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Climate Change BC Sustainable Energy Association

Published on February 16th, 2014 | by Roy L Hales

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The Carbon Bubble: Unburnable Fossil Fuels & Investor Risk

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February 16th, 2014 by  

Originally Published on the ECOreport

BC Sustainable Energy Association

Business as usual is no longer a viable option for the fossil fuel industry. At the present rate of consumption, the world is heading towards a 6°C rise in global temperatures. Fossil fuel companies are exposing their investors to financial and climate risk. These were among the many topics discussed at the BC Sustainable Energy Association Webinar “The Carbon Bubble – Unburnable Fossil Fuels,” with Mark Campanale of the London-based Carbon Tracker Initiative.

Around 197 people attended the webinar, which was hosted by Guy Dauncey.

At the current trajectory, we are expected to hit 2 degrees sometime between 3031 and 2045 – Courtesy the Carbon Trackers

Campanale explained that the fossil fuel industry is currently operating at a disconnect with the approaching reality of climate change. Much of what they believe to be true will be challenged once it becomes apparent that 2/3 of current fossil fuel reserves cannot be commercialized before 2050 — if we hope to keep the temperature rise under 2°C.

There are three possible scenarios for how this realization will occur:

  • Industry will make the necessary adjustments now, which is unlikely.
  • Industry will wait until it is forced to make changes, which could result in a 6°C temperature rise being unavoidable.
  • Investors will help steer their companies into the correct choices.

This third option has already started to happen. The Norwegian Pension Fund has already divested half of the money it had invested in coal. A number of US companies are reducing their investments in the oil sands.

This is important information for Canadians because, as Campanale explains, ”Canada’s reserves of fossil fuels are significantly larger than it’s fair share of a global carbon budget.”

Our proven oil, bitumen, gas, and coal reserves make up 18% of the “global carbon budget” (the amount of CO2 that can be produced before we go over the 2°C threshold) and we may have as much as twice the allowable amount.

That is bad news for people like Premier Christie Clark, who believe BC’s future lies in fossil fuels, because “78% of Canada’s proven reserves, and 89% of proven-plus-probable reserves, would need to remain underground.”

Carbon Constraints from 2020 are expected to impact discounted coal – HSBC Analysis

The coal industry could be one of the hardest hit sectors.

The International Energy Agency estimates that “only 20% of global coal reserves can be developed by 2050″ if we hope to stay within a two-degree temperature rise.

Citi Research argues that it is very likely the demand for thermal coal will flatten, or peak, even in China by 2020.

Production of gas and oil will also need to be reduced. This will hit the more difficult sectors, like the oil sands and marginal LNG fields, hardest.

Exxon, Shell, and Chevron have all been spending at record levels to boost their output, but this has yet to pay off. They cannot continue to spend more just to maintain production levels. The commercial viability of undeveloped reserves is questionable  unless development costs also fall.

The boards of fossil fuel companies must be made to realize that they are wasting their investors’ funds on high-cost carbon projects. There is at least a 20% chance of their falling prey to some future government preventative action against climate change. There is legal liability, as extreme weather events become more common. These are real dangers which are not being disclosed.

The most sensible course of action for fossil fuel companies is to trim back more costly ventures and attune their future course of actions to climate science.

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About the Author

is the editor of the ECOreport (www.theecoreport.com), a website dedicated to exploring how our lifestyle choices and technologies affect the West Coast of North America and writes for both Clean Techncia and PlanetSave. He is a research junkie who has written hundreds of articles since he was first published in 1982. Roy lives on Cortes Island, BC, Canada.



  • Doug Cutler

    Yes, use the market. Here’s one small but effective measure easily taken: the timely purchase of the new LEDs lights. The “soft white” option puts out a warm, hi-quality light very comparable to incandescent at 80% less power draw and for the same lumination levels. My local utility in Ontario has a coupon promotion running. A purchase of approx. $150 worth of LEDs to replace both compact fluorescents and a few remaining incandescents has removed 300 watts from our household power demand. That’s about 50c/watt, way better than cost of installed solar panels. I’m likely to return for more and will be giving away many as gifts as well.

    Residential and commercial lighting accounts for maybe 12-15% of overall electrical demand so there’s room there to make a sizable dent. Broadly adopted, the efficiency savings of the new LEDs would represent many power plants worth of new generation.

    • Rick Kargaard

      I purchased four led bulbs recently and was highly impressed. Even at their current high cost they make dollar sense and exhibit none of the problems of CFLs. Replace bulbs in all higher use lights.

      • Doug Cutler

        Good strategy, pick off the high use lights first; in a few years cost of LEDs could well go down. You’d think these new lights should go a long way to silencing critics of the incandescent phase-out like Michelle Bachmann but you never can tell with those folks.

  • J_JamesM

    Okay, this is freaking hilarious. I’m no liberal conspiracy theorist who sees the oil industry behind every bad thing, but even I can acknowledge that the oil industry has no conception of a limit on burnable oil because they are trying to deny climate change in the first place.

    • Bob_Wallace

      Actually all the major oil companies have acknowledged climate change and the role that fossil fuels are playing. The oil industry is not a denier.

      I see the oil companies more like the alcoholic beverage industry. They realize, and admit, that consumption of their produce can and does cause great harm to some of their customers. But if people want to buy their product, they’ll sell it.

      • J_JamesM

        What they say and what they do are two different things. That’s especially applicable to entities so large. One hand may act counter to the other, so to speak.

        • Ronald Brakels

          Our new coal terminals in Australia have all been designed to withstand significant sea level rises.

          • Leeman

            Not so, take what happen in England last week, climate change is real.

      • Rick Kargaard

        I agree with Bob. It is the consumer who needs to reduce their consumption and turn to less carbon intensive choices. Vote with your consumer dollars. It is not only gasoline which is the culprit it is almost all consumer goods. The choices are there, but it takes a bit of effort. If people are not making that effort they must not be aware of possible consequences.

  • Matt

    Unless the golden rule changes soon. “He with the most gold makes the rules”. We all better hope that there is a Gaia and that she pulls our fat out of the fire. It is time for a social movement. Its time to use the “free” market against them
    -Divest today
    -Push your rep to
    - – require that coal,gas, oil not be allow to be mixed into investment fund, they can only be in a carbon fund.
    - – Carbon tax
    - – Building codes that require efficency

    • johnBas5

      Gaia pulls our fat IN the fire, for she is the forces of nature.

      • wattleberry

        That’s what I thought.

  • Bob Ashworth

    It’s time for fossil fuel companies to transform themselves into Energy Companies and start embracing the future carbon-free energy solutions.

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