On Feb. 11, Finance Minister Jim Flaherty will deliver the 2014 federal budget. An early budget with little expected in the manner of new commitments or funding, this budget is being called a bridge towards Flaherty's promise of a deficit free budget in 2015. Even in the unlikely event that Flaherty can make good on that promise, Canada should be more worried about another budget -- our ever-shrinking carbon budget. With drastic implications for the planet and the economic stability of important public institutions, balancing Canada's carbon budget is a test that politicians are failing.
In 2009, governments from around the world -- including Canada -- pledged to limit global temperature rise to below 2 degrees celsius. At nearly a degree of warming already, we're already seeing this climatic mismanagement playing out as extreme weather like summer flooding in Toronto and Southern Alberta, Hurricane Sandy and Typhoon Haiyan. We're seeing it in record droughts and wildfire rates, the unpredictable polar vortex and in the 30 million people displaced globally by climate change last year.
The term "carbon budget" refers to the remaining amount of carbon emissions we can safely emit in order to have a shot at keeping temperature rise below 2 degrees. According to the best science we have, the global budget lies around 500 gigatons of CO2. The problem comes up when we understand that with only 500 gigatons of space remaining, the global fossil fuel industry has nearly 3000 gigatons in their proven reserves. Put another way, we need to leave 80% of fossil fuels in the ground.
Here in Canada the exact numbers depend on how you divide up the global carbon budget. With a small population and relatively small GDP our share of the budget is less than 10 gigatons, but taking into account our role as an energy exporter that number can grow to closer to 20 gigatons. With nearly 100 gigatons of carbon in Canada's proven fossil fuel reserves - most of it as tar sands and coal -- Canada faces similar limits, and a need to keep at least 80 per cent of fossil fuels in the ground.
The ecological and physical consequences of blowing our carbon budget, from disappearing coastlines to a melting arctic, are stark but often hard for someone like Minister Flaherty to understand. This ignorance, willful or accidental, is dangerous because it is also obscuring major economic consequences. The Insurance Bureau of Canada recently reported that in 2013 extreme weather and climate impacts cost people across Canada $3.2 billion. The now disbanded National Roundtable on the Environment and the Economy pegged the federal cost of climate adaptation at $5 billion a year by 2020, rising to between $21 billion and $43 billion per year by 2050. The same report warns that in major cities we can expect to see "three to six deaths per 100,000 people per year in the 2020s, with impacts worsening in future decades," as a result of a changed climate.
On top of these expected costs to governments, institutions across Canada are also being put at risk by a government unable to balance our carbon budget. As global action on climate change continues, high carbon fuels like coal and tar sands are becoming considered unburnable carbon or 'stranded assets' by countries, businesses and investors alike. Last week, 17 foundations announced that they we're collectively divesting $2 billion in assets from fossil fuels. According to investment bank HSBC, this carbon 'bubble' has the potential to drop the market value of fossil fuel companies by upwards of 60 per cent. With Shell and Exxon both reporting record low profits, public institutions like Universities, pension funds and churches are building up dangerous risk in their investments that could be costly when the bubble bursts. In 2008-2009 the University of Toronto was forced to underwrite it's endowment by nearly half a billion dollars because of losses when the housing bubble burst.
The federal government has us on track to blow our carbon budget., but they are not alone. No opposition party, provincial government or major institution in Canada - save for the city of Vancouver -- is taking our carbon budget or the impacts of blowing it seriously. Doing so would mean needing to commit to take every available step to keep fossil fuels in the ground, and for most institutions that means divesting their holdings from the oil, coal and gas industry.
With a federal budget on deck that, at best, promises business as usual when it comes to climate inaction in Canada, divesting from fossil fuels is one way that people and institutions can help balance our carbon budget, politicians certainly aren't doing it.
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