Markets will advance green agenda even if some governments lose interest: Don Pittis

While the majority of the G7leadersrenewed their countries'commitment to fighting climate change this weekend, there are increasing signs ofpoliticaldefections from the low-carbon strategy.

U.S. President Donald Trump, who has repudiated the Paris Accord, skipped out of the two-daymeeting in Quebec early, before the other six leaders started talking climate.

Ontario isnow officially"open for business" under the leadership of newly elected Progressive Conservative premier-designate Doug Ford, who campaigned against the province's cap-and-trade program andin favour of a 10-cent cut in the price of gasoline.

That led to a rousing vote of confidence from Alberta'sOpposition Leader Jason Kenny.

"The Ontario PCs are strongly committed to fighting Justin Trudeau's federal carbon tax, and joining a future Alberta government in defending Canada's resource industries," the United Conservative Party leader saidin a statement celebrating Ford's win.

But just asOntario voters werepreparingto elect a pro-business party opposed to climate action, one of Canada's most celebrated business leaders was sounding a very different note.

"Reducing our dependence on oil is one of thesinglegreatestchallenges that our society faces," said Sergio Marchionne, the man credited with rescuing carmaker Chrysler,merging it with the Italian auto giant Fiat.

Marchionne, who completed an MBA at the University ofWindsor and a law degree at Toronto's OsgoodeHall, has until recently been a critic of battery-powered cars.

But Marchionne has changed his tune.

Business follows the money

Just over a week ago, Fiat-Chryslerannounced it waslaunchinga multi-billion-dollar plan to catch up with its competitors, introducing a fleet of 30 hybrid and fully electric cars to join its Fiat 500e.

Environmentalism is only part of Fiat-Chrysler'smotivation:The company says high-efficiency electric powertrains will keep fuel costs down, keeping buyers happy.

Listening to some conservative politicians, you might think all businesswas ideologically opposed to cutting carbon.

Of course, that's not true.Business follows the money.

For example, Ontario's Del Mastro family, owners of theDeltroGroup, are both big investorsin the alternative power sectorand well-connected among conservatives.

New research published last week in the journal NatureClimate Change indicates that even if political leaders backed off their commitment to stop climate change,businesswill do the job on its own.

The search for financial efficiency and the steady progress of technology means that the world is going to use a lot less coal, oil and gas, the researchers say, shaking up global energy investment.

Trillion-dollar rethink

Announcing the study last week, the BBC worried that a "Carbon 'bubble' could cost global economy trillions."

But the head of the Cambridge University team that conducted the study, Canadian Jean-Franois Mercure, was quick to play down any hysteria over thefinancial risk implied by his research.

"Ideally, we would promote the recognition of these risks in a way that doesn't lead to panic," saidMercure, who initially studied physics at the University of Montreal, beforetransferring his mathskills to modelling theeconomic futureof technology.

Mercurehopes there will be "an orderly transition" that gradually moves financing away from risky assets. That process has already begun, he says, led by people like Bank of England governor and fellow Canadian Mark Carney.

And financial markets may eventually decide to provide less money for projects seenas higher risk.

The Cambridge research extrapolatescurrent rates of adoption of low-carbon technologyandshows that iftrends continue, theresult will beadrastic, market-based decline in growth in demand for fossil fuels, leading to losses in the order of$1 trillion to $4 trillion USby 2035.

That is quick for such a large sumof money.

Finance will watch the trend

The global use of technology such as hybrid and battery vehicles, solar powerand wind power remains small.But just as we've seen by calculating themathematical curve for the adoption of previous innovations, such as the automobileor the cellphone, it is possible to project along-term trend.

Even without runningthe statistics, we can see the same story in Marchionne's race to catch up with GM, Toyota, Renault-Nissan, Tesla and all the other carmakersexpanding their electric fleets.

And while hisresearch shows demand will not fall off a cliff, Mercure says he expects the need for oil will stop growing around 2030.

Somewhere before that date, he suggests,the world's cheapest oil producers, including titan Saudi Arabia, will open the taps to make sure it is not their crude left in the ground when oil demand falls further.

Still,predicting the future is hard, andit is possible the Cambridge scientists' trend calculationswon't come true. Perhaps some new technology, such as cheap carbon capture, will change the market once again.

But as 2030 approaches, if the forecast seems to be coming true, it is the more expensive oil, such as that set to be shipped viaCanada'staxpayer-funded Trans Mountainpipeline, that won't find investors andeventuallywon't be wanted.

"In our view, it is completely possible,and probable,that the pipeline would not deliver as much return as the government currently expects it to,"said Mercure.

Follow Don on Twitter via@don_pittis