CANADA’S PLAN TO BREAK THE CARBON BANK
Originally in the Huffington Post Last summer, 350.org founder Bill McKibben wrote an article for Rolling Stone called “Global Warming’s Terrifying New Math.” The piece, based on research from the Carbon Track Initiative and backed up by the World Bank and International Energy Agency, laid out three numbers at the heart of the climate crisis.
First, is the ceiling for temperature rise, the magic number of 2 degrees Celsius, the maximum warming that even Canada’s climate ignorant government has agreed to. The next number is our global carbon budget of 565 gigatonnes (Gt), the maximum amount we can emit to still have a decent chance of hitting that 2 degree threshold. The third, and scariest, number is 2,795 Gt, the proven reserves of the global fossil fuel industry, and all the carbon they are planning to burn.
All this adds up to sobering equation that to avoid catastrophic climate disruption, 80 per cent of the oil, coal and gas on our planet needs to stay underground, math that Canada’s Natural Resource Minister Joe Oliver doesn’t seem to believe. Oliver really should be paying attention though, because if McKibben’s math was terrifying, new research from the Canadian Center for Policy Alternatives paints a grim picture of that it means for Canada.
Breaking down the global carbon budget by country would leave Canada with a fair share of 9 Gt based on its share of world GDP, and 2.4 Gt based on population. Even taking into consideration Canada’s energy exports, Canada’s fair carbon budget would climb to an absolute maximum of 20Gt. On the other side of the equation, add up all of Canada’s oil, coal and gas reserves and you have 91Gt, three fifths of this in bitumen and coal. This is nearly 20 per cent of the available global carbon budget and almost five times our maximum fair share. It also means that at least 78 per cent of these reserves are unburnable carbon.
Canada is on track to blow past our carbon budget. The tar sands alone are being put on a path to grow to at least three times the size that the International Energy Agency calls the upper limit for demand and production for a 2C warming limit. If the Keystone XL debate is anything to go by, the Harper government is hedging its bets on breaking the carbon bank, something which could come at the expense of Canadians’ own bank accounts.
It’s no secret that Canada’s economy is skewed towards the fossil fuel industry. The Toronto Stock Exchange is home to 405 oil and gas companies, a number that grows even higher when you add in coal producers and pipeline companies. High yield investments in Canada are almost guaranteed to be heavily invested in the fossil fuel industry, which is why reports like the recent one from HSBC should be so worrying.
According to HSBC, major oil companies could see up to two thirds of their market value lost because of unburnable carbon, especially in high carbon reserves like the tar sands. Another report from Standard & Poor claims that tar sands companies could be facing major credit downgrades in the next five years as state and non-state climate action shrinks the market for high carbon energy and creates what they call a “stress scenario” on producers.
For Canadians, this means that our public and private investments are at risk. The Canadian Center for Policy Alternatives looked at over 100 fossil fuel companies listed on the TSX and found that with a $50 equivalent social cost on carbon, those companies were holding nearly $850 million in carbon liabilities. Increase the social cost of carbon, and these liabilities climb into trillions. Carbon liabilities are the costs that would be imposed on innocent bystanders — like students, workers, retirees, and anyone holding investments in unburnable carbon — should those fossil fuels be combusted and put into the atmosphere. This should be of particular concern to Canada given the large amount of high carbon fuels like in Canadian fossil fuel reserves. In fact, the European Union is already considering action to restrict the import of fuels produced from Canada’s tar sands.
After a year of record breaking heat that was punctuated by Hurricane Sandy, Typhoon Bopha and more, climate action has been forced back onto the agenda of countries around the globe. India recently announced it would be boosting its solar capacity eight fold, wind energy became Spain’s number one source of energy and even at home Ontario has commited to phase out coal fired power by 2014. These are just three examples of the kind of action on climate change that the Canadian government is hedging its bets will not happen.
We literally can’t afford this. Students on over 300 campuses across North America have already done the math and launched campaigns to divest their University endowments from fossil fuels. With more joining every day, the student divestment movement is growing across Canada, and posing all of a question, what kind of Canada are you invested in? A look into your investments, your city or your pension fund might just surprise you, and help us all deflate this carbon bubble.