued that investors are mispricing the risk of stranding by continuing to invest, and that accurate pricing of that risk would help bring about stranding by limiting the funds available to fossil fuel companies to exploit their reserves.

In 2010, fewer than a hundred published articles contained the term ‘stranded asset’; in 2015, there were more than a thousand, and by 2020 the number had more than doubled again. But since then, something has changed. People have stopped talking about stranded assets. What happened? At the start of this decade, the three major European oil and gas companies – BP, Shell and Total – seemed committed to moving to clean energy. All made statements promising to reduce fossil fuel extraction and exploration. BP pledged that it would shrink its oil and gas production by 40 per cent within ten years and would stop exploring for oil and gas in countries where it didn’t already operate. In February 2023, however, it performed a volte-face. The new plan was actually to expand oil and gas production for several years to come, and the 40 per cent target was abandoned. Instead, it would aim for around 25 per cent, though the small print mentioned that ‘underlying’ production would be maintained at a ‘broadly flat’ level to the end of the decade. In other words, any substantive reduction would come through asset sales to other operators, meaning zero reduction in output or emissions at the global level. Total and Shell followed suit. In June, Shell dropped its previously announced plan to cut production each year for the rest of the decade and said it would invest $40 billion in new oil and gas production between 2023 and 2035. Like BP, it anticipated that underlying output would remain stable.

This pivot back to hydrocarbons was widely interpreted as a reaction to profits and share prices. Profits from oil and gas production had surged in 2022 as the war in Ukraine drove up commodity prices: the companies were evidently hungry for more of the same. As for share prices, the European trio had underperformed their American peers – ExxonMobil, Chevron, ConocoPhillips – since announcing plans to cut oil and gas output. The wish to please shareholders was part of the explanation, but other factors were at work too. For one thing, it was clear by early 2023 that the Covid pandemic had not marked the turning point in energy consumption patterns that many had predicted. When BP, Shell and Total committed to cutting oil and gas production, demand for their products was crashing; many believed it would never recover to previous heights. Having stopped flying, for example, economists predicted that rich-world consumers would be more modest in their air-travel habits once the pandemic was over. But in 2022, demand came roaring back.

The other important part of the story is political. In 2015, an agreement was struck at the UN Climate Change Conference in Paris to pursue efforts to limit the global temperature increase to 1.5°C. In the years that followed, major governments – with the exception of the US – made encouraging noises about reining in fossil fuel capitalism. It’s in this context that activists could talk more confidently about asset stranding, while BP, Shell and Total, anxious perhaps that their hydrocarbon reserves might become worthless, began to stress the prospect of robust carbon prices in the projections they shared with investors while also drawing up plans for the clean energy transition. The more time that passed without government action, however, the more the energy companies began to relax. The Paris Accords, after all, were little more than a statement of intent, and included no enforcement mechanism.

In 2021, the International Energy Agency, the leading forecaster of global energy futures, decided that enough was enough. The agency was formed in 1974 as a defensive response by Western countries, and the US in particular, to the shift in power in oil and gas production away from the West and largely towards the Middle East. In subsequent decades the IEA asserted its independence, but critics were sceptical, citing the agency’s tendency to underestimate growth in renewable power production. It was extraordinary therefore to see the agency set out a pathway for the global energy sector to reach ‘net-zero’ emissions of greenhouse gases by 2050. This would give the world an ‘even chance’ of limiting the global temperature rise to 1.5°C. The IEA wasn’t telling governments what to do; it can’t. But if net zero and 1.5°C were to remain on the table, there could be no new oil and gas fields or ‘unabated’ coal-fired power plants approved for development (we’ll return to that word ‘unabated’) and no new coal mines. Zero. The implication was that all undeveloped reserves should immediately be stranded: not half, not four-fifths, but all. And even this might not be enough.

Barely had the ink dried on the IEA report than new coal mines were approved in countries ranging from Australia to China and India. Others swiftly followed; over the next two years, more than four hundred new oil and gas developments were approved in more than fifty countries. These included Rosebank, located eighty miles west of Shetland and estimated to hold as many as 300 million barrels of oil – Britain’s largest untapped oilfield. In ignoring the IEA’s unambiguous recommendation (or warning), policymakers sent a clear signal that they were not interested in stranding fossil fuel assets. On the contrary, it was business as usual. Energy and mining companies – the sponsors of the new projects – were duly emboldened. BP’s reversal came less than two years after the IEA’s intervention. No wonder talk of asset stranding has flagged since 2021. The world has surrendered to climate breakdown.

Ihave​ borrowed the language of ‘surrender’ from Overshoot by Andreas Malm and Wim Carton, a clear-eyed analysis of the last half-decade or so of climate horrors. Stranded assets – their absolute necessity, and their apparent impossibility – are at the centre of the story. Malm and Carton give a stark account of the fossil fuel industry’s resistance to stranding, and the alacrity with which it continues to fashion and exploit opportunities to convert reserves into productive assets. As they point out, it is a matter of wealth accumulation: the oil and gas business remains staggeringly profitable, the business of developing alternative energy sources anything but. It is easy to frame the present historical moment, in Gramscian terms, as an interregnum: the old (fossil fuel capitalism) is dying and the new (clean capitalism) cannot yet be born. But, as Malm and Carton insist, fossil fuel capitalism isn’t dying: if it were, output and emissions would be falling decisively. Instead, the industry has been buoyed by waves of approvals for new project-development in the last few years.

Malm and Carton dismiss the argument that fossil fuel companies are merely responding to customer demand – demand the companies say their competitors would meet if they didn’t. There is responsibility here, but no accountability. They note Daniel Bressler’s calculations of the ‘mortality cost’ of carbon: an estimated 226 excess deaths before 2100 for every million tonnes of CO₂ emitted in 2020 (35 billion tonnes were emitted that year, so that’s nearly eight million excess deaths). And the mortality cost is rising: as global temperatures increase, so does the damage caused by each additional unit of emissions. Malm and Carton cite the closing argument of the prosecutor in the case against the officer who murdered George Floyd: ‘If you’re doing something that hurts somebody, and you know it, you’re doing it on purpose.’

Rich-world consumers aren’t absolved either. Consumption-related CO₂ emissions are as unequally distributed as monetary wealth, and the egregious emissions levels of recent years have done much more to sustain the carbon-intensive consumption habits of the affluent in the global North than to lift people out of poverty in the global South. I have lost count of the number of times a self-identified climate progressive has explained to me that our individual consumption and emissions are irrelevant; that what we need to do is strand fossil fuel assets. Yes, asset stranding is needed. But it’s a nonsense to think that production shapes consumption and the reverse does not apply. ‘Consumption produces production,’ as Marx wrote. ‘Consumption furnishes the impulse to produce and also provides the object which acts as the determining purpose of production.’ Supply may not create its own demand, but we know by now that demand – demand, at least, for oil and gas – calls forth ample supply. We also know that political initiatives of sufficient scale and visibility in the realm of consumption can help, however modestly, in bringing about systemic change: consider, for example, the role of consumer boycotts in the anti-apartheid movement. This isn’t to say that there is a material or moral equivalence between consumers and fossil fuel companies in the allocation of responsibility for climate breakdown. Malm and Carton are clear that there isn’t. But we make it far too easy for fossil fuel producers if we also refuse to change. Hypocrisy aside, it confers legitimacy on the argument that they are merely serving consumer demand.

Malm and Carton are less persuasive in their analysis of why governments have surrendered. This matters, because all fossil fuel projects are politically constituted. Either they are state projects, controlled and administered by state-owned enterprises such as Equinor, Saudi Aramco or Sinopec, or they depend on state permissions in order to exist. Why haven’t policymakers stopped the pillage? Malm and Carton suggest that governments are fearful of sparking an epic financial crash and it’s true that any political intervention resulting in the stranding of fossil fuel assets would entail losses and instability far beyond the confines of the energy sector.

Yet there is more to the collective surrender than this. The power of the fossil fuel lobby shouldn’t be underestimated: some 2500 oil and gas industry lobbyists attended the 2023 UN Climate Change Conference (in Dubai, of all places, and hosted by the president of the UAE’s national oil company), nearly four times as many as attended the previous year’s circus in Egypt. A resurgence of concerns over national energy security in the face of the supply-chain seizures of the pandemic period and the difficulties caused by Russia’s invasion of Ukraine and growing instability in the Middle East has also played a role. And even where production is wholly controlled by private companies, profits have to be shared with domestic governments in the form of royalties and other taxes. Few governments, in countries rich or poor, would willingly relinquish those revenues.

The degree of political and economic difficulty that fossil-fuel-producing nations would face were they willing to strand their carbon assets varies enormously. It would be especially challenging for the government of a country whose reserves are both plentiful and relatively easy to recover – Venezuela, say. It is in this light that we should understand Labour’s plan to stop new developments in the North Sea (it may also withdraw support for the Rosebank project, which is subject to legal challenges). Not only is the North Sea one of the world’s most exhausted hydrocarbon basins, but the cost per barrel of extracting what remains is higher than in any of the world’s other major hydrocarbon-producing territories, so the profitability of the enterprise is marginal. The likes of BP have long since switched their focus to more profitable regions. In reality, the decision facing Labour is an easy one. This is no sacrifice of untold riches.

There are even greater obstacles to government action when it comes to asset stranding. We live carbon-intensive lives, especially in the global North. This was all too apparent during the inflation surge of 2021-23, when sharp increases in oil and gas prices accounted, especially via household energy prices, for a large share of headline inflation. The concern among policymakers is that a reduction in fossil fuel supply – the very object of stranding – without a commensurate reduction in demand could only result in one thing: a rise in prices. And that is anathema to governments, which as we have seen tend to get ejected from office after periods of inflation. This is why governments worldwide have maintained vast demand-side fossil fuel subsidies – tax exemptions, fuel vouchers, even direct support to consumers – through decades of climate breakdown, and why meaningful carbon taxes have rarely been implemented.

To take just one example of government sensitivity on these matters, in October 2022 OPEC and its partners announced a cut in production of two million barrels per day (out of a total of nearly fifty million), their largest supply cut since 2020. You might imagine that this would be received as good news – decreased oil and gas output, lower CO₂ emissions, perhaps a foretaste of further cuts to come – by Joe Biden, who was often praised for having the best environmental record of any president in American history. Yet Biden was furious and openly threatened ‘consequences’. The Democratic Senator Bob Menendez demanded that the US cease all co-operation with Saudi Arabia, including weapons sales; even Bernie Sanders agreed. The cut in supply would mean an increase in the price of crude oil – indeed, OPEC spokespeople said this was its purpose – and that would, as Sanders put it, ‘jack up US gas prices’. It was under Biden that the US once again became the world’s largest oil and gas-producing nation. When policymakers around the world contemplate a potential future of purposeful asset stranding, American politicians see rising fuel prices and angry voters. That is not a future they can promote, still less actively bring about.

If Malm and Carton​ are right that all major constituencies have effectively surrendered to climate breakdown, we are now, as the title of their book has it, in the world of ‘overshoot’. The notion first came to prominence in a book called Beyond the Limits (1992) by Donella Meadows, Dennis Meadows and Jørgen Randers. Twenty years earlier they had authored (with William Behrens) one of the most influential ever reports on the relationship between society and the environment, The Limits to Growth. The argument of this book was that the earth could sustain only a certain amount of population growth and resource consumption, and that based on current trends its physical limits would be breached within a hundred years, precipitating sudden social and economic collapse. Beyond the Limits renewed this argument and radically shortened the timeframe: we were, in the early 1990s, on track to ‘overshoot’ the earth’s carrying capacity within just a few decades.

Scientists and politicians have repeatedly identified limits or targets for manageable global warming and we have grown accustomed to the idea that we are on course to surpass these thresholds, or have done so already. It was recently reported that global temperatures have exceeded pre-industrial temperatures by at least 1.5°C for twelve consecutive months (averaging 1.64°C warmer). So much for Paris. However, Malm and Carton’s polemic isn’t just a restatement of this failure. Not only are we exceeding all warming limits that scientists consider ‘safe’, they argue, but the political, business and scientific powers that collectively determine society’s approach to climate have assented to the overshoot as a fait accompli. In other words, there is an institutionalised acceptance of the transgression of notional climate ‘limits’.

There are two sides to this accommodation. The first is that asset stranding is considered impossible. The second is that it is considered increasingly legitimate to argue that damage can be undone at a later date. What has come to be accepted, implicitly, is that it is fine to overshoot 1.5°C – to hit 2 or 2.5°C, say – because we can subsequently bring the temperature back down.

As Malm and Carton see it, we have arrived at the acceptance of overshoot in successive steps. The first step was a shift in focus from mitigation (addressing the causes of warming) to adaptation (learning to live in a warmer world). When politicians in high-emissions countries emphasise the importance of adaptation and climate ‘resilience’, as they began to do in the 1990s, it usually means they have abandoned mitigation. We need to learn to adapt because we can’t – that’s to say, won’t – tackle the causes of climate change.

The second step was the rise of the notion of ‘carbon capture and storage’, or CCS. If CO₂ emissions could be captured at source and transported to a location for safe long-term storage or sequestration, they would pose no danger to the climate. A CCS retrofit to a coal-fired power plant, for instance, could grab the bulk of the CO₂ emitted before it had a chance to enter the atmosphere. CCS held out great promise for fossil fuel capitalists. The earliest significant research into possible technical solutions, undertaken around the turn of the century, was funded by major polluters. This returns us to the IEA’s recommendation in 2021 that ‘unabated’ coal plants no longer be approved for development. Plants abated with CCS would be fine. The problem is that more than twenty years on from those early experiments, CCS still isn’t ready, technically or economically, for large-scale commercial use. By all accounts it isn’t even close.

The third, and penultimate, step towards acceptance of overshoot was the embrace of ‘direct air capture’. DAC, like CCS, involves capturing emitted carbon and locking it away. But while CCS captures CO₂ at source, before it can escape into the atmosphere, DAC captures CO₂ that has already been emitted. This was even more appealing to the fossil fuel industry. CCS, in theory at least, would allow us to continue burning fossil fuels while staying within temperature limits, because combustion would effectively be emissions-free. With DAC, we can emit as much carbon as we like, then suck it all back up. Here, overshoot has no limits. After all, if we can reverse-engineer global temperatures back down from 2°C to 1.5°C, then why not from 2.5°C? Or 3°C?

DAC is the technology par excellence of the insidious terminological and conceptual innovation known as ‘net zero’. As many critics have pointed out, ‘net-zero emissions’ does not mean ‘zero emissions’: it means a world of continuing fossil fuel combustion and CO₂ emission on whatever scale, just so long as an equal and opposite amount of CO₂ is captured from the atmosphere. That would be one thing if it worked. But DAC is the most difficult and expensive form of carbon capture, considerably more challenging even than CCS. At last count, a total of 27 DAC plants had been commissioned worldwide, collectively capturing a total of 0.01 million tonnes of CO₂ per year, or the equivalent of around 0.00003 per cent of annual CO₂ emissions.

Perhaps this snail-like progress explains the growing enthusiasm for the technological fix that represents the fourth and final step: geoengineering. If all else fails, the argument goes, we can modify the composition of the atmosphere to directly cool the earth, for example, by injecting sulphate aerosols into the stratosphere to increase the amount of sunlight reflected back into space. The hope is that by these means we might dispense with mechanisms for managing atmospheric levels of CO₂ altogether.

Overshoot ideology is writ large in the statements issued by major governments about their climate goals and how they intend to achieve them. No government speaks of actual zero: net zero – itself a creature of overshoot – dominates official climate policy. But, even more telling, all talk of mitigation (essentially, asset stranding) has given way to the terms and tools of overshoot: adaptation, CO₂ removal, geoengineering. The world of overshoot is one in which robust mitigation in the here and now, based on proven zero-carbon technologies of energy generation, is sacrificed for redemptive action based on uncertain technologies.

Overshoot ideology would not have triumphed without the support of the scientific establishment. Among the worst villains in Overshoot is the UN body formed in the 1980s to advance scientific knowledge about climate change, the Intergovernmental Panel on Climate Change, and in particular, the IPCC’s Working Group III. The group was tasked with the assessment of ‘mitigation pathways’ and their compatibility with the world’s climate goals. In recent decades it has become increasingly relaxed about overshoot. This was made explicit in its ‘Special Report on Global Warming of 1.5°C’ from 2018, in which it deemed two types of pathways ‘1.5°C consistent’: those in which warming actually ‘remains below 1.5°C’ and those in which warming ‘temporarily exceeds (“overshoots”) 1.5°C and then returns to 1.5°C’. Of the 578 pathways included in the report, Malm and Carton tell us, 568 were in the second category. Delegations to the IPCC from vulnerable nations refused to accept the overshoot scenarios: ‘We will have the water up to our necks by then.’

Economists are singled out by Malm and Carton for special criticism. The models they have built to help the IPCC and others present illustrative pathways to the public are known as ‘integrated assessment models’ because they combine climate, economic and social scenarios. IAMs typically assume that the best policy for tackling climate change is the cheapest one, and that costs will fall over time. On this view, it is always better to postpone action which will later become cheaper. In creating these models, as Malm and Carton put it, economists have displayed ‘practical loyalty to business as usual and nominal fealty to temperature targets’.

Malm and Carton​ don’t indulge in any handwringing. On the contrary, Overshoot is a forceful appeal to do as much as we can as quickly as possible to avert a climate breakdown worse than the one already guaranteed. They reiterate the necessity of stranding: keep it in the ground! If the book makes for grim reading, it’s because there is little ground for optimism. The forces arrayed against asset stranding are extremely powerful, especially in parts of the world where fossil fuel reserves remain most abundant and can be extracted most lucratively. The situation is not helped by those climate commentators who underestimate or ignore the forces of fossil fuel reactionism: they are guilty of ‘hurrah-optimism’, described by Adorno as the ‘constantly enforced insistence that everybody should admit that everything will turn out well’.

If Malm and Carton see a chink of light in the darkness, it is in evidence of local resistance to the further exploitation of fossil fuel reserves. In principle, they suggest, this resistance could be scaled up, potentially all the way – at least in the West, where the private sector largely controls the fossil fuel economy – to expropriation, nationalisation and forced asset stranding. They cite the example of Ecuador, where there has been a long-running campaign to halt drilling in the Yasuní national park, which stands on top of the country’s second largest oil reserves. In 2014, campaigners collected enough signatures to trigger a national referendum. The government refused to recognise the legitimacy of the petition, but after a lengthy court battle Ecuador’s Supreme Court judged that the referendum should go ahead. It was held in August 2023 – by which time Petroecuador, the state-owned oil company, had already sunk more than $2 billion into the Yasuní project – and a majority voted in favour of halting extraction. For the first time, Malm and Carton write, ‘a people democratically elected to strand fossil fuel assets.’ More than a billion barrels of oil remain in the ground, at least for the time being.

The case of Ecuador, and the role of its Supreme Court in particular, put me in mind of E.P. Thompson’s Whigs and Hunters (1975), his account of the Black Act of 1723 which criminalised and imposed harsh penalties on those found guilty of various acts of hunting, fishing and destruction of property. The act was a response to a proliferation of these activities during the enclosure of common lands, which saw the immiseration of rural communities. On the face of it, Whigs and Hunters reaffirms what we already know: that laws and legal frameworks are instruments of the ruling class, used to enforce and maintain social inequality. But it is in the paradoxical nature of the law, Thompson argues, that the more brazen it is, the more it loses its efficacy. ‘If the law is evidently partial and unjust,’ he writes, ‘then it will mask nothing, legitimise nothing, contribute nothing to any class’s hegemony … It cannot seem to be [just] without upholding its own logic and criteria of equity; indeed, on occasion, by actually being just.’ To an extent the law made the elites ‘prisoners of their own rhetoric; they played the games of power according to rules which suited them, but they could not break those rules or the whole game would be thrown away.’ It was ‘inherent in the very nature of the medium which they had selected for their own self-defence that it could not be reserved for the exclusive use only of their own class’. Thus, as and where they could find and afford a lawyer, England’s commoners in the 18th century ‘would actually fight for their rights by means of law; occasionally [they] could actually win a case.’ The law both reinforced the power of the ruling class and at the same time ‘imposed, again and again, inhibitions on the actions of the rulers’.

The government in Ecuador could neither stop its people fighting for their rights, nor ignore the rule of law when legal judgment obstructed the government’s preferred course of action. And it isn’t only in Ecuador that fossil fuel capitalism is occasionally stung by nettlesome jurists. In 2019, Surrey County Council granted planning permission for four oil wells to be drilled at Horse Hill. Campaigners mounted a legal case, arguing that the environmental impact assessment conducted by the council should have taken into account the more than ten million tonnes of CO₂ that would be emitted when the recovered oil was, inevitably, burned. After five years and numerous setbacks – including losses in lower courts against adversaries with deep pockets – the UK Supreme Court ruled in June that the council had indeed acted unlawfully by granting permits without considering the consequences for the climate. The council’s planning permission was quashed.

I am not starry-eyed about any of this. More often than not, the law comes down on the side of fossil fuel capital. The multi-year custodial sentences recently given to Just Stop Oil activists for conspiring to cause gridlock on Britain’s roads says much about the illiberalism of the legal system. And we can expect the right-wing supermajority on the US Supreme Court to be emboldened by a second Trump term. But Thompson was right that even a legal system weighted in favour of propertied elites can and sometimes must rule against their interests if they ask too much of it. There is precedent, too, in the successful use of the legal system to curb the influence and power of Big Tobacco, which was eventually undone by its own misinformation campaigns. When all other avenues to the timely stranding of fossil fuel reserves, including government intervention, appear to have been closed off, perhaps the law – ably navigated by determined campaigners – is all that remains.