Fossil fuel companies defy warnings on burning reserves

The world’s biggest fossil fuel companies are taking a defiant stance against warnings that reserves of coal, oil and gas are already several times larger than can be burned if the world’s governments are to meet their pledge to tackle climate change.

Peabody Energy, the world’s largest private coal company, said on Monday that global warming was “an environmental crisis predicted by flawed computer models”.

Another coal giant, Glencore Xstrata, said on Tuesday that governments would fail to implement measures to cut carbon emissions. Oil and gas major ExxonMobil said new reserves in the Arctic and Canadian tar sands must be exploited, moves scientists deem incompatible with tackling global warming.

The fossil fuel companies rejection of the consensus of governments and scientists that urgent action to cut emissions is needed comes as the G20 group of leading nations launched a joint probe into global financial risks posed by fossil fuel companies investing in expensive projects that could be left worthless by international action on climate change, the so-called “carbon bubble”. The World Bank and Bank of England have already warned of the serious risk climate action poses to trillions of dollars of fossil fuel assets.

“A toxic brew of climate denial and environmental irresponsibility is steering Big Coal and Big Oil towards ever greater fossil fuel extraction, and towards an economic precipice,” said Doug Parr, policy director at Greenpeace UK. “The problem is their headlong rush to disaster could drag many ordinary people’s pensions and investments over the edge with them. We can only hope that our political leaders can stand up to the lobbying muscle of fossil fuel companies and their short-sighted recklessness.”

Peabody Energy chairman and chief executive Greg Boyce, told a fossil fuel conference in Houston, US, that access to low cost energy was the world’s biggest issue. “The greatest problem we confront is not an environmental crisis predicted by flawed computer models, but a human crisis that is fully within our power to solve.”

He said tens of millions American of parents faced “the terrible choice of putting food on the table, buying medicine or paying for power” and that the problem was even worse for billions of people around the world without proper electricity.

“We should not mandate artificial carbon caps, carbon taxes or renewable mandates that will hurt people and cripple economies for negligible environmental benefit,” said Boyce.

“The sudden interest of climate ‘merchants of doubt’ like Peabody in global poverty strikes me as cynical at best,” said Anthony Hobley, chief executive of the Carbon Tracker Initiative, which has pioneered the analysis of carbon bubble. “They are using the world’s energy poor for a game of smoke and mirrors to sow confusion because the facts say otherwise.” Former US vice-president Al Gore has also accused the coal industry of mounting a cynical and misleading campaign.

A recent study showed 80% of coal reserves must remain in the ground if climate change is to be tackled. The most recent report from the UN’s Intergovernmental Panel on Climate Change, approved by 195 of the world’s nations, concluded that limiting the impacts of global warming “is necessary to achieve sustainable development and equity, including poverty eradication” and that climate change impacts are projected “to prolong existing and create new poverty traps”.

Ivan Glasenberg, the billionaire chief executive of Glencore Xstrata, dismissed concerns that any of its 4.3bn tonnes of coal reserves could be left worthless – or ‘stranded’ – by international action to cut greenhouse gases. He said he did not believe governments would act in the face of growing demand for cheap energy.

Speaking at the launch of the company’s sustainability report, Glasenberg said: “Some of our stakeholders are concerned about the future of our fossil fuel reserves; in particular that they may become stranded assets. We do not believe that the global energy reality will economically support carbon measures that would prevent us from fully utilising our fossil fuel reserves.”

“Glencore CEO’s statement about the future of their coal reserves flies in the face of recent reports from banks such as HSBC and ignores the concerns of the Bank of England and now the G20,” said Hobley. “It reminds me of similar denials by previous industries in decline from steam locomotion, Kodak film, Blockbuster videos and Olivetti typewriters.”

ExxonMobil, Chevron and Shell have also defended their interests by arguing that the only way the world meet it energy demand is by burning fossil fuels. A recent report from Bloomberg New Energy Finance showed that, as costs plummet, global new low carbon energy capacity has outstripped new coal, gas and oil combined since 2013.

Also speaking at the fossil fuel conference in Houston, ExxonMobil chairman and chief executive Rex Tillerson called for the exploitation of Arctic oil and gas reserves and the building of the Keystone XL pipeline to bring oil from Canada’s tar sands to the US. He said the pipeline had been delayed by “political machinations”.

Hobley said: “Focusing on high cost high carbon capital expenditure in the Arctic and tar sands makes neither financial or climate sense [so] what possible rational can there be for pouring billions of dollars of shareholders money into them?”

The Guardian is running a campaign asking the world’s two biggest health charities to join over 180 institutions in divesting from fossil fuels. The Bill and Melinda Gates Foundation has investments in both Peabody Energy and Glencore Xstrata.