Climate woe fails to halt oil explorers

High-level delegates at next month’s climate change talks in Bali meet at a time when storm clouds are gathering over the world economy.

Market wobbles in the wake of this summer’s sub-prime crisis as well as rising oil prices are unlikely to favour the fight against global warming.

Yet, the costs of failing to agree on strong criteria for a post-Kyoto framework could be far higher. A landmark report last year by Nicholas Stern of the London School of Economics laid out the economics of global warming in the starkest of terms. Global warming, said the report, could shrink the global economy by 20%. By contrast, it continued, taking immediate action would cost just 1% of global gross domestic product.

The prospect of tackling climate change was daunting enough when the findings of the Stern report were first released last year. Dealing with the problem at a time when world markets are feeling the effects of the sub-prime fallout, however, will be doubly difficult.

Last week (15 November), Angel Gurría, the secretary-general of the Organization for Economic Co-operation and Development, identified the dip in the "confidence level" of financial markets as the biggest impact of the crisis. None of this bodes well for costly climate change policy.

"Finance ministers in Europe are very worried about this," says Juan Delgado, a research fellow at Brussels-based think-tank Bruegel. "They say: we’re going to fight climate change, but let’s look at the numbers. We have to look at the best way of accommodating these measures," he added.

Common wisdom would have it that switching over to cleaner forms of energy might make added sense to policymakers at a time when increases in oil prices per barrel are about to hit the psychological $100 mark. Yet governments including Canada and Russia are now hunting for new sources of fossil fuels, ironically enough, under retreating glaciers in the Arctic Ocean. The UK, meanwhile, is preparing territorial claims on tens of thousands of square miles of the Atlantic Ocean floor in the hope of annexing lucrative oil fields.

OPEC, the organisation of petroleum exporting countries, signalled a radical change of thinking on climate change at a rare summit meeting last week (only the third in 47 years). OPEC secretary-general Abdullah al-Badri announced that the group would be willing to help fund research into carbon capture and storage technologies. Robert Mabro, of the Oxford Institute for Energy Studies, describes the move as a good initiative. "We have yet to see what the reaction of governments will be," he says.

High-level delegates at next month’s climate change talks in Bali meet at a time when storm clouds are gathering over the world economy.