Suncor Energy CEO Steve Williams rocked the oil industry boat Thursday when he announced a plan to leave some of the company’s oilsands reserves unrecovered during a conference call with investors.

Williams said the company is working to develop a plan with Alberta to “strand” its least economical reserves, a proposal that appears to align with the call of environmentalists to leave the high-cost and high-carbon fossil fuels in the ground to prevent catastrophic global warming.

“We are advocating in a modest way to work with government so that we can strand some of the oil in the oilsands,” Williams said, as reported by The Canadian Press.

“Our regulation is written so that we take to a very high percentage the last piece of oil out. That tends to be the most expensive both economically and environmentally. What we would like to do is leave that last piece in (the ground),” he said.

“I’m very optimistic we are making some breakthroughs with government to do that.”

The proposal is about more than leaving some oil deposits undeveloped, according to Simon Dyer, director of the Pembina Institute.

“We’re talking about Alberta moving philosophically from maximizing production to optimizing value,” Dyer told DeSmog Canada.

Having a conversation about where, when and how to leave behind the most expensive and highest polluting deposits just makes sense within the context of the Alberta climate plan, which caps total oilsands emissions at 100 megatonnes, and the Paris Agreement, he said.

“We have 166 billion barrels of oil in the oilsands. In 40 years we’ve extracted six per cent of them. It’s inconceivable to think we’ll extract all of them even though our regulations are written in a way that we don’t leave a barrel behind.”

Dyer said Williams is seeking a change in those regulations.

“It’s the first timid steps towards a ‘leave it in the ground’ conversation,” he said.

Suncor holds approximately 8.7 billion barrels of oil in the oilsands, including open pit mines and in situ operations. Focusing on its most profitable projects could save the company 10 to 20 per cent in operating costs, Williams said.

Keith Stewart, head of Greenpeace Canada’s climate and energy campaign, said Williams surprised a lot of people with his request but added it’s unclear at this stage how Alberta will manage Suncor’s request.

“It's important to recognize that what [Williams] really wants to do is 'high-grade' his existing reserves: exploit only the cheapest and most profitable parts,” Stewart said.

There may be some hesitation on the part of Alberta, which relies on oil royalties, to simply allow companies to back out of oil extraction agreements, he said. Extraction agreements are managed under Directive 82, something Alberta may have to alter to accommodate Suncor’s request.

Suncor Opens Conversation about ‘Stranded Assets’ in #Alberta’s #Oilsands https://t.co/Ne04sUzuFB #cdnpoli #ableg

— DeSmog Canada (@DeSmogCanada) August 2, 2016

“Lease agreements often establish rules that limit 'high-grading' and Suncor is clearly trying to get those rules changed,” Stewart said, adding this would likely help companies shut-in low-performance in situ operations.

Stewart said it makes sense in an increasingly carbon-constrained world for fossil fuel companies to want to back out of their least profitable leases and added it’s interesting in this case that Williams chose to adopt the language of environmentalists to justify doing so.

“He could have said this in corporate-speak that would be meaningless to most, but instead he used a term that — until recently — was only used by the environmental movement. The asset is stranded, or worthless, because the oil has to stay in the ground to avoid dangerous levels of warming and that isn’t something most oil executives want to talk about.”

While high-grading assets isn’t necessarily a bad thing from an environmental perspective, the act of stranding assets needs to be considered in a global context, Stewart said.

“Williams called for a ‘modest’ stranding of assets, whereas climate science tells us we need to strand around 80 per cent of fossil fuel reserves. So we’re still far apart on how much ‘stranding’ is called for. But if you think back to the federal election, it was considered heretical when an NDP candidate suggested some of the oilsands had to be left in the ground so this is an interesting development.”

Alberta’s climate plan placed a hard cap of 100 megatonnes on oilsands production, but 130 megatonnes of projects have already been approved.

Dyer, who sits on the Alberta Oilsands Advisory Group, a coalition of industry, environmental and First Nations leaders, said Alberta faces the difficult task of taking approved projects off the table.

“We’re going to have a competitive process whereby the Alberta regulator decides which projects go forward. They can’t all go forward under the cap so again we’re in a situation where the Alberta Energy Regulator, instead of approving every project, has to decide which of these projects is better for Alberta,” he said.

“If we’re never going to extract all of the bitumen, why don’t you high-grade and take the most profitable stuff that has the least environmental impact?”

Dyer said it’s important for Alberta to recognize a global transition away from fossil fuels is taking place.

“You’ve got to consider the Paris agreement and countries musing about being fossil fuel free by 2050 and the uptake of electric vehicles,” he said.

“It’s a tough point for Albertans but whether we like it or not the world’s changing,” he said. “At the current rate of production it would take us 200 years to get through the oilsands. It’s just inconceivable that will happen.”

So, if some of Alberta’s bitumen is being taken off the table, a conversation needs to take place about how that will happen. Dyer said he hopes that conversation will take place publicly and transparently.

“I think if we get policy to move from the idea that you extract everything regardless of the benefit or the cost and instead you actually make decisions based on optimizing benefits, that can only be a positive thing.”

Image: Steve Williams at a 2012 Suncor Annual General Meeting via Flickr

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This article originally appeared on the Council of Canadians' website.

If you follow mainstream media you’ve probably heard the argument ‘we need to get our oil to tidewater’ ad nauseam.

Be it Natural Resource Minister Carr, Prime Minister Trudeau, Premier Notley or pipeline and tar sands industries, it’s a drum beat that’s building in intensity. As the argument goes, if we could only get a pipeline built and oil shipped, Canada’s crumbling oil industry could recover from its current woes.

Here’s the thing… it’s totally wrong.

I’m not the only one calling this bluff.

In a recent iPolitics piece written by former top senior manager with one of Canada’s top energy companies, Ross Melot (who earlier argued the business case for the Energy East pipeline is shaky at best), stated clearly:  

“…Premier Notley just became the latest Canadian politician to play games with pipelines. She’s telling Albertans a pipeline to tidewater can cure what ails the industry. It won’t — it can’t — because the problem a pipeline to tidewater was intended to address doesn’t exist anymore…Money spent on a pipeline right now would be money wasted. But Notley can’t say that aloud — not while also delivering the bad news on her province’s finances.”

Tar Sands Woes Aren’t Due to Lack of Pipelines

The core premise of this argument is that a lack of pipeline access to tidewater is forcing tar sands crude to be sold at discounted rates. So, with greater access and market diversity will come higher prices for tar sands crude.

But one should keep in mind the price differential between tar sands crude (classified as Western Canadian Select WCS) and other key crude oil price benchmarks like West Texas Intermediate (WTI) has reduced significantly since 2013 (when you could legitimately make an economic case for getting oil to tidewater).

In fact, Scotia Bank Energy Economist Rory Johnson projected that by 2017 there would be no price differential at all.

Several pipeline projects between Illinois, Cushing and the Gulf Coast came online in 2013/2014, relieving a regional transportation bottleneck, allowing tar sands crude to flow further to the U.S. Gulf Coast.

The Gulf Coast refineries are the ultimate destination for tar sands crude. It is home to over 2 million barrels per day of oil refining capacity, much of it geared towards heavy oil.

Current pipelines actually give tar sands producers 500 thousand barrels per day of surplus capacity to the Gulf Coast, and U.S. Midwest, another important destination for heavy oil.

The price differential that exists is explained not by lack of access, but primarily by the quality and remote location of the tar sands. Bitumen is thick and heavy, requiring dilution for transporting by pipeline, creating more havoc when leaked in waterways and generating more carbon pollution when produced.

Bitumen costs more to refine and produces less valuable end products like gasoline (generally $2-$3 per barrel of the price differential). And, simply put, Hardisty, Alberta — the original point for southern bound pipelines — is far from major markets, so this adds to the costs of shipping tar sands crude.

Further, accessing Asian and European markets via Kinder Morgan or Energy East pipelines will do little to fetch more money. The long-distance travel adds to costs and Asian markets have less capacity to refine heavy crude than here in North America. In fact, evidence suggests producers will fetch a lower prices in Asian markets than they get from Gulf Coast and U.S. Midwest refiners.

Oil Prices Decrease While Carbon Policies Increase

Alberta's deficit, one that is causing serious struggles for workers and families across the province and this country (with many workers traveling to Alberta for high paying jobs) is first and foremost, a victim of the global oil price crash. 

Heavy oil in the tar sands is more difficult and more expensive to produce than other sources of oil. And right now it has a lot of competition.

Returning to Melot’s article, he adds further critical context. “Alberta’s problem is twofold: Its oilsands have been buried by fracked American oil that is both higher-value and cheaper to produce…" 

Undeniably, the U.S. is awash in cheaper fracked oil, the production of which is wreaking havoc on communities, waterways and our shared climate. 

Melot also rightly argues that, longer-term, the tar sands will face marginalization in a 'world committed to weaning itself off carbon.'

Energy East is proposed as 40-year infrastructure.

If it is operational in 2020 as TransCanada anticipates, this means Canada will have the capacity to produce and ship 1.1 million barrels of oil at least until 2060.

This is past the 2050 deadline the Paris agreement included as a goal for weaning ourselves off of fossil fuels, which many climate scientists support. It runs in conflict with over 100 scientists in Canada who have publicly called on no further expansion of the tar sands.

Pursuing this kind of infrastructure locks Alberta and Canada into producing and shipping what will become stranded assets within the projected lifetime of the project. This not only puts our climate, communities and waterways at risk — it represents an economic risk too.

The truth is we can meet the deadline and de-carbonize by 2050. It’s not technology that stands in our way, but political will and the powerful fossil fuel lobby.

Image: Premier of Alberta/Flickr.

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Nearly $1 trillion (£700bn) is being invested in new coal-fired power plants worldwide despite the fact that the demand for electricity generated from coal has declined for two years in a row, shows a new report released today.

The report, by Greenpeace, the Sierra Club and CoalSwarm, warns that this problem of overbuilding is creating an “increasingly severe capacity bubble”.

Last year the global power sector added at least 84 gigawatts (GW) of new coal power capacity. This is a 25 percent increase from 2014.

As the report explains, across the world a generating capacity equal to 1,500 coal plants is either in construction or in various stages of planning. The amount of capital potentially wasted on these plants comes to US$981 billion.

Yet, the average coal plant is running fewer and fewer hours each year.

In China for example, the consumption of coal for electricity generation dropped 3.6 percent last year. Currently, the average Chinese coal plant runs less than half the time – the lowest level since 1969 – and the government recently announced plans to halt new coal plant approvals.

And in India, 11GW of thermal capacity is lying idle. Last year saw the first drop in India’s annual coal power installations since 2006 and the report expects this the drop “to be even more pronounced” in 2016.

“The era of Big Coal is clearly coming to an end,” said Nicole Ghio, senior campaigner for the Sierra Club’s International Climate and Energy campaign. “Coal use keeps falling off a cliff and plants are sitting idle, yet more money is being wasted on misguided attempts at locking in this dirty, dangerous fuel.”

Lauri Myllyvirta, senior global campaigner on Coal and Air Pollution at Greenpeace, described the situation as a “last-ditch push” by an industry which is becoming “rapidly uncompetitive”.

But while coal plant retirements may be growing globally, led by efforts in Europe and the US, this is not happening fast enough to balance out the overbuilding.

As the report warns, the danger of all this potential capacity sitting idle is that, in the end, it might be used but with significant impact on the world’s ability to meet its climate targets under the Paris Agreement.

“Even with no further building of coal plants, emissions from current coal plants will still be 150 percent higher than what is consistent with scenarios limiting warming to 2°C,” it explains, “meaning that most operating and new coal-fired plants will have to be phased out well before the end of their planned lifetime.”

Even building “high efficiency” coal plants is not a viable solution the report states, since this would lock in “large, long-lived carbon emitters, interfering with the need to fully decarbonize the power sector by 2040 in order to limit warming to 2°C”.

Instead, the report argues that the amount wasted on the coal capacity bubble should be direct towards alleviating energy poverty and investing in clean energy such as wind and solar power.

It notes that the nearly $1 trillion wasted is equivalent to the total level of investment needed to provide electricity to the 1.2 billion people currently lacking access to energy according to the International Energy Agency.

This would also be enough money to increase the amount of solar and wind power installed globally by 39 percent, the report finds.

“The hundreds of billions being thrown at coal could instead go toward the booming clean energy sector, helping more than a billion people get access to the clean, reliable electricity that fossil fuels have failed to deliver,” explained Ghio.

In addition to its significant climate impact, the report finds that the additional new proposed coal capacity would result in over 130,000 more premature deaths worldwide each year due to air pollution.

“The clock is ticking on the transition to clean energy,” said Ted Nace, director of CoalSwarm. “Although this research has revealed hundreds of billions being squandered on unneeded coal plants, there’s more at stake here than money.”

Photo: Tennessee Valley Authority via Flickr

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One hundred and ninety-five countries, including Canada, have formally agreed that we need to limit the Earth’s temperature rise over pre-industrial levels to two degrees. It’s uncontroversial.

Because going much beyond a two degree increase would be “incompatible with an organized global community” in the words of one of the UK’s top climate scientists. And if you’re not sure what that would look like, imagine the movie Mad Max but replace Mel Gibson’s character with a pile of hot dirt.

To have a decent chance of staying below two degrees, the world can only burn around a thousand more gigatonnes of CO2. But current fossil fuel reserves in the ground are about 3000 gigatonnes.

If we burn all that it would be beyond Mad Max. It would be like the end of Raiders of the Lost Ark when those guys’ faces melt off, but realistic and not suddenly like Wallace & Gromit attempting horror.

Companies are spending billions searching for more fossil fuel reserves, and we literally can’t burn the stuff we’ve already found. And I don’t mean literally in a “literally zillions” kind of way. We cannot physically do it and hope for a Mentally Sound Max future.

A new study this month in Nature made headlines by restating these numbers, but it went further to say specifically which reserves make the most sense to leave unburned. For Canada it means leaving 71 per cent of natural gas, 97 per cent of coal, and 99 per cent of oilsands in the ground.

And like a patient being told they have 6 months to live, we can expect the Canadian oil and gas sector to react with denial, and then to publicly challenge the credibility of the doctor, and then pay another doctor to give a better diagnosis.

You know, the things terminally ill patients normally do. The metaphor works.   

Fossil fuel companies will do everything in their power to get their reserves above ground, because their stock prices depend on it. If everyone agreed with the conclusions of this Nature paper, the value of fossil fuel companies would crash.

So by investing in their stocks, you’re effectively placing a bet on how long they can fool people. And while companies have fooled us into buying a lot of stupid crap, from Snuggies to two-person Snuggies to camouflage Snuggies, a lot more is at stake this time than just our dignity. 

This video originally appeared on The Toronto Star.

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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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If oil prices continue their slide downward, the cancellation of high-cost oilsands projects are likely, but just because prices rebounded in the past and investment returned, does not mean that is a guide for the future, warns James Leaton, research director of the Carbon Tracker Initiative.

Thursday night at the Royal Ontario Museum in Toronto, Leaton told the crowd of over 170 people the Alberta oilsands are a big target for investors looking to reduce risk because of the high capital expenditure (capex) costs.

“The oilsands are Canada’s elephant in the atmosphere,” said Leaton, an originator of the “carbon bubble” theory. “We see investors moving away from high-cost, high-carbon projects, so there is a challenge that capital is not going to automatically flow to Alberta anymore.”

Source: Carbon Supply Cost Curves: Evaluating Financial Risk to Oil Capital Expenditures from Carbon Tracker Initiative, May 7, 2014.

Investors and oil companies may de-leverage their portfolios of risky projects in the face of new carbon regulation or even from other factors like the decreasing costs of renewable energy, vehicle efficiency improvements in key markets, and economic growth rates in China, Leaton said.

Before the oil price started plummeting, Royal Dutch Shell PLC, Total SA, and Statoil ASA cancelled oilsands projects because of the high costs and lack of access to markets.

In a media conference yesterday finance minister Joe Oliver said the federal government has taken the drop in oil prices into account in its fiscal forecasts.

“When we took into account the oil price decline which had already occurred, we made the assumption that the prices would stay at the low level for the entire period,” Oliver said.

The sinking oil price provides companies an opportunity to re-evaluate the resiliency of their business models and projections that oil demand will keep growing, Leaton told DeSmog Canada in an interview after the talk.

Carbon Bubble theory impacting oil firms

The carbon bubble theory argues oil companies are overvalued based on their proven fossil fuel reserves — a large amount of their reserves are stranded assets because they cannot be burnt if the world is to avoid catastrophic climate change.

Once the carbon bubble, like the tech or housing bubble, pops it would bring dramatic re-evaluation of oil companies, resulting in massive layoffs and major industry restructuring. In Canada, the oilsands represents two per cent of the country’s GDP and 90 per cent of the economic benefit goes to Alberta.

Pressured by activist shareholders, ExxonMobil and Shell have publicly rejected this theory. Shell told their shareholders the methodology underpinning the carbon bubble “has significant gaps,” arguing energy demand growth will keep the world wanting oil for years to come.

In March, Exxon released a 30-page document to shareholders saying they “are confident that none of our hydrocarbon reserves are now or will become stranded.” In reviewing Exxon’s report to shareholders, the Carbon Tracker Initiative found the document, far from assuring stakeholders, underestimated the threat climate action poses to the company’s carbon reserves.

“If some of your biggest shareholders write to and say: ‘we are worried about how you are spending capital’, you should be able to write back on two sheets of paper and explain how you are spending capital, rather than 30 pages of fluffy stuff,” Leaton said.

On Tuesday activist shareholders filed a resolution seeking increased dividends or share buy backs for investors, rather than invest in expensive, carbon-intensive oil projects.

“This shows the investors are not satisfied with the response because it didn’t address their issues,” Leaton said.

Ontario is working with Carbon Tracker

In attendance at the talk, Ontario Environment and Climate Change Minister Glen Murray told Desmog Canada afterwards that his government was conducting extensive stakeholder discussions about a new approach to price carbon in Ontario.

Included in those discussions are conversations with the financial industry about potential stranded assets. Three of Canada’s five big banks are the largest investors in the oilsands.

“We are working with Jim and Carbon Tracker to develop that policy discussion…” to bring forward to the financial industry, Murray said.

Influencing activism

The Canadian Association of Petroleum Producers predicts oilsands production to double from nearly 2 million barrels a day to over 4 million by 2025.*

Tim Gray, executive director of Environmental Defence, also spoke at the talk and told Desmog Canada the public doesn't want the pipelines to help fuel the rapid expansion of the oilsands.

“There are two billion barrels of production there a day and that will continue to generate revenue,” Gray said. “Those are relatively low cost assets…Why not use the wealth being generated from the current level of development to invest it that [low-carbon economy] transition.”

“What the Carbon Tracker Initiative has done is show that putting all of our eggs into the tar sands basket is a very risky economic move,” Keith Stewart, climate and energy campaigner with Greenpeace Canada, said. “We could end up with multi-billion dollar white elephants which are weighing our economy down and miss out on the green-energy revolution which could lift us up.”

The event was organized by Environmental Defence and The Pembina Institute.

*An earlier version of this article stated billions, rather than millions, of barrels.

Image Credit: Kris Krug

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Canada’s vast resource wealth could become ‘stranded’ as the world’s carbon reserves become increasingly risky to develop.

A coalition of 70 investors managing some $3 trillion in assets launched an initiative last week petitioning the world's top oil producers to "assess the financial risks" of what will happen to their massive oil and gas investments in a carbon constrained world.

Ceres, which advocates for sustainable business practices globally, launched the initiative in tandem with another environmental advocacy group, Carbon Tracker. Carbon Tracker found in a recent report that 200 of the largest publicly traded fossil fuel companies invested $674 billion on developing new oil and gas reserves in 2012, raising the question of how many billions of those dollars would be left unused and stranded in the ground.

These organizations are arguing that after the latest U.N. climate report, oil and gas companies are investing in resources that are better left in the ground. They believe governments and environmentally conscious consumers are going to make these assets uneconomic and an eventual burden for shareholders.

Where does that leave Canada with its vast carbon reserves, most notably in the Alberta oilsands? Some believe Canada is "playing with fire" and could potentially strand massive investments while ignoring opportunities the rest of the world is seizing.

Canadian Prime Minister Stephen Harper has no plan B, as he clearly indicated in his latest throne speech outlining the Conservative government's legislative plan for the coming months. “We must seize this moment,” according to text from the speech. “The window for gaining access to new markets will not remain open indefinitely. Now more than ever, our future prosperity depends on responsible development of these resources.” 

Yet Canada could pay the price when the carbon bubble bursts and Big Oil reduces oilsands investment.

Jeremy Leggett, author of the recently published book "Energy of Nations," told DeSmog that Canada is missing out on new opportunities by throwing all its efforts into expensive oilsands ventures:

"Given the emphasis they are putting on tar sands, they are playing with fire as these are exactly the type of high carbon, high cost assets where investors around the world are already starting to challenge capital expenditure plans or reduce exposure. Indeed, if a carbon-fuel stranded-asset risk debate takes off globally, and people start divesting en masse even ahead of regulation, as has already started to happen with insurance companies and pension funds in Norway, Sweden and Australia, Canada itself could wind up as some kind of stranded asset: a country with both significant actual stranded assets in the tar sands, and lost opportunity-cost potential assets in all those cleantech companies it could have incubated in the suburbs of Vancouver, and never did."

Canada’s commitment to developing its carbon reserves has led to a common petrostate plight: Dutch Disease.

Canada's currency has soared and is at near par with its giant neighbour to the south, the United States. The manufacturing sector has been hollowed out, severely reducing the breadth of Canada’s overall business sector.

"We have an endowment of a resource and we're just trying to spend it as fast as we can which is a pretty irresponsible," Tim Weis, Director of Renewable Energy at Calgary's Pembina Institute said in an interview. "You wouldn't run your personal finances that way."

Canada, once the envy of the world as an open democracy and protected natural spaces seems to be working hard to tarnish its own brand. The Harper government is gagging its scientists, upending environmental protections and missing targets to reduce greenhouse gas emissions, all in the name of keeping oilsands development on track.

"If the world ever takes climate change seriously, Canada will be revealed to all as a pariah nation," Bill McKibben, the author and founder of 350.org, said in an email. "I don't know what damage a bad brand can do to a country, but I fear that Canada (a country where I spent five years of my boyhood and that I love a good deal) is going to find out eventually."

Image Credit: Kris Krug via flickr

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Despite an international agreement to reduce emissions from carbon-intensive sources, oil and coal companies continue to pour hundreds of billions of dollars a year into finding new fossil fuel deposits containing enough carbon to more than double global climate pollution emissions.  

This is the conclusion of a new report finding that $674 billion was spent globally last year alone on the discovery of new fossil fuel deposits that will likely never be used. 

The report, Unburnable Carbon 2013: Wasted Capital and Stranded Assets, authored by researchers at the Carbon Tracker Initiative, Grantham Foundation and the London School of Economics and Politics, describes the idea of a "carbon bubble" that is the result of global fossil fuel reserves that already far exceed the maximum amount we can afford to burn and still avoid the most disastrous effects of climate change.

Despite this growing carbon bubble, and the inevitable movement towards a greatly reduced reliance on carbon intensive fuels in the future, energy companies continue to pour billions of dollars into discovering new fossil fuel reserves. 

If this all plays out as researchers predict, energy companies will end up with a potential $6 trillion in stranded assets that will never be exploited – oil and coal reserves that the world will not need.

According to the report:

"The analysis shows that between 60-80% of coal, oil and gas reserves of publicly listed companies could be classified ‘unburnable’ if the world is to achieve emissions reductions that mean an 80% probability of not exceeding global warming of 2°C."

This conclusion is based on the most optimistic reduction targets resulting in only 2 degrees Celsius of warming, but even at 3 degrees of warming (a totally disastrous scenario), the report concludes that there would still be "significant restraints on our use of fossil fuel reserves between now and 2050. Yet companies in the oil, gas and coal sectors are seeking to develop further resources which could double the level of potential CO2 emissions on the world’s stock exchanges to 1,541 billion tonnes."

These companies are investing billions and billions without taking into account even these most conservative reduction projections.

Professor Lord Nicholas Stern of Brentford, Chair of the Grantham Research Institute on Climate Change and the Environment, said:

“Smart investors can already see that most fossil fuel reserves are essentially unburnable because of the need to reduce emissions in line with the global agreement by governments to avoid global warming of more than 2°C. They can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision. But I hope this report will mean that regulators also take note, because much of the embedded risk from these potentially toxic carbon assets is not openly recognized through current reporting requirements.”

So what about Canada and its tar sands operations?

Are we creating a massive carbon bubble? You bet. I will be exploring this further in the coming days.

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