It turns out when you do the "two-degree stress test," a lot of fossil fuel production doesn't look so clever. If the world is going to stay under internationally agreed limits for carbon emissions, it's going to have to leave some coal, oil, and gas in the ground.
The charts here come from Carbon Tracker, a London nonprofit. They show the difference between the International Energy Agency's 450 Scenario (450 referring to the concentration of CO2 in the atmosphere) and what the energy industry is planning for the next 20 years. If we're going to have an "energy pathway consistent with the goal of limiting the global increase in temperature to 2°C"—which is what the 450 Scenario does—some investment in the world's fossil deposits will need to be junked.
The report says that more than $2 trillion of capital expenditures need to "not be approved" in order to avoid the necessary emissions. This is the equivalent of cutting fossil fuel supply (and emissions) by about a quarter.
The analysis shows $412 billion of unwarranted energy investment in the United States, $179 billion in China, and $147 billion in Russia. It means no new coal mines, no Canadian oil sands, and no Arctic exploration.
The Paris climate agreement—now signed by as many as 170 governments—offers some hope that this can get done. But surely the real action is on the capital markets where the energy giants—and the people who invest in them—decide whether to pursue new coal, oil, and gas projects.
Carbon Tracker calls on energy companies to report their assets in light of the two degrees signal, for analysts to do more "sensitivity analysis" of when companies are skirting the limits, and for governments to stress test their energy policies for two degrees.
At the moment, the capital markets don't reflect underlying climate math. And, until they do, no international climate agreement will be worth the fancy ink it's written in.
Cover Photo: SvedOliver via Shutterstock