The Coalition’s conversion to climate change activism seems to be almost complete.
A year ago it was ‘socialism masquerading as environmentalism’; yesterday the government reversed its refusal to contribute to the Green Climate Fund and put in $200 million, and last night Julie Bishop even had the nerve to tick off China and India for not doing enough to stop climate change.
Tony Abbott has been what you might call a 'thought leader' on this subject, beginning with his famous declaration in 2010 that climate science is ‘absolute crap’ and his description of the proposed ETS as a scam.
And who can forget the jubilant high-fives among Coalition leaders as the Carbon Tax Repeal Bill passed the Senate in July this year.
So from the time, in 2011, that it was clear the Coalition would win the 2013 election, until this week, the Australian owners of fossil fuel assets -- coal and natural gas -- would have been feeling reasonably comfortable that they had, or soon would have, a government that was working to protect the value of their assets.
That has now changed. The Coalition’s conversion to some form of reluctant, public ‘true belief’, plus what’s going on at the climate conference in Lima this week, changes the game for them completely.
There is an increasing prospect that Australia’s vast fossil fuel assets, a key foundation of the nation’s wealth, will become ‘stranded’.
In fact an agenda item in a ‘draft negotiating text’ in Lima over the weekend referred to ‘full decarbonisation by 2050’. If that phrasing turns into a formal agreement in Paris next year, it puts a finishing date on the coal, oil and natural gas industries.
If that sounds a little dramatic, remember there is already a global glut of oil, against all predictions, leading this morning to another fall in its price to just above US$60 a barrel, the lowest price in five years.
Saudi Arabia is effectively engaged in a price war with the US shale oil producers, trying to preserve its market share and, by driving the price down towards its marginal cost of production, prevent further exploration.
Consider, also, this article in Reuters yesterday headlined “LNG boom over as China looks to sell out of long-term deals”, quoting a gas industry analyst as saying: "We talk about China choking on LNG. There's just too much coming onto the market."
According to this story, one of China’s state-controlled energy giants, Sinopec, is looking to sell some long-term LNG import deals from Australia and elsewhere.
Arguably, most of the world’s coal assets are already stranded -- doomed by the new global momentum for carbon reduction agreements to remain in the ground forever.
With the way that even Australia’s Coalition is now talking, it would be very surprising indeed if the Lima conference didn’t end with a fresh impetus for a new international agreement next year.
But even with existing emissions reduction targets, the falling cost of solar power means coal-fired power generators are likely soon to become stranded assets as well.
The Coalition is bringing up the rear in its conversion to climate change ‘true belief’, pantingly trying to catch up, but this is a powerful signal to businesses and investors of just how far the debate on this subject has now come. They need to prepare.