The carbon budget is a simple, but very important concept. It is based on the fact that what matters in addressing climate change is not what governments agree to do by 2050, but the total quantity of greenhouse gases in the atmosphere.
The carbon budget is the amount of greenhouse gases that can be emitted before the global temperature rise exceeds 2°C. The NGO Carbon Tracker Initiative points out that this leads to the concept of “unburnable carbon”, if we are to avoid runaway climate change. In a 2011 report, Carbon Tracker Initiative quotes research from the Potsdam Insitute, that puts a figure on how much greenhouse gas can be emitted worldwide:
Research by the Potsdam Institute calculates that to reduce the chance of exceeding 2°C warming to 20%, the global carbon budget for 2000-2050 is 886 GtCO2. Minus emissions from the first decade of this century, this leaves a budget of 565 GtCO2 for the remaining 40 years to 2050.
So, we’ve already used up more than one-third of our carbon budget up to 2050. Carbon Tracker Initiative estimates that proven fossil fuel reserves total 2,795 GtCO2, meaning that we can burn only 20% of these reserves leaving 80% of proven reserves unburnable.
This has obvious implications for fossil fuel companies and governments (90% of oil and gas reserves are under government control). If 80% of their reserves are really unburnable that means they are worthless.
In its World Energy Outlook 2012, the International Energy Agency estimated that one-third of proven reserves can be burned if we are to have a 50% of meeting the 2°C target. And earlier this year, HSBC put out a report that estimated that the market value of fossil fuel companies could be reduced by between 40% and 60% as a result of “unburnable carbon”.
In September 2013, the Intergovernmental Panel on Climate Change acknowledged the carbon budget when it released the first part of its fifth assessment report (AR5).
Limiting the warming caused by anthropogenic CO2 emissions alone with a probability of >33%, >50%, and >66% to less than 2°C … will require cumulative CO2 emissions from all anthropogenic sources to stay [below] 1,560 GtC, 1,210 GtC, and 1,000 GtC [respectively]. An amount of 531 GtC was already emitted by 2011.
The numbers are slightly different from Carbon Tracker Initiative’s but the principle is the same. The only way of addressing climate change is by leaving fossil fuels in the ground.
Now, a group of 70 institutional investors, representing about US$3 trillion in assets, have written to 45 of the world’s biggest fossil fuel companies asking them about their “exposure to these risks and plans for managing them”. The initiative is coordinated by Carbon Tracker Initiative and CERES, a US-based NGO that aims to “mobilize investor and business leadership to build a thriving, sustainable global economy”.
The investors’ letter points out that the world’s 200 largest fossil fuel companies spent a total of US$674 billion in 2012, finding and developing new reserves. “This raises concern about the possibility that returns on this capital may never be realized,” the investors note.
So now all we need is the UN Framework Convention on Climate Change to pick up on the carbon budget idea, preferably in a couple of weeks’ time during COP19 in Warsaw. Fat chance. Last week The Guardian reported Christiana Figueres, executive director of the UNFCCC, as saying that carbon budgets were a “good scientific exercise” but that they could not be the basis for negotiations. Figueres told The Guardian:
“I don’t think it’s possible. Politically it would be very difficult. I don’t know who would hold the pen [in setting out allocations of future budgets].”
So once again the UNFCCC will spend a great deal of time discussing REDD and other carbon trading mechanisms that will not address climate change. And once again it will spend no time whatsoever discussing ways of leaving fossil fuels in the ground. In other words, it will not be discussing the one thing that will address climate change.
PHOTO Credit: Potsdam Institute.