Ian Dunlop’s life has been spent in the center of the carbon economy and the climate change debate.
His bio from LinkedIn chronicles his background…
Ian Dunlop has wide experience in energy resources, infrastructure, and international business, for many years on the international staff of Royal Dutch Shell. He has worked at senior level in oil, gas and coal exploration and production, in scenario and long-term energy planning, competition reform and privatization. He chaired the Australian Coal Associations in 1987-88. From 1998-2000 he chaired the Australian Greenhouse Office Experts Group on Emissions Trading which developed the first emissions trading system design for Australia. From 1997 to 2001 he was CEO of the Australian Institute of Company Directors. Ian has a particular interest in the interaction of corporate governance, corporate responsibility and sustainability. An engineer from the University of Cambridge (UK), MA Mechanical Sciences, he is a Fellow of the Australian Institute of Company Directors, the Australasian Institute of Mining and Metallurgy and the Energy Institute (UK), and a Member of the Society of Petroleum Engineers of AIME (USA). He is Chairman of Safe Climate Australia, a Director of Australia 21, Deputy Convenor of the Australian Association for the Study of Peak Oil, a Fellow of the Centre for Policy Development, a Member of The Club of Rome and a member of Mikhail Gorbachev’s Climate Change Task Force. He advises and writes extensively on governance, climate change, energy and sustainability.
He grew up in the middle of the oil and coal business, and over the years he has come to his own conclusions about climate change and the impact it will have on humanity’s future. I interviewed him mid-May 2016 to learn more. I wanted to learn more about what can be done about climate change, what the role of business is, and what the impact on the economy is.
Ian starts by explaining… “My background is in the resource business, especially oil and gas exploration, and then additionally coal mining. I worked for Royal Dutch Shell for most of my career. I left Shell in the early 90s. Essentially I have been involved in the climate debate since the 60s, because it was on the agenda way back then, it was going to become an issue in due course for the fossil fuel business. If you look at the intervening 40 or 50 years the science has gotten clearer, the evidence has gotten harder and harder. And quite simply it’s moving much faster than anyone expected, and it is going to have an impact far quicker than anybody officially is prepared to admit, certainly people who are negotiating things like the Paris Agreement.”
“We have got a problem, in that this is essentially about risk management. And most of the arguments in the formal scientific position of the IPCC is a fairly conservative view. I does not include the fat tail risks, the positive feed-back tipping points, that is going to move the changes taking place much faster.”
What are some of those tipping points…“things like sea ice in the artic, the melting of the Greenland ice sheet, permafrost melt and the implications that has for carbon and methane release. You see evidence already of release from methane perorates; nodules that sit on the sea bed and as temperature rise they change from solid to gaseous states. This is occurring already around the shallow sea beds in the artic and in Siberia in last 12-18 months.”
“The IPCC sets out a formal scientific position every five or six years, but the really critical risk implications in terms of tipping points in the work they do are not quantified; they talk about them, but they are not quantified for good reason. We do not yet have enough scientific knowledge to be precise about what the implications are going to be.”
“Now there is a clear distinction that needs to be made between the science and the risk implications of climate change. Because the risk is something that you really have to think ahead as the extent of the speed at which things occur and the fat tail implications, what people refer to as low probability, but high impact events. These are the things that need to concern us.”
People are assuming there is a low degree of risk until there is a risk, and then it is too late to address the risk. “Yeah, precisely… sensible risk management designed to avoid all that, you try to anticipate that and in fact if you have high uncertainty like in the current environment because of the lack of knowledge on tipping points you should take greater precautions than would otherwise be the case.”
“That kind of risk management is commonplace in corporations, but in this case no one wants to do anything about it.”
“So the concern is we are now starting to see those tipping points kick in, and some of the best scientists have taken the position that the changes are irreversible. The west Antarctic ice sheet is probably now in irreversible breakup and that potentially adds 2-3 meters of sea level rise. Once that goes it takes away the buttressing effect from the ice sheets on west Antarctic mainland is lost and you run the risk that over time those sheets will run much more quickly.”
“You are seeing the same thing now in the arctic. You are seeing the speed of sea ice melt is accelerating in a way that we have never seen, because of the changes in the jet stream. We are seeing periods of extended high temperatures in much of North America contrast to extended cold period or flood periods in other areas. The problem they currently have in Ft. McMurry, Canada is a similar thing because the Jetstream is locking in that high pressure area it draws moisture out of the arboreal forest. Once that happens it becomes very dangerous because of fire risk, which is precisely what’s happened. And if you look around the world you see in China a lot of bush fires that are burning, as well as in the Himalayas.”
“The Paris agreement which was entered into last December was hailed as a diplomatic triumph, in a practical sense it was a complete disaster. What it does is give people a sense of complacency to feel that they can stay below 2 degrees temp increase, and indeed below 1.5 degrees c as a maximum from pre industrial temperatures. The hard fact is that it is impossible to now stay below 1.5 degrees Celsius. We have probably already locked in 1.8 or 1.9 because of what we have historically done, even if we don’t emit another ton of carbon ever again. When you look at the changes taking place we are moving to a world of 3.5 degrees C. It is completely unrealistic, and frankly totally irresponsible to say that we are aiming for 1.5 degrees C. The technology, like carbon capture are not providing the results that we require. Its complete non sense, and major corporations around the world are accepting Paris with no understanding of what the implications are.”
“So sadly we are at the point where the chances of getting on top of the major impacts of climate change are getting slimmer and slimmer by the day. My feeling is the only way we get ahead of this is to declare a global emergency and get on a wartime footing basis, which more and more people are talking about.”
“If you are concerned about the economy, quite frankly the economy is going to have to be turned on its head, if we are serious about doing anything. Which we may not be; it may be that the problem is too difficult, and the world’s leadership and the economic system is unable to cope. You had this happen in World War 2, you had economies turned on their head in the US, the UK, Germany and Japan to meet a completely different demand. I don’t say that lightly, but that’s what scientists are telling us is now required and it’s been patently bloody obvious for the last 10 years.”
The evidence is now mounting that we are in irreversible positions in a number of areas around the world, and we starting to see the financial and social instability that comes from that. Syria is basically a climate change issue, the same in North Africa. It is basically climate change driven.”
The issues there stem from the drought of 2012, and what that did to food prices, and the worsening climate situation since then. The result has been social upheaval, revolution, war, starvation and migration.
“Much bigger issue is the entire economic system is set up on a premise that is not sustainable. We are using up natural capital in a way that is completely unsustainable, increasingly so since the 1970’s. Now we are getting to the point where we have real limits emerging which historically we have managed to get around.”
“Demand has not returned and we have not been able to reactivate growth since the financial crisis, which was essentially caused by peak oil, in my view. It wasn’t the only thing, there were the issues of ethics and banks and subprime mortgages, but the underlying cause was high energy costs.”
At that time oil spiked to $147/bbl.
Dunlop explains that the costs of oil exploration have been increasing, and even with the advent of fracking, oil is only profitable at prices of $80-$100/bbl. “Fracking is a mirage,” he says.
“Because of acceleration of climate change we need to change our economies to a low carbon footing far faster than anyone anticipated.”
He contends that we are in a dangerous situation because, “the economy still has not recovered from the shock of 2008, and quantitative easing and monetary policy have been exhausted.” He continues, “Their ability to bail out the system again like in 2008 is considerably less than previously done. As all of these things come together, it seems to me the world economy is in fairly deep ****, to be quite frank, because it doesn’t take very much to tip it over the edge. We don’t have the levers to pull ourselves out as we once did.”
I asked how he advises companies on sustainability. On this note he says he is viewed by many in business as an extremist and that “people in the business world don’t want to know about climate change. We have a real problem in the US and the rest of the world, that leaders of business and politics, who have been in energy and commodities don’t want to accept that they will have to accept changes that will turn their businesses on their heads. There really hasn’t been much interest in listening to scientists and the risk implications. That is starting to change. I think people are waking up to the fact that the problem is much, much bigger than they had thought. And I think there is a major corporate governance issue in this because the investment community is suddenly starting to realize that they and the directors may be personally liable for not seriously addressing climate risk.”
“Major corporations have to recognize the need for change, because if they don’t they won’t have much basis for economic activity. What people fail to understand, the implication of a 4 degree increase, which is where we are headed, probably more than 4, is a reduction in world population from 7 billion people down to 1 billion people. We are talking about a genuine existential issue.”
“That is not a stable global economy. So any thought that we can somehow do minor incremental tweaking is frankly nonsense. We have never had an issue like this before. Our economic system is not designed to handle this.”
Dunlop states the role of corporate directors is to identify these types of risks and direct change with their companies to address risks, but you can only do that in an environment of brutal honesty.
I asked if there are any companies that are leaders in addressing climate change. He states there is a great deal of green washing going on, but “companies are not accepting the degree of change required. It’s improving, but it is not enough.”
What would be the one thing that would need to change immediately in order to make a difference going forward? “Acceptance of the need for emergency action. That this is a genuine risk we have never ever seen before and it’s going to need a completely different approach. We have awakened too late to make a graduated response. There is no way around it.” He mentions, “We are subsidizing the fossil fuel industries five times the level of renewables. Those subsidies have to stop. Once there is a level playing field new technologies can have a real shot at making a difference.”
“Many of the IPCC studies that assume we are able to stay below 2 degree C, do so having only a 50-60% likelihood of that occurring. As an engineer you don’t build a skyscraper or a bridge with a 50-50 chance that it will fall down.” That’s a great analogy.
I asked Ian what kind of world his kids and grandkids will inherit. “A rather nasty one, unless we get off our ass and do something about it. The fact is the population estimate I mentioned is quite real. Dropping from 7 billion to 1 billion people, it’s not going to be a very nice place. How it occurs and how fast it occurs is difficult to predict. People need to get their heads around that and be honest about talking about it.”
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