Nature has just published an assessment of the location and accessibility of all the world’s known carbon fuel reserves (coal, oil and gas), and its conclusion is striking: 80% of coal, 50% of oil and 33% of gas need to be classified as unburnable if the earth is to remain within the 2C “guard rail” of global warming identified by the IPCC and major governments. The Guardian has some nice graphics summarizing the implications, which are dire: 90% of Australian coal and 85% of Canadian oil needs to stay in the ground, for example. These country-specific estimates are based on the assumption that the cheapest material will be extracted first, and uses information on the specific carbon cost of each source. For example the Nature press release states that:

Canada holds the world’s single largest share of unburnable oil because most of that reserve comes in the form of tar sands, a mix of bitumen and sand that requires burning natural gas to transform it into usable petroleum products

and explains that this extra carbon cost makes the tar sands essentially inaccessible. Meanwhile, at the Conversation, John Quiggin has written an article suggesting that carbon capture and sequestration (CCS) is a non-starter, indicating that we can’t rely on sequestration to take out the excess carbon we are producing. Which means that the only option for dealing with this carbon becomes a blacklist, with severe implications for the future of the fossil fuel industry:  and if 80% of the stuff needs to stay in the ground then that means fossil fuel companies have to essentially write off 80% of their balance sheet. There is no solution to this stranded asset problem that will see our planet remain a livable place, but no government and not many economists are taking this seriously.

So what can be done to solve this apparently unsolvable problem? A lot of economists attempting to tackle the policy response to global warming seem to think that a carbon tax or a carbon price is the most efficient way to reduce carbon use, but they don’t usually take into account this budgeting problem: they talk about reducing flux, but not about the hard ceiling of the carbon budget. At best, advocates of a carbon price seem to think that the price alone will spur creativity and new investment that will lead to a solution to the budget problem, but when challenged (as I have done repeatedly at for example John Quiggin’s blog) the only answer they seem to have is some vague promise of future technological improvements, or tree planting. As I have observed previously on this blog, even an extremely high and strict carbon tax will likely be insufficient to force even the rapid reductions in carbon consumption we need now, let alone to force developed nations to zero carbon. It is increasingly obvious that a carbon tax is a minimum response to the challenge of global warming, and that on top of that specific policy and legislative interventions are needed to rapidly decarbonize those elements of the economy that can be. If 80% of the world’s coal needs to remain unburned, then we need to be reserving that coal for long-term use in an industry that cannot operate without it: steel-making. Given it is essential for steel production, coal should not be used for anything else. Similarly, oil should be reserved for jet travel and any maritime uses where it cannot be exchanged for something else. Using it for heating or private transport is an incredibly wasteful use of a resource which is far more valuable than its available reserves suggest. Even under an aggressive and probably fascistic level of tree planting, we won’t be able to get to a world of negative carbon emission for a very long time, and until we do reach that state we need to recognize that the only carbon we should be emitting should be from industries that absolutely cannot be switched.

We also need to recognize that the continued prospecting for new coal, oil and gas is madness. There is no social value to be had from this prospecting. $670 billion a year is spent on prospecting for material that can never be used, contributing to a growing carbon bubble that could have serious economic consequences. That money should be spent on developing new zero carbon industrial and energy production processes, and given the efforts that the resource companies have made to get us into this mess, it hardly seems a big deal to me if they were forced to spend their prospecting money for the social good. But in any case one thing should definitely be done immediately: all new prospecting should be banned. It’s not just a waste of money, it’s counterproductive: the more reserves there are, the greater the future environmental risk and the harder it is to downsize this industry.

As I have said often on this blog, it’s time the world got serious about climate change. This means more than just minor tax changes with a vague promise of innovation in the future; it means a concrete set of policy proposals for the elimination of carbon emission from our economy, with a concrete goal for every sector of industrial and social life. Sectors that can’t go zero carbon need to be identified and strategies put in place to first minimize and ultimately offset those sectors’ emissions, and coal and oil resources need to be prioritized for only those sectors. If we start now and implement policies rapidly across many countries, we can probably do this with minimal economic disruption, but if we don’t start soon and act aggressively, the future is going to be very dark: we will enter a world of extremely fascist and restrictive responses to growing environmental problems, coupled probably with potentially catastrophic and untested geoengineering.

It’s now or never!