We’re a decade away from blowing our global carbon budget and exceeding the 1.5 C temperature target set in the Paris Agreement, according to a new study published in Nature Communications.

“We have a limited amount of carbon that we’re allowed to burn over time, a carbon budget that is not going to replenish itself,” said Damon Matthews, lead author of the report and a climate scientist at Concordia University.

The new research determined we can only add 440 gigatonnes of emissions to the atmosphere before the temperature of the planet increases 1.5 C above pre-industrial levels. The calculation was based on the current rate of global emissions, which is about 40 gigatonnes per year. 

This budget is slightly more conservative than the estimate from the Intergovernmental Panel on Climate Change. In 2018, the panel determined that we have 580 gigatonnes left, which means we’re down to about 500 gigatonnes today based on existing rates of emissions. 

Meanwhile, another climate scientist — Kirsten Zickfeld at Simon Fraser University — said Canada will overspend on its share of the budget in four or five years unless the country makes rapid changes to its rate of emissions. Her calculation was based on a target of 2 C and used a per-capita model, which allocates every person on the planet an equal amount of emissions. 

“Every year matters. If we overspend now, we’ll have to save a lot later on,” she said. “That’s where the carbon budget comes in — it shows us nicely that if we drag our feet now, then this will require very painful and more costly reductions down the line.”

But what exactly is a carbon budget and why is it important? Here’s everything you need to know from climate accounting 101. 

What’s a carbon budget?

A carbon budget represents the total amount of emissions that can be emitted in the future in a given region while limiting global warming to a given temperature target, such as the levels laid out in the Paris Agreement. 

The international treaty set a temperature target of “well below 2 C” and preferably no higher than 1.5 C above pre-industrial levels. It has been adopted by more than 200 countries since it was formalized in 2016. Those countries are responsible for developing and communicating plans for reducing greenhouse gas emissions in line with the international targets. 

Matthews compared a carbon budget to a financial budget. 

“You have this much money, you can spend it however you want. If you spend more sooner, you’ll have less to spend later, but you’re never going to get more,” he said. “So, this is your budget: you have to stick within it and if you don’t, then you go into debt, or in this case, we exceed our climate objectives.”

How are carbon budgets and emissions reduction targets connected? 

Emissions reduction targets represent the percentage amounts by which jurisdictions aim to reduce their greenhouse gas emissions from benchmark levels by specific times. They are an essential element of most jurisdictions’ climate policies. 

Emissions reduction targets may or may not be set with the objective of staying within a carbon budget. As Marc Lee, senior economist with the Canadian Centre for Policy Alternatives, pointed out, targets are often arbitrary and the Government of Canada has missed every one it has set, as illustrated in a recent Ecojustice report. 

Regardless of whether a target is set with a budget in mind, targets and budgets are intrinsically connected — reducing emissions now leaves room in the budget for more emissions later. 

Alberta’s oilsands, including this Syncrude facility, emit roughly 70 megatonnes of emissions every year, according to the provincial government. Canada’s remaining share of the global carbon budget — based on limiting warming to 2 C and using a per-capita model — is about three gigatonnes, which it will produce in about four or five years at current rates, according to a calculation by climate scientist Kirsten Zickfeld. Photo: Alex MacLean

Carbon budgets provide stronger frameworks to set targets and support long-term planning, Lee said.

When targets aren’t tied to budgets, governments can change them whenever success looks unlikely. Take B.C. for example. In 2007, Gordon Campbell’s BC Liberal government committed to a 33 per cent reduction below 2007 levels by 2020. Not only was that target missed, emissions actually went up. Last month, the province committed to a new interim target of a 16 per cent reduction below 2007 levels by 2025.

“We need to be planning so emissions are going down every single year, instead of talking about a target, putting some measures on the table and then saying, ‘Oh, surprise! We didn’t meet our target,’ ” Lee said.  

Carbon budgets help keep jurisdictions accountable and allow them to see if emissions reduction targets are consistent with the end goal of limiting global warming, Zickfeld added.

How are carbon budgets calculated?

Over the past decade, scientists have proposed several different formulas for calculating carbon budgets. What these formulas have in common is they compare historical emissions to the past rate of global warming to predict future warming. But they differ in how they account for non-carbon emissions and other uncertainties. 

The Intergovernmental Panel on Climate Change calculates the global total using a model based on the amount of warming that has occurred since the mid-1800s, when emissions started accumulating in the atmosphere. The calculation also accounts for other contributions to climate change, such as non-carbon greenhouse gases, aerosols and the thawing of permafrost. 

In a recent report published in the journal Nature GeoScience, Zickfeld, Matthews and colleagues said uncertainties “can be used to either trivialize the most ambitious mitigation targets by characterizing them as impossible, or to argue that there is ample time to allow for a gradual transition to a low-carbon economy.”

Caribou walk on permafrost in Tombstone Territorial Park in Yukon. Thawing permafrost is one of the factors the Intergovernmental Panel on Climate Change accounts for in its carbon budget calculation. Photo: Jimmy Thomson / The Narwhal

The report offers recommendations for calculating budgets to ensure they’re transparent and traceable. It says carbon budgets should be clearly defined in relation to the target of either 1.5 C or 2 C as set out in the Paris Agreement. It also recommends clearly defining the chances of success. Carbon budgets are typically calculated for either a 50 or 67 per cent chance of limiting warming to the temperature target. (Matthews said the 440 gigatonne calculation is based on a 50 per cent chance of limiting warming to 1.5 C. If we want to increase our chances to 67 per cent, we only have 230 gigatonnes left.) 

The report adds that any areas of uncertainty that could impact the numbers should be clearly defined and noted and assumptions about future carbon capture efforts, such as reforestation, should not be included.   

Consistency is crucial, Zickfeld explained.

“At the scientific level, it is very important because those global carbon budget numbers, that’s what governments and nations will ultimately use if they’re interested in coming up with national budgets.”

Who has a carbon budget? 

Few jurisdictions have national or regional carbon budgets, according to Matthews, but the model can be applied on any scale — even on a municipal level. 

The United Kingdom and the European Union have adopted region-specific carbon budgets to inform climate policy and set clear targets. Other countries, including Canada, do not have carbon budgets but have set targets based on the international model.

Last fall, the City of Edmonton declared a climate emergency and officially adopted a carbon budget, noting it can only emit 135 megatonnes before 2050. The city created its budget based on the international model. 

Why doesn’t Canada have a carbon budget? 

Matthews said the simple answer is it’s a relatively new concept. 

“The emissions targets that are being set now were negotiated a decade ago, and it was really only a decade ago that the idea of a carbon budget started to emerge from the science.”

He added that the concept has impacted policy on climate action in recent years, here in Canada and elsewhere, as countries set net-zero emissions targets based on the simple fact that the global carbon budget will eventually run out. 

“What we’re seeing now is that countries are starting to change their targets, and they’re starting to increasingly adopt net-zero targets. This is a reflection of the idea of a carbon budget.”

The federal government’s climate plan includes a promise to reach net-zero emissions by 2050. However, critics say Canada needs to go further on its climate commitments. Photo: Justin Trudeau / Flickr

The Trudeau government committed to reaching net zero by 2050 during the last election campaign and tabled a bill to legislate that commitment in late 2020. The bill requires the minister of Environment and Climate Change to set five-year emissions reductions targets starting in 2030 to meet that goal. 

In an emailed statement, Environment and Climate Canada said it is taking more than 60 measures to get to net zero.

“Key measures include carbon pricing, emissions reductions regulations for light-duty and heavy-duty vehicles, strengthened methane regulations for the oil and gas and landfill sectors, energy efficiency improvements and investments in clean electrification,” the statement said.  

In a recent article about the research into carbon budgets, Matthews and colleague Kasia Tokarska warned Canada’s commitment isn’t ambitious enough. 

“Our results suggest that even if the growing list of countries committing to 2050 net-zero emissions targets reached their goals, we would still deplete the 1.5 C remaining carbon budget more than a decade too soon.”

How do countries calculate a fair share of the global carbon budget?

This is a significant ethical problem, according to climate scientists working on carbon budgets. The simplest way to calculate a national allocation is to take the global carbon budget, divide it by the number of people on the planet and multiply that number by a country’s population. But that doesn’t account for inequities on the international landscape. 

“The UK has a 200-year history of burning CO2 and has an economy that has profited from that history,” Matthews said, by way of an example. “[The UK] has produced much more greenhouse gases per capita than most countries in the world, and is far more responsible for the problem that we’re in right now.” 

He said given that history, an argument can be made that the UK — and other countries with similar histories, including Canada — should be ramping down emissions considerably faster than other nations, especially developing countries.

“If we have a global target of net zero in 2050, they should be targeting 2040 or 2035, something ahead of the curve to reflect that additional responsibility.”

The ethical conundrum, he said, is every country in the world can construct a reasonable argument for why it deserves more of the carbon budget.

What happens if we blow our global carbon budget?

Warming above 1.5 C would dramatically increase extreme weather events and the risk of widespread ecosystem loss, and have dire impacts on ocean warming and acidification, according to the Intergovernmental Panel on Climate Change.

Those impacts would have dramatic effects on fisheries and coastal subsistence communities. Even at 1.5 C, the panel predicts a 70 to 90 per cent loss of coral reefs, and the associated impacts on species reliant on those ecosystems would be devastating. If the climate stabilized at 1.5 C of warming, the projected global sea level rise over the next 80 years would impact 10.4 million fewer people. 

If the world exceeds 2 C of warming, we would need to say goodbye to many Arctic wildlife, including narwhals. Photo: Baffinland

At 2 C, the Arctic seas would be ice-free once every 10 years, compared to once every 100 years at 1.5 C. So long, polar bears. Adieu to our namesake narwhals. The number of species that would lose over half of their habitat doubles at 2 C compared to 1.5 C and at the higher temperature, the risks of coastal flooding and stress on food and water resources would increase dramatically. 

“Every bit of warming that you allow will bring additional irreversible impacts,” Zickfeld said. “And there will be a huge benefit to avoiding each additional bit of warming. The climate crisis is as urgent as ever. We have only so much time.” 

Can we actually stay within our global carbon budget?

Matthews admitted reaching net-zero emissions before the budget is spent will be difficult, but told The Narwhal he believes it can be done. 

“There’s lots of things that seem impossible until they become necessary and then all of a sudden they’re possible. I don’t think anyone would have said it would be possible for the entire world to stop leaving the house for a year. It would seem inconceivable.” 

He said what’s needed is political will and corresponding effort.

“Emissions dropped by seven per cent last year, basically as a side effect of efforts to control COVID. If we actually diverted energy and investments towards doing that on purpose and dropped emissions by seven per cent every year for the next 15 years, we’d get to net zero by 2035.” 

“If governments actually took climate change seriously, and gave it the attention and resources that it needs, we would be able to resolve the problem very quickly, much more quickly than most people would imagine.”

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The Canadian Environmental Assessment Agency (CEAA) never considered the cumulative greenhouse gas emissions of the Pacific NorthWest LNG export terminal, according to documents revealed in a federal court this week.

The documents were submitted to a federal court in Vancouver during a hearing to determine whether the information should be considered as part of a forthcoming judicial review of the federal government’s decision to approve the LNG project.  

SkeenaWild Conservation Trust filed for the judicial review of the project’s approval and received 17,000 pages of federal documents under disclosure — the release of information required by law during legal proceedings. SkeenaWild hired two experts to give expert testimony on those documents.

One of those experts Kirsten Zickfeld, a climate scientist and associate professor of geography at Simon Fraser University, testified in a sworn affidavit that CEAA did not provide the federal government with an assessment of cumulative emissions from the project and that these emissions “should be assessed, especially…in terms of their share of a provincial or national ‘carbon budget.’ ”

A second expert, policy and technical analyst from the Pembina Institute Maximilian Kniewasser, testified in a sworn affidavit that Canada considered imposing conditions on the project to limit carbon pollution, such as requiring the project be powered by grid electricity rather than natural gas, but chose not to despite doing so to varying degrees for two other LNG projects, LNG Canada and Woodfibre LNG.

The federal government and Pacific NorthWest LNG asked the court to strike the affidavits from consideration as evidence on the basis that they are “inadmissible…extrinsic evidence.”  

Greg Knox, executive director of SkeenaWild, argued the two affidavits should be considered as evidence in the upcoming judicial review, likely to take place this fall.

“We are not trying to bring in new evidence,” Knox told DeSmog Canada, “just evidence to the court to show in black and white that the agency failed to provide the minister and cabinet with the proper information to make an informed decision on the project.”

Pacific NorthWest LNG To Take Up Big Chunk of Canada’s Carbon Budget

Zickfeld, an expert in climate modelling and carbon budgets, served as the lead author of the UN Special Report of the Intergovernmental Panel on Climate Change (IPCC) on the 1.5 degree target.

Under the Paris Agreement, the majority of the world’s governments, Canada included, have agreed to limit global temperature increase to well below 2 degrees Celsius with a goal of limiting that increase to 1.5 degrees.

Efforts to work towards that goal, Zickfeld outlines, will require countries to cap their climate pollution through carbon budgets.

Depending on the type of carbon budget Canada selects, Pacific NorthWest LNG could eat up 2.5 to 11 per cent of the country’s total all-time climate pollution allowance.

“Over the lifetime of the project (here assumed to be 30 years), these annual emissions add up to about 360 million metric tons of CO2 cumulative emissions,” Zickfeld wrote.

A large part of what makes liquefied natural gas exports so carbon-intensive is the process of turning natural gas into a liquid. The process requires running massive compressor stations 24/7 to cool gas to -162 degrees Celsius, the point at which gas turns into a liquid that can be loaded onto tankers.

In the second document Kniewasser concludes the carbon emissions from the project could have been significantly reduced had the agency assessed the technical and economic feasibility of powering the LNG terminal with grid electricity, rather than with natural gas.

“I described two alternatives to power LNG projects other than burning natural gas: using grid electricity to power non-compression load, and using grid electricity to power compression load,” he wrote in his affidavit.

These alternatives could have reduce greenhouse gas emissions from the project by between six per cent and 44 per cent, or 8 and 57 megatonnes of carbon emissions, every year, Kniewasser stated.

“These potential emissions reductions are especially significant given the project’s long operating life, B.C.’s legislated long-term climate targets, and Canada’s Paris climate commitments.”

Feds Never Considered Cumulative #Climate Impacts Of Pacific Northwest #LNG, Court Docs Reveal https://t.co/CX9llm7KZ2 #cdnpoli

— DeSmog Canada (@DeSmogCanada) July 14, 2017

Much of Pacific Northwest LNG Review Conducted Behind Closed Doors

The fact that cabinet was not apprised of the cumulative climate impacts of Pacific Northwest LNG was not a matter of public knowledge, Knox told DeSmog Canada.

“In the type of environmental assessment process we had for this project, none of that was made available to the public. And it was never provided to the public until we requested it through the legal process,” he said.

Under what is know as a standard environmental assessment process, the Canadian Environmental Assessment agency conducted a review of Pacific NorthWest LNG with no public hearing, no cross examination and no full public disclosure of documents submitted during the duration of the review.

About half of the documents that were used in the assessment process weren’t on the public record, Knox said.

“When we got those documents in the spring, that is when we got some expert witnesses to comment on the complete lack of cumulative effects assessment for climate pollution and an assessment of the viability of using electricity from the grid to reduce emissions.”

“Under CEAA both of those things should have been done and the minister in cabinet should have been given that information. That poses the question: what sort of discussions and deals were done behind the scenes and why wasn’t this proper process done to reduce and assess the climate pollution from this project?”

Knox said the federal government’s decision to approve Pacific NorthWest LNG conflicts with promises to take meaningful action on climate change.

“When the government and industry are teaming up to argue against doing their due diligence on the climate impacts of this project, it’s really disconcerting,” he said.

“I think that government in this case is standing up for the interests of industry. We believe we’re bringing information and evidence forward that is in the public’s interest.”  

Kirsten Zickfeld Affidavit PNW LNG by DeSmog Canada on Scribd

Max Kniewasser Affidavit (Apr 27 2017) by DeSmog Canada on Scribd

Crown's Motion to Strike Zickfeld and Kniewasser Affidavits PNW LNG July 2017 by DeSmog Canada on Scribd

PNW LNG Motion to Strike Zickfeld and Kniewasser Affidavits July 2017 by DeSmog Canada on Scribd

Image: Federal ministers and Premier Christy Clark annouce the approval of the Pacific Northwest LNG terminal in September 2017. Photo: B.C. Government via Flickr (CC BY-NC-ND 2.0)

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A group of scientists from across North America are calling on the governments of Canada and Alberta to impose a moratorium on future development of the Alberta oilsands.

The recommendation is the result of a consensus document that surveys scientific literature related to the oilsands from across research fields. The clear outcome of the research — as it relates to climate, ecosystems, species protection and indigenous rights — is a need to end oilsands growth, the group states.

“As scientists we recognize that no one can speak with authority to all aspects of this complex topic, which is why we came together to synthesize the science from our different fields,” Wendy Palen, professor of biological sciences at Simon Fraser University, said.

The group of scientists, which include 12 fellows of the Royal Society of Canada, 22 members of the U.S. National Academy of Science, five recipients of the Order of Canada and a Nobel Prize winner, released their consensus position on a website, www.oilsandsmoratorium.org, Wednesday. A ful list of the scientists supporting the moratorium can be found here.

“These decisions are complex,” Palen added, “they transcend national boundaries and national interests and they are far broader than any single scientific study or economic assessment.”

Canada’s Carbon Budget

“Within our carbon budget we have high emission sources such as oilsands and unconventional sources of oil and coal that cannot be developed,” Mark Jaccard, energy and climate economist at Simon Fraser University said.

“Therefor while the existing output of the oilsands should not be shut down tomorrow — we’re not talking about harming the Alberta economy or the jobs that are there now — what the research shows, and that’s why we’re calling for it, is that we shouldn’t be doubling down or quadrupling down on the oilsands,” he said.

The oilsands industry produced just over 2 million barrels of oil per day (bpd) in 2014. The most recent projections released this month from the Canadian Association of Petroleum Producers projects oilsands production to grow to more than 4.2 million bpd by 2030.

In 2013 Canada’s National Energy Board forecasted 5 million bpd by 2035, although falling oil prices have altered most projections.

Jaccard said other forecasts see production skyrocketing to 6 or 9 million bpd.

“None of this needs to be done,” he said.

Alberta Taking on Too Much Risk

Thomas Homer-Dixon, Professor at the Balsillie School of International Affairs at the University of Waterloo said the call for a moratorium shouldn’t been see as an “attack on Alberta.”

“The risks are largest for Alberta in particular continuing on this path,” he said. “This is an ultimately economic dead end because the climate is changing and because there will be, in time, some kind of North American or global pricing regime for carbon.”

Homer-Dixon said a path to “alternative routes for economic development” would involve less risk for Alberta.

“Rather than assuming what we’re suggesting is a risky alternative fraught with uncertainty — which it is in some respects — it’s actually less risky and less fraught with uncertainty in many respects than continuing down the current pathway of doubling down on oilsands extraction.”

This week G7 leaders, including Prime Minister Stephen Harper, released a declaration calling for a total decarbonization of the global economy by 2100 and a dramatic reduction in greenhouse gas emissions by 2050.

Although Canada agreed to these goals in principle, many are left wondering what concrete steps will be taken to reduce Canada’s emissions. The Alberta oilsands are the fastest growing source of greenhouse gas emissions in Canada.

“A moratorium makes a lot of sense”

Homer-Dixon said a carbon-constrained future could have severe effects on Canada and Alberta’s economy if we don’t move into low-carbon sources of energy.

“Far sooner than most Canadians expect we may have trouble selling our fossil fuels to the world,” he said.

David Keith, professor of applied physics and public policy at the Harvard Kennedy School, said there’s a “there’s enormous, direct self-interest here from people who care about a sustainable Alberta economy.”

“I’ve got kids and my own interests here,” he said. “But the more we grow the harder the fall is going to be.”

“If you don’t want to see a crushing downturn and want to see some sort of gradual turn for Alberta —where there’s a healthy Albertan economy when I’m old and my kids are grown — then a moratorium makes a lot of sense, even from a purely self-interested point of view.”

Keith added he doesn’t see a moratorium as the responsibility of industry.

“The fundamental onus is not on proponents,” he said. “The onus is on the regulatory system — the government of Alberta, the government of Canada — to act in the long-term interest of the people they serve.”

Thinking the Oilsands Beyond Climate and Economy

David Schindler, professor of ecology at the University of Alberta, said the group of scientists are making arguments for a moratorium that extend beyond the scope of climate.

The group lists a total of 10 reasons that support a moratorium including broad support for alternative energy and the treaty rights of first nations.

“If you take the focus off carbon dioxide and greenhouse gasses for a minute and look at the other points among our 10, oilsands are really a poster child for unsustainable development,” Schindler said.

He added an additional major concern is the risk pipelines destined to carry diluted bitumen to the British Columbian coast pose to salmon stocks. “They cross hundreds of river channels and particularly in winter when those rivers are covered with ice, you cannot remove spilled oil from under ice.”

He said small spills have caused major problems in the Athabasca River. “The technology for removing that oil from under ice doesn’t exist.”

He said caribou are also disappearing from the oilsands region and expansion of development and pipelines will further exacerbate their recovery.

Ken Lertzman, professor at the school of resource and environmental management at Simon Fraser University, said social justice is yet another reason to support the moratorium.

Lertzman said the production of oil in Alberta and its transit across North America “violates the treaty rights of many indigenous peoples.” He added much of the oilsands development occurs on the traditional territory of First Nations, many of which are still dealing with unresolved land claims.

Both the Athabasca Chipewyan First Nation and the Beaver Lake Cree First Nation have been involved in protracted battles with the Alberta and federal governments to protect their treaty rights and territorial lands from the cumulative impacts of oilsands development.

“Indigenous peoples live on the frontlines of energy development; it’s their rights, livelihoods, health and cultures that are most at risk,” he said.

Image Credit: Kris Krug

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A new study published today in the journal Nature finds the vast majority – 99 per cent – of Canada’s oilsands are “unburnable” if the world is to avoid a global temperature rise of more than 2 degrees Celsius. 

The study, co-authored by Christophe McGlade and Paul Ekins, also found over 80 per cent of the world’s current coal reserves and half of all gas reserves similarly need to remain unused. 

Given changing market conditions that are already making the production of expensive and carbon-intensive fossil fuel reserves – like oilsands crude – more difficult, the authors concluded that a concerted effort to limit global warming would result in a massive drop in Canadian oil production.

The extraction of bitumen would “drop to negligible levels after 2020 in all scenarios because it is considerably less economic than other methods of production,” the report states.

The use of in situ mining and carbon capture and storage (CCS) to limit greenhouse gas emissions from oilsands production would only slightly move the needle, according to the study, with a total of 85 per cent still remaining unburnable despite these efforts. The authors also predict CCS, a process both the government of Canada and the oil and gas industry are increasingly relying on, will have a limited role to play in a world taking action to limit global warming.

“Because of the expense of CCS, its relatively late date of introduction (2025), and the assumed maximum rate at which it can be built, CCS has a relatively modest effect on the overall levels of fossil fuel that can be produced before 2050 in a 2C scenario.”

The authors argue that keeping within that 2C target will require an entirely reworked relationship with carbon and a concerted effort to keep reserves underground.

“A stark transformation in our understanding of fossil fuel availability is necessary,” the authors write in the paper’s conclusion, adding, “in a climate-constrained world…large portions of the reserve base and an even greater proportion of the resource base [recoverable under current economic conditions] should not be produced if the temperature rise is to remain below 2 degrees Celsius.”

The new research for the first time uses a single integrated model to analyze the world’s oil, gas and coal reserves and what portion of the remaining global ‘carbon budget’ countries might claim given the type and location of their reserves.

Within their analysis McGlade and Ekins found the Middle East holds over half of the world’s unburnable oil and that Canada has the lowest utilization of its deposits – the majority of which are buried in bitumen stores – while the U.S. has the world’s highest.

Coal is by far the most restricted fossil fuel resource in the study with 82 per cent of global resources remaining unburned before 2050.

The region assignment of unburnable reserves can be seen in the chart below:

In December countries will gather at the UN climate summit in Paris to sign an international climate deal meant to limit rising greenhouse gas emissions and global atmospheric temperatures. According to the Intergovernmental Panel on Climate Change (IPCC) in order to avoid a temperature rise above 2C the carbon budget between 2011 and 2050 must be limited to between 870-1,240 gigatonnes of CO2.

However, as the study’s authors point out, global fossil fuel reserves surpass that number by three times.

Given the urgent need to limit the use of current resources, the study makes the point that policy action on climate change would “render unnecessary” the continued exploration of new fossil fuel reserves.

As DeSmog Canada recently reported, G20 nations spend around $88 billion annually to explore for new coal, oil and gas reserves.

A report produced by the Overseas Development Institute and Oil Change International notes this level of investment for carbon stores that may never be exploited creates a “triple-loss” scenario by investing in potentially stranded fossil fuels, diverting investment from alternative energy, and undermining an ambitious climate deal in 2015.

“In 2013, fossil fuel companies spent some $670bn (£443bn) on exploring for new oil and gas resources. One might ask why they are doing this when there is more in the ground than we can afford to burn,” study author Paul Ekins told The Guardian.

“The investors in those companies might feel that money is better spent either developing low-carbon energy sources or being returned to investors as dividends,” said Ekins. 

Image Credit: Oilsands operations by Kris Krug.

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A groundbreaking report shows that Quebec cannot afford to be green-lighting fossil fuel projects, such as Enbridge’s Line 9B reversal or increased gas and oil extraction within the province, if it hopes to play its part in avoiding catastrophic climate change.

Quebec has run an 11 megatonne (Mt) carbon deficit since at least 2011, will do so for the foreseeable future, and must decrease its carbon emissions by 3.6 per cent a year until 2100 in order to help avoid a global two degree Celsius temperature increase, concludes the report from the Institut de recherche et d’informations socio-économique (IRIS), a Montreal-based think-tank.

“[This shows] the policies proposed by the government are not only insufficient, they go in the wrong direction,” said Maude Prud’homme, an organizer with Tache d’huile (Oil Slick), which organizes against growing oil extraction in the Gaspésie region of Quebec. “Allowing the growth of the tar sands via new pipelines is definitely backwards. The eventual exploitation of [oil and gas in] Anticostie, the Gaspé peninsula or the St-Laurence River all go against reducing our climate footprint,” she told DeSmog.

Quebec's Carbon Budget

The study is based on a 1,340 gigatonne (Gt) global “carbon budget” from the year 2000 and 2100, as established by the Intergovernmental Panel on Climate Change (IPCC). The carbon budget represents the maximum total carbon emissions in order to avoid a two degree Celsius increase in global temperatures, which has been set by scientists as the cut-off mark in order to avoid the most catastrophic impacts of climate change.

As the report notes, though, two degrees Celsius provides a long-term guidepost, but we are already seeing major impacts of climate change world-wide with only a 0.8 degree Celsius rise in temperature.

Quebec has already set the goal of reducing carbon emissions by 25 per cent compared to 1990 levels by 2020, but that objective has never been placed side-by-side with a global goal of carbon emission reduction. “We are emitting too many greenhouse gases compared to our size in relation to the rest of the world,” the report’s author Renaud Gignac told DeSmog. “What we see is that Quebec's actions are insufficient in relation to the physical reality of the climate.”

The study makes no effort to hide the enormity of the challenge facing Quebec. The province is currently reducing emissions by only 0.8 per cent per year, much less than the 3.6 per cent that IRIS prescribes. And while the Quebec government says it is on track to meet its goal of a 25 per cent reduction, IRIS’ study says the province must actually be aiming for a reduction of 40 per cent below 1990 levels by 2020 in order to play its fair part.

Over the long term, this means that Quebec must move from its current per capita annual emissions of 9.1t per person, to 1.4t per person in 2050, and further to 0.2t per person in 2100.

To calculate these targets, Gignac applied the “contraction and convergence” theory of carbon emission reduction, established in 1997 during the Kyoto climate change negotiations. Under contraction and convergence, industrialized countries (including Quebec) must at first contract their emissions more quickly than industrializing countries, to make up for the historical over-exploitation of carbon used in their industrialization process. IRIS estimates that this contraction period should go on until 2050. At that point—assuming all countries have had a chance to increase their level of industrial development—all countries would then decrease their use of carbon at the same rate.

For the province to meet this goal, there is a need for immediate and systemic action, said both Gignac and Prud’homme. For example, said Gignac, the provincial government’s favourable stance towards Enbridge’s Line 9B pipeline reversal, which could see tar sands crude piped to Quebec and refined in Montreal, will have an immediate, negative impact on Quebec’s emissions. “The refining process of oil from the tar sands is more polluting [than conventional oil] and it also results in residue like petroleum coke that is then used as fuel in cement factories. So the Quebec government does not seem to realize its responsibility in the climate crisis.”

A Holistic Change

Beyond immediate decisions, argues Prud’homme, Quebec must revisit its long-term plans. This includes everything from transportation infrastructure to industrial development. “We need to be focusing on a reduction of all the sectors that have a strong dependence on oil. We need to absolutely avoid extracting more hydrocarbons. What is currently in the ground needs to stay there." To accomplish this, she says, we need to take a holistic approach.

For example, when discussing reducing emissions in transport, the province needs to also be talking about food sovereignty and the electrification of vehicles, she argues. Or when talking about the overall energy needs of the province, it’s necessary to consider the needs of communities: feeding ourselves, adequate lodging, cultural needs, and see how we can plausibly meet those needs within the physical realities of the climate.

As of writing this, neither the Quebec government not any elected officials had contacted IRIS to discuss their findings. But in an email to DeSmog, a Quebec government spokesperson re-iterated the province’s commitment to its goal of a 25 per cent reduction below 1990 levels by 2020. The email also highlighted the establishment of a cap and trade system to encourage emission reductions in all sectors. They did not, however, directly comment on the carbon deficit or whether they feel that these objectives continue to be valid considering IRIS’ findings.

While many environmentalists have already argued that Quebec has been under-performing in its efforts to reduce carbon emissions, the hope is that this report serves as a wake-up call for Quebec, says Gignac.

Facing the Challenge

“There are other countries that are way ahead of Canada and Quebec. Quebec also has a tendency to say things are much worse in Alberta, but that here we are leaders. But finally when we look at the rest of the world, Quebec is more on the side of countries that exceed their carbon budgets,” said Gignac. “So, if we really want to be on the side of the solution, maybe inspire other Canadian jurisdictions to adopt a carbon budget and be more ambitious, we shouldn't compare ourselves to the worst, but rather compare ourselves to the physical limits of the atmosphere, of what the atmosphere can absorb, based on the latest scientific data.”

Marc Lee, a researcher with the Canadian Centre for Policy Alternatives who has written about the implications of the IPCC’s carbon budget for Canada, sees this report as being a new, useful tool in analyzing Canada’s piece of the global carbon emissions pie, and what needs to be done. By focusing on the science, he says, “the report gives clarity to the challenges we face.” And those challenges will be large.

According to Lee, the upper limit of Canada’s portion of the carbon budget is most likely around 24 Gt. But Canada has over 90 Gt worth of carbon emissions locked up in known fossil fuel reserves, and Canadian industry and the governments are hoping to exploit these reserves within in the coming decades.

While these numbers help to clarify the challenges ahead, they also show how deeply we need to change society in order to surpass them, said Prud'homme.

“The fact the this report sounds the alarm, that more and more scientific bodies are sounding the alarm about the urgency to drastically change our priorities as a society, and that the governments, the powers that be, aren't necessary [to sound the alarm] — I think it's symptomatic of larger issues, of structural decisions in society,” she said. “If these structures are not at the service of the community, that if they are not at the service of future generations, it should lead us to seriously question those democratic decision-making structures.”

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It was less than six months ago that a handful of energy companies resorted to selling off portions of their stake in the oil patch after failing to garner the kind of investor support they needed to fund major projects.

The costs of development in the oilsands is increasing due to material and labour shortages in Alberta and limited real estate. According to reports by the Petroleum Human Resources Council of Canada, the industry is effectively innovating itself out of the labour market, expanding beyond what the available pool of skilled labour can support.

Development costs are also escalating as the environmental toll of extracting and upgrading tar-like bitumen from the region has put both policy makers and the public on edge.

Jean-Michel Gires, the former CEO of the Canadian unit of France's Total SA, says crude from the oilsands is "among the most expensive oil" in the world to produce. Yet, development continues, leading some experts to claim that the oilsands costly production still doesn't accurately reflect the true costs associated with the resource.

Rising Costs

Royal Dutch Shell's Athabasca Oil Sands Project costs jumped from an estimated $3.5 billion in 2005 to $14.3 billion in 2010 due to unforseen expenses. 

Even without environmental regulations concerning waste, companies are already spending billions on tailings reduction technology simply because they’re running out of space. Tailings ponds currently cover more than 176 square kilometres of the region.

The Kearl Mine, an Exxon-owned Imperial Oil project, cost $12.9 billion in its first phase – more than 40 percent over the expected price tag.

The mega-project is intended to produce 600,000 barrels of crude oil per day by 2020. Downgraded from three development phases to two, the Kearl project is expected to produce 110,000 barrels per day by the end of this year.

The mine is already connected to Enbridge’s Cheecham Terminal by the Woodland Pipeline and will begin to test capacity before long. Enbridge quietly received regulatory approval in August of last year to build a $1.3 billion extension of the Woodland Pipeline to accommodate the expected increase in production at Kearl. The project is set to be complete in 2015, the same year Imperial plans to move an additional 110,000 barrels of bitumen per day out of Kearl.

Inflating Investments

According to investment analysts, the solution to the problem, both in terms of money and morale, is to greenlight the various pipeline projects currently under consideration, including proposal to modify existing pipelines such as Enbridge’s Line 9 to eastern Canada. But those pipelines themselves are projected to cost billions of dollars to build.

Moving ahead with such projects has been made easier with a flood of outside investment used to artificially prop up the industry.

One such surge of investment recently came from Warren Buffet. This summer marked the first time one of the world’s largest investors plunged billions into Canadian resource development. Buffet, head of Berkshire Hathaway Inc, has thrown his weight behind Suncor, Canada’s largest oil and gas company.

Ironically, this kind of large-scale investment serves to drive costs up even higher by contributing to inflation.

Counting the Real Costs

It’s unlikely the rising costs of development, no matter how severe, will investment in the oilsands to an end. Yet when it comes to realistic cost accounting for large-scale carbon projects, there are people working on pragmatic solutions.

In spite of the environmental movement’s push for a shift in values, some experts say it’s more likely carbon policy will make the difference.

Dr. Andrew Leach, professor at the Alberta School of Business at the University of Alberta says the rising social cost of tar sands development, as well as meaningful environmental policy changes are contributing to the higher price tags on new projects, but it’s ultimately consumer choices that will determine whether projects in the tar sands remain viable.

To illustrate, Leach uses the example of the car-driven suburb model of living.

“In order to meet at 450 ppm target, we can’t have people living out in the suburbs and driving big cars, but people are still living in the suburbs and buying big cars.” The analogy applies to dirty oil development. It’s not that developers don’t know what’s going on; it’s that they won’t stop until someone makes them.

“That’s sort of at the heart of carbon pricing to say let’s let the market decide what activities make sense given a particular carbon budget.”

From a policy perspective Leach, who spent a year working on policy initiatives with Environment Canada, believes the best thing we can do it is force the industry to internalize the social costs of extracting oil from the ground.

“The social cost of a carbon future, reclamation expenses, water and air pollution – those need to be internal to company decisions, and that can be done in any number of ways,” he said, adding that this is a standard view among economist, despite how popular media portrays the issue.

Matt Horne, Director of Climate Change at the Pembina Institute, says industry regulation and policy changes are already making renewables more competitive. Combined with success stories from various fields within the green energy, the gap between oil and renewable energy is getting smaller. It’s just the policy piece that’s missing.

He says the combination of solid economics and strong environmental policies will make renewables the norm rather than “a few leading examples.” The goal is ultimately to make it cheaper to produce clean energy than it is to extract oil from the ground.

“I think policy can change quickly and change the economic playing field quite quickly.”

Mark Jaccard, professor in the School of Resource Management at Simon Fraser University and author of Sustainability Suspicions, believes that with more attention on those leading examples—particularly the ones closest to home like California and British Columbia—we can make that change sooner rather than later.

“I am amazed that environmentalists all over North America are not talking about California's policies every day and focusing strategic efforts to effect voting support on vulnerable politicians where they do not push for similar policies,” he said in an email interview.

He cited the Low Carbon Fuel Standard, the Renewable Electricity Portfolio Standard and the Vehicle Emissions Standards among others as examples of economic and environmental success.

Jaccard also believes the movement needs to shift its focus from individual projects to the broader issue of the climate. When it comes to particular projects, such as the Enbridge Northern Gateway Pipeline, he says the benefits for the people in power will always outweigh the environmental costs. To create the critical mass necessary for change, we should be focusing on climate change as a global issue, something no one can ignore.

“When did we get good policies implemented? Never when talking about oil sands and oil spills. But yes when we got enough people (probably less than 10 percent of the population) very concerned about climate change. Politicians, ever watchful of swing voters, had to pay attention.” Environmentalists should also be fighting for trade penalties on imports from jurisdictions that are still using the atmosphere as a dumping ground, he adds.

“Only in this way can environmentalists put together a coherent argument for action. Only in this way can we effectively counter the fossil fuel arguments like, one, we need the Chinese to act, two, our emissions are only a small percentage, three, we won't stop needing oil tomorrow, etc.”  

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In its latest report the Intergovernmental Panel on Climate Change (IPCC) gave global greenhouse gas emissions a worldwide limit, know as the global ‘carbon budget.’ In order to prevent temperatures from rising above the 2 C threshold scientists have designated to avoid “dangerous” climate change, total global emissions need to stay within about 921 billion tonnes or gigatonnes (Gt).

As Marc Lee, senior economist with the Canadian Centre for Policy Alternatives recently pointed out, the carbon budget “should be a wake-up call for Canada.”

“With a development model based on ever more fossil fuel extraction, Canada’s economy and financial markets are on a collision course with the urgent need for global climate action,” he said.

As Lee explains the global carbon budget of 921 Gt gives the planet a 66 per cent chance of staying within the 2 C limit. But that chance gets drastically worse if we surpass the budget: emitting as much as 1068 Gt leaves us with a mere 50 per cent chance.

The warming potential of all global carbon assets via the Carbon Tracker Initiative's report Unburnable Carbon.

Canada’s portion of the emissions pie would depend on negotiations, but would likely end up being between 4 (given our population size) and 24 Gt (given our gross domestic product).

When pooled together, however, Canada’s proven reserves of bitumen, oil, natural gas and coal add up to 91 Gt. If you add our probable reserves in you end up with a whopping grand total of 174 Gt.

Even if Canada’s negotiators were shrewd, Lee allows, and end up with a 30 Gt national budget because Canada relies on fossil fuel exports, still two-thirds of Canada’s proven reserves, and 83 per cent of proven-plus-probable reserves would need to remain unburnt.

As Lee writes, this has significant impact on Canada’s financial market:

"This math should alarm institutional investors, and pension funds in particular – because stock market valuations are premised on fossil-fuel-producing companies extracting those resources. Analysts have called this a 'carbon bubble' in our financial markets.

This is bad news for the Toronto Stock Exchange (TSX), which is highly weighted toward the fossil fuel sector, with total market capitalization of fossil fuel companies of about $400-billion to $500-billion. Fossil fuel companies account for about 24 per cent of the total value of the S&P/TSX composite index."

A report recently released by the Carbon Tracker Initiative shows that “currently financial markets have an unlimited capacity to treat fossil fuel reserves as assets.” This unchecked incorporation of what are already considered unburnable carbon reserves is a major market failure, write the report’s authors, that is “creating systemic risks for institutional investors, notably the threat of fossil fuel assets becoming stranded as the shift to a low-carbon economy accelerates.”

The concept of “stranded assets” made international headlines last week after a coalition of 70 investors worth $3 trillion pressured 45 of the biggest oil and gas companies to deal with this concern.

The very real limitations placed on the value of Canada’s carbon assets due to their impact on climate change also casts the Harper Government’s position on resource development in a new light.

Recently Natural Resources Minister Joe Oliver told the World Energy Congress in Daegu, South Korea that “expanding and diversifying our energy exports is a top priority of the Canadian government.”

“Canada is well placed to meet the growing demand for oil and gas. Canada is the world’s fifth-largest producer of oil and has the third-largest proven reserves – 172 billion barrels, of which 168 billion are from the oil sands. Canada is the world’s fifth-largest producer of natural gas, with recoverable gas resources approaching 1,300 trillion cubic feet – some 200 years of production at current rates,” he said.

In addition to having enormous carbon reserves, Canada is failing to adequately manage its current emissions output. According to a new Environment Canada report, Canada’s carbon emissions in 2020 will be 20 per cent higher than the Harper Government’s promised reductions under the 2009 Copenhagen Accord.

Canada’s emissions are set to be 66-107 per cent higher than its required reductions to avoid more than 2 C of warming.

Image Credit: Cover image from the Carbon Tracker Initiative's report Unburnable Carbon.

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