Investments in the oil, gas and coal industry are starting to lose their value and will become a liability based on a major UN report released Monday. The UN Intergovernmental Panel on Climate Change's (IPCC) 2,000+page report confirms that Canada must keep more than 75 per cent of its fossil fuel reserves in the ground.
Forget peak oil. This is the era of Unburnable Carbon.
In the IPCC report summarizing more than 9,000 new climate research papers confirmed that only so much fossil fuel can be burned to keep global warming under 2C, the internationally agreed on cap. Written by hundreds of the world's leading scientists from 39 countries, the report also confirmed that half to two thirds of the 2C carbon budget have already been used up.
At the current 'burn rate' the remaining carbon budget will only last 15 or so years. And that's to have a 50 per cent chance of staying below 2C of warming. No scientist regards 2C as 'safe.' The heating will be wildly uneven and spawn extreme weather events beyond any ever experienced in human history.
What is the liability of companies continuing to produce and profit from their carbon stocks?
"It's the reserves of oil, gas and coal that props up the stock prices of the industry," said David Cadman, President of ICLEI, the only network of sustainable cities operating worldwide. More than 1200 cities in the network are on their way to reducing their emissions 20 per cent by 2020 and 80 per cent reductions by 2050.
"This 'carbon bubble' is going to burst. What are the consequences for Canada now that we've tied ourselves to the fossil fuel industry?" Cadman, a Vancouver city councilor, told DeSmog.
At least 78 per cent of Canada’s proven oil, bitumen, gas, and coal reserves, and 89 per cent of proven-plus-probable reserves need to remain underground according to a 2013 study by the Canadian Centre for Policy Alternatives (CCPA).
"Business-as-usual for the fossil fuel industry is incompatible with the need to keep the global temperature increase to 2 degrees C or less," said CCPA Senior Economist Marc Lee.
"We are in need of a ‘managed retreat’ from fossil fuel investments," Lee said in a press release.
Some of the first calculations about the size of the 2C carbon budget were published in the leading scientific journal Nature four years ago. That same year the first-ever Indigenous Peoples’ Global Summit on Climate Change ended with a call to phase-out of fossil fuels.
The fact that carbon or CO2 traps heat from the sun was established more than 120 years ago. Burning fossil fuels, deforestation and other human activities puts additional CO2 into the atmosphere where it remains essentially forever.
It is hardly surprising -- and is certainly not scientifically controversial -- that additional CO2 in the atmosphere acts as insulation, trapping heat.
Humanity has already pumped out 531-billion tonnes of CO2 the IPCC confirmed. The resulting warming is now 0.85C and on its way to between 1.0 and 1.2C.
Add roughly 1-trillion tonnes of additional CO2 to the atmosphere and the blanket will be so thick the surface of the entire planet will heat up on average of 2C.
This heating, however, will not be even. The Arctic and the north will heat up 6 to 8C due to a process called Arctic Amplification. That guarantees the end of the Arctic sea ice in summers and major but unknown changes to the weather of the Northern hemisphere. It would also mean the end of the Greenland ice sheet, raising sea levels 7 metres over the next 1,000 years. Local effects on Canada's northern region will be profound from collapsing permafrost, increased flooding in some regions and fires in others. And in this new climate there will be major impacts on wildlife and vegetation.
And that's the 50-50 budget: With that much CO2 there is a 50 per cent chance of heating up more than 2C. And scientists acknowledge this budget doesn't include positive feedbacks like emissions from thawing permafrost that they know are draining the carbon account but not by how much.
Given the deadly serious consequences of blowing the budget, there is a high incentive to stay well under the budget cap. But the opposite is happening. Billions of dollars are being wasted by banks, investment funds and pension plans on the oil, gas, and coal industry's efforts to get more carbon out the ground.
None of this is theoretical. Lord Stern, the former World Bank chief economist, said on Sunday that the effort required to stay within the budget must be addressed as a matter of urgency.
"Delay is dangerous because greenhouse gases are accumulating in the atmosphere and because we are locking in high carbon infrastructure and capital."
Lord Stern told the Guardian that cutting carbon emissions "will be full of opportunity, discovery, innovation and growth," if there is sound public policy.
By Stephen Leahy, DeSmog Canada
