Call it by its name: Fossilflation
On one hand, fossilflation is just obvious — the price of gas is up in lights on street corners and rest stops. But inflation is a thorny problem for climate action. Politicians are under pressure to curb gas prices, Big Oil is cashing in, and the public has little appetite for spending more money on energy projects.
If inflation is top of the public mind, the conversation should be about the F-word — how much of our economic problems are rooted in our dependence on fossil fuels.
Close to half of current inflation is due to energy prices. That’s true in Canada as well as the United States and it’s even higher in other parts of the world. And it’s worth remembering that oil was surging past $90 per barrel even before Putin’s fossil-fuelled invasion of Ukraine.
“Fossilflation” can’t have been coined by the European Central Bank but the ECB brought the term to prominence this spring when Isabel Schnable memorably described “fossilflation” driving consumer price spikes and “climateflation” boosting food costs.
Schnabel also wondered aloud about emerging “greenflation” stoking demand for metals and minerals in cleantech. Then earlier this month, Christine Lagarde, president of the ECB, announced, “We are now observing “fossilflation”, not “greenflation! While decarbonization in the energy sector can cause rising prices in the medium term, it can lower inflation in the long term.”
The secretary general of the United Nations was even more blunt:
The fundamental problem is that fossil fuel prices are always volatile and vulnerable to nasty geopolitics. And that’s not just a problem for inflation: ominously, 10 of the last 12 recessions were preceded by a spike in oil prices.
By contrast, electricity is remarkably stable while the cost of electricity and heat from renewables is dropping dramatically. Canadian forecasts repeatedly find that a “Big Switch” towards clean electricity will ultimately make energy more affordable, and cheaper for Canadians overall.
The same is true in the United States, where estimates range as high as $2 trillion in savings for Americans, per year.
Fossil fuels don’t just drive up the cost of living directly, either. They drive up extreme weather and droughts, crippling farms and causing costs to soar on everything from staples like wheat to condiments like sriracha sauce. We could add on the costs of fire and flood, of insurance and rebuilding and ruggedizing. The list of economic damage and “climateflation” goes on and on, even before we include the toll on lives and livelihoods.
Our political leaders will have to be preoccupied with inflation (perhaps even more preoccupied with being seen to be preoccupied). If the cost of living is front of mind, they should be clear with the public that the longer we stay hooked on fossil fuels, the longer we’re stuck on the financial roller-coaster of fossilflation and the accelerating impacts of climate change.
Canada’s finance minister is truly impressive in many ways, but where is Chrystia Freeland on the defining crisis of our time, asks Seth Klein?
“Beyond passing boilerplate references to the importance of climate action, I can think of no substantive intervention or speech Freeland has made on the most pressing collective challenge of our lives.”
Goodbye to some single-use plastics
The federal government is banning the production and import of six kinds of single-use plastics including bags, takeout containers and straws.
That’s “good news for the burgeoning industry of reusable takeout food-ware services in most major Canadian cities.”
But those six items will need to be joined by many others because plastics are the fossil fuel industry’s Plan B and “are expected to contribute more to climate change than coal-powered generating plants within the next decade.” You can read more about Canada’s plastics problem in this special report from Canada’s National Observer.
TMX pipeline officially a money-loser
The Trans Mountain pipeline expansion is on track to lose us between $600 million and $6.3 billion, according to the Parliamentary Budget Officer. That may not be a surprise to anyone following the project’s skyrocketing costs, but it is shocking to learn the government’s rosier estimates had relied on secret reports assuming the pipeline would operate for 100 years.
“We believe that's probably too long of a time horizon, to assume that the pipeline will be operating for at least another century ... let alone to take into consideration revenues that will be generated over such a long period of time,” Parliamentary Budget Officer Yves Giroux told Natasha Bulowski.
“Also, because of the various commitments to net-zero or to reduce reliance on fossil fuels, we didn't think that using a 100-year time horizon was appropriate.”
Banking on bribery
Glencore Energy was convicted in the U.K. on bribery charges related to its oil operations in Africa.
The Guardian reports: “Glencore said it had set aside $1.5 billion to cover potential fines and costs related to the investigations in the U.K., U.S. and Brazil. While significant, that amount was far below the $4 billion that Glencore said would be returned to shareholders after record profits.
Breaking camp at the top of the world
Nepal is getting ready to move Everest’s base camp because the Khumbu Glacier is melting away.
"We surprisingly see crevasses appearing overnight at places where we sleep," Kishor Adhikari, a colonel in the Nepali army, told the BBC. "In the morning, many of us have this chilling experience that we could have fallen into them in the night. Cracks on the ground develop so often, it is quite risky."
Leave 40 per cent of existing fossil fuels in the ground
“New research from Environmental Research Letters has found that existing fossil fuel developments could warm the Earth beyond 1.5 C. It points at a need to leave approximately 40 per cent of “developed reserves” unextracted. This is quite a revelation at a time when the Canadian government is still approving new oil developments, funding oil pipelines and has not ruled out further projects in the future,” writes Lori Lee Oates.
Colombia’s new president says he will do just that
Gustavo Petro was elected last Sunday along with the nation’s first Black and second female vice-president, Francia Marquez (a Goldman prize winner).
Climate Home News reports “Petro committed to ‘undertake a gradual de-escalation of economic dependence on oil and coal.’ He committed not to grant any new licences for hydrocarbon exploration during his four-year mandate and to halt all pilot fracking projects and the development of offshore fossil fuels.”
A decade of wins against fossil fuel projects
Since 2012, Indigenous and settler communities have blocked 73 per cent of the 55 fossil fuel projects proposed in Oregon, Washington state and B.C. That’s the headline finding from a new report by the Sightline Institute. Nine export projects are still in the works, mostly in British Columbia.
Canada’s first electric ambulances are poised to hit the streets of Montreal and Laval. Quebec-based Lion Electric has teamed up with Demers Ambulances to produce the Demers eFX, with support from the federal and Quebec governments.
French bank drops financing for fossil companies
France’s second-biggest bank, Crédit Agricole, has announced it will drop fossil fuel financing. Reclaim Finance welcomed the announcement that “recognize[s] for the first time the need to progressively disengage from the oil and gas industry.”
Edmonton embraces wind and solar
Alberta’s capital signed two new contracts for renewable energy as the city aims for 100 per cent renewable electricity. Eighty per cent of the power will come from wind and 20 per cent from solar.
“This contract will allow us to reduce emissions by 30 per cent from our current operations,” Mayor Amarjeet Sohi told Global News. “That’s a significant reduction over the next 20 years. But we need to do more. We have 70 per cent (of the) target that we haven’t met yet.”
‘A failure of humanity’
I know it can be tough to face the climate crisis (over 3,000 villages underwater in Bangladesh and India just this week), but you can’t miss this powerful piece by Jessica McDiarmid, ‘A failure of humanity’: World’s poorest countries contend with climate disasters caused by the richest nations.
Jessica takes us to South Sudan with Reza Eshaghian who grew up in London, Ont., and trained to be an ER doctor. Since 2014, he’s spent three months a year with Médecins sans Frontières helping people in Syria, Chad and other countries. Eshaghian came to realize “the biggest problem is the climate crisis.”
Jessica’s writing is unforgettable from the opening line: “First, the animals die.”
Oil wells into solar farms
But I can’t leave you on that note, so let’s circle back to Alberta where former oil and gas workers are transforming inactive wells into solar farms. RenuWell is a rapid upskilling program jointly run by Iron & Earth, an organization of energy workers, and Medicine Hat College, alongside other partners. RenuWell broke ground on its first two sites this week near Taber in southern Alberta.
“I’ve been following Iron & Earth for a little while because they are transitioning from oil and gas to solar and I'm interested in moving my career into solar,” says Shawn Hubbard, a current participant in the program. “That's why I signed up; because it's a new direction. Oil and gas has been in decline in this area and I'm excited because it's a new industry and it's growing fast,”
That’s all for this week. Thank you for reading Zero Carbon. Please forward it along and always feel free to write me with feedback or suggestions at [email protected]
Support for this issue of Zero Carbon came from The Trottier Foundation and I-SEA.