“Fiduciary: a person to whom power is entrusted for the benefit of another”
“Power is reposed in members of Parliament by the public for exercise in the interests of the public and not primarily for the interests of members or the parties to which they belong. The cry ‘whatever it takes’ is not consistent with the performance of fiduciary duty” Sir Gerard Brennan AC, KBE, QC
After three decades of global inaction, none more so than in Australia, human-induced climate change is now an existential risk to humanity. That is, a risk posing large negative consequences which will be irreversible, resulting inter alia in major reductions in global and national population, species extinction, disruption of economies and social chaos, unless carbon emissions are reduced on an emergency basis. The risk is immediate in that it is being locked in today by our insistence on expanding the use of fossil fuels when the carbon budget to stay below sensible temperature increase limits is already exhausted.
As one of the countries most exposed to climate impact, and in the top half dozen carbon polluters worldwide when exports are included, as they must be, this should be of major concern to Australia. Instead, politicians and bureaucrats urge massive fossil fuel expansion to supply domestic and Asian markets, the latter justified on the grounds of poverty alleviation and the drug peddlers argument that: “if we don’t supply it, others will”. Blind to the fact that fossil fuels are now creating far more poverty than they are alleviating. In so doing Australia would be complicit in destroying the conditions which make human life possible. There is no greater crime against humanity.
Regulators now recognise that climate risk far outweighs the financial risks which triggered the 2008 Global Financial Crisis, and demand action . Company directors have a fiduciary responsibility to understand, assess and act upon climate risk. Overseas, directors are already facing legal action, and personal liability, for having refused to do so, or for misrepresenting that risk. Compensation is being sought from carbon polluters for damage incurred from climate impact. Similar action will be taken here.
But what of our politicians and bureacrats and their contribution to this crime? The last few years have seen an unprecendented stream of lies and disinformation emanating from our official bodies around climate and energy policy, in blatant disregard of the facts, with seemingly no end to distortions designed to achieve short-term political advantage. What fiduciary responsibility do they have to the community they are supposed to serve?
Ministers repeatedly remind us that the first responsibility of government is the security of the people. On any balanced assessment of the science and evidence, climate change is now the greatest threat to that security and to our future prosperity.
Australia signed and ratified the 2015 Paris Climate Agreement, presumably with the intent of meeting its objectives to limit global average temperature increase to “well below 20C above pre-industrial levels and to pursue efforts to limit the increase to 1.50C”, and “to reach global peaking of greenhouse gas emissions as soon as possible —– in accordance with best available science”, recognising that “climate change represents an urgent and potentially irreversible threat to human societies and the planet”.
The voluntary Intended Nationally Determined Contributions (INDCs) made by Paris participants, if implemented, would not meet the objectives, leading to a global temperature increase in the 3-40C range, a world incompatible with an organised global community. The Australian commitment, of a 26-28% emission reduction by 2030 on 2005 levels is derisory on any fair international comparison.
Regional temperature variations would be far greater than these global averages, rendering many parts of the world uninhabitable even at 20C, beyond the capacity of human physiology to function effectively. This may well be the case across much of Australia.
Since Paris, our Federal Government has ignored the Agreement, brushing off the increasingly urgent warnings of “the best available science” and ramping up fossil fuel expansion, whilst placing every possible obstacle in the way of low-carbon energy alternatives.
The fact that many Ministers and parliamentarians are climate deniers for ideological or party political reasons, does not absolve them of the fiduciary responsibility to set aside their personal prejudices and to act in the public interest with integrity, fairness and accountability. This requires them to understand the latest climate science and to act accordingly. It is not acceptable for those in positions of public trust to dismiss these warnings in the cavalier manner which has typified the last few years. Particularly when the risk is existential.
The Prime Minister failed this test recently by implying the disastrous Tathra bushfires had nothing to do with climate change. Every extreme weather event today has some element of climate change involved; it is irresponsible to imply otherwise.
Ministers justify their approach by misrepresenting international studies to support their fossil fuel expansion ambitions. Notably by citing the work of the International Energy Agency (IEA).
The IEA sets out its perspective on the energy sector over the next 25 years in its annual World Energy Outlook (WEO), exploring the implications of alternative climate and energy scenarios. Key scenarios are: current policies (CP) which assumes business-as-usual (4-50C temperature increase), new policies (NP) which extends CP with policy committed to but not yet implemented (3.5-40C temperature increase), and sustainable development (SDS) which is the pathway to meet various sustainable development goals. SDS claims to keep global average temperature increase below 20C, but only with a 50% chance of success by relying on massive investment in sequestration technologies which have yet to be invented. In reality, SDS would result in temperature increase substantially above 20C. There is no scenario which realistically achieves the Paris objectives.
The IEA is no paragon of virtue regarding climate change . It downplays both climate impact, and the potential of alternative energy sources, as a result of strong pressure politically from its developed country membership, and from vested interests who make up its advisory bodies such as the IEA Energy Business Council and the Coal Industry Advisory Board.
Consequently their scenarios are seized upon to justify further fossil fuel investment . For Australia, Asia Pacific coal demand is a key factor, this being our major export market. In the November 2017 WEO, under NP assumptions annual coal demand increases by 12% or 480 million tonnes by 2040, but under SDS assumptions it declines by 47% or 1880 million tonnes.
The IEA takes NP as their central scenario as this is where we are headed if governments implement their current commitments. However, in the fine print the IEA make it clear that NP is not a sustainable future. In the 2017 WEO, Executive Director Fatih Birol says: “Decision-makers also need to know where they would like to get to. — This is the point of the SDS scenario” – even though SDS does not meet the Paris objectives.
Having ratified Paris, presumably this is at least where Australia wants to get to. Not so our Ministers. At his National Press Club address on 28th March 2018, Resource Minister Canavan insisted on using the IEA NP Asia Pacific 480 million tonnes annual demand increase by 2040 to justify expansion of our coal industry, ignoring the SDS 1880 million tonnes decline. The latter is the minimum transition to approach a sustainable future; many existing operations become stranded assets before the end of their working life, and certainly no new coal investment. Ministers Frydenberg and Ciobo similarily insist on using NP estimates and ignore the SDS.
Canavan then assured the Press Club that in the first 40 years of this century, the world will use more coal than in the entire previous history of the coal industry. The IEA repeatedly emphasise that their scenarios are not forecasts. They are designed to give decision-makers an understanding of the implications of their actions, and they only cover part of the story. If the NP pathway is followed, there will be no market for export coal as Asia Pacific economies will shrink rapidly under the weight of climate impact. If more coal is used by 2040 than in previous history, humanity will become extinct. These are consequences the IEA does not discuss.
Such ministerial naivety is laughable, but it highlights a serious governance failure. As with company directors, it is incumbent upon ministers to understand these issues, in particular the risks to which the Australian community is exposed by their decisions. The only possible justification for Minister Canavan’s view is that he does not believe climate change is even a problem, let alone accept the need to rapidly reduce emissions. Further, he has no understanding of the implications of his proposed action. Whatever the Minister’s personal position, or the views of those who voted for him, given the overwhelming science and evidence confirming the urgency to address climate change, such ignorance is unacceptable and a fundamental breach of his fiduciary responsibility to the nation.
Ian Dunlop was formerly an international oil, gas and coal industry executive, chair of the Australian Coal Association and CEO of the Australian Institute of Company Directors. He is a Member of the Club of Rome.