Mitigating global warming while replacing revenue from $2 trillion in stranded fossil fuel assets

A big thanks to Dr. Alan K. Miller for compiling these references on the $2 trillion stranded fossil fuel assets.

Bloomberg Markets recent summary article:

“Oil majors risk wasting $2.3 trillion if peak demand looms” (https://www.bloomberg.com/news/articles/2017-06-20/oil-majors-risk-wasting-2-3-trillion-as-climate-goals-take-toll)

“Oil companies risk wasting $2.3 trillion of investments should demand peak in the next decade as the world works toward its goal of limiting global warming, according to a report from Carbon Tracker.”

From the Executive Summary of the Carbon Tracker report, “2 degrees of separation — Transition risk for oil and gas in a low carbon world”

“Carbon budget alignment: company by company

This new analysis provides a way of understanding whether the supply options of the largest publicly traded oil and gas producers are aligned with demand levels consistent with a 2 degree Celsius (2D) carbon budget. By allocating the carbon budget to potential oil and gas projects, through applying the economic logic of a carbon supply cost curve, it is possible to identify which companies have the highest exposure to potential capital expenditure (capex) to 2025. This report provides a snapshot of the potentially unneeded capex spend for 69 global oil and gas companies — highlighting for the first time, the wideranging degree of exposure amongst companies in the sector.

Excess capex

The analysis shows that:

• US$2.3trn — around one third — of potential capex to 2025 should not be deployed in a 2D scenario compared to business as usual expectations.

• Company level exposure varies from under 10% to over 60% when considering the largest 69 publicly traded companies.

• Around two thirds of the potential oil and gas production which is surplus to requirements in a 2D scenario is controlled by the private sector.”

Dr. Miller is the founder of Cool It, Earth!, a California-based startup tackling the challenge of global warming by using Ocean Thermal Energy Conversion (OTEC) to trigger natural climate forces that will cool the Earth’s entire atmosphere, while also generating CO2-free energy.

OTEC uses the temperature difference between cool deep ocean water and warm tropical surface water to produce clean electricity on the oceans. 7 TW is an environmentally sustainable level. Using electrolysis plus the Haber-Bosch process to generate ammonia as the safe liquid-fuel hydrogen energy carrier, it can provide 2.6 TW of dispatchable, storable, CO2-free electric power wherever needed on land. Comparisons among recent climate modeling studies have shown that the upwelled cold water from this same level of OTEC, if discharged and retained at the surface, will also set off natural climate forces that will directly decrease the Earth’s Surface Atmospheric Temperature (SAT) by 1.08°C, equivalent to taking 2,261 Gt of CO2 out of the atmosphere.

Together with the associated fossil-fuel replacement, OTEC used in this way can by itself mitigate 1.7°C of global warming. If a modest amount of wind, wave, and solar power is added, global warming could be held to 1.5°C at fossil-fuel replacement levels close to the 2015 Paris climate talks INDC commitments. Possible environmental effects have been examined, and no show-stoppers have been identified.

The Earth cooling element enables the concept of negative carbon fees to be enacted, to help pay for the system and make it very competitive economically. Production of ammonia using “grazing” OTEC plants in tropical waters, with transport of the ammonia by tanker and pipeline to wherever needed as a storable, non-interruptible, CO2-free liquid fuel, could form the basis for huge adjacent businesses by large existing oil companies, who may face the prospect of revenue declines as the world shifts to a future based more on CO2-free energy sources. Work refining the concept is underway.