Thursday Afternoon Links

This and that for your Thursday reading.

- Marc Lee looks in detail at the risks involved in relying on tar sands development as an economic model:

The UK outfit Carbon Tracker was the first to point out this means we are seeing a “carbon bubble” in our financial markets – that  fossil fuel companies, whose business model is the extraction of carbon, are over-valued on the stock markets of the world. This analysis was subsequently picked up by Bill McKibben in his now-famous article, “Global Warming’s Terrifying Math,” which launched the fossil fuel divestment movement, plus some local content by yours truly in a CCPA report called Canada’s Carbon Liabilities.

The latest from Carbon Tracker looks at planned capital investments in oil production around the world (future reports will look at coal and natural gas). These have different costs of extraction, leading to a “carbon supply cost curve” for oil production. Carbon Tracker argues that in a world of constrained carbon, it only makes economic sense that it will be the high cost suppliers that get cut out of the action.

This logic is bad news for Alberta’s tar sands, which are among the highest cost reserves. Using an oil and gas industry database, Carbon Tracker looks at a potential $1.1 trillion of capital expenditure on oil projects between 2014 and 2025 that require a price of at least US$95 per barrel market price ($80 break-even) – i.e. those projects most likely to not go ahead in a carbon-constrained world. They find that a very large share of these projects (nearly 40%) are tar sands projects in Alberta (see Figure 7 in particular).
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For the most part, however, the underlying assumption of Canadian financial markets, including most Canadian pension funds, is that governments of the world will not get their act together, so there is no reason to pull out from fossil fuel investments. Some skepticism that governments will be able to reach a new deal is warranted, but the probability of them doing so is not zero either. But even in the absence of a global treaty, unilateral actions by Canada’s trading partners could impose de facto carbon constraints. Examples include the Keystone XL pipeline and European Fuel Quality directives.

There is a strong possibility that, sooner or later, Canada will be living in a carbon-constrained world, a development that would have significant (and, to date, widely ignored) economic implications. In this context, “responsible resource development” implies strategic management of fossil fuel reserves in order to maximize shared prosperity, within the context of a carbon budget. The good news is that Canadians have been bombarded with several decades of budget talk about “living within our means”  – now we just have to apply that to carbon.

- But Sheila Pratt highlights some more examples of the oil industry trying to buy the public's silence when it comes to questioning unfettered oil exploitation. And the Council of Canadians notes that for now, Canada is instead trying to bully the EU and other international allies into delaying any steps to reduce fossil fuel consumption.

- Meanwhile, Justin Ling writes that yet another trade agreement side-effect - this time arising out of the TPP - looks to be far more intrusive surveillance by the U.S. and other foreign states.

- Joseph Stead reports that the corporate sector is laughing at the UK's honour-system plan to improve corporate accountability. And Julian Beltrame finds that the Cons' tall tales about mythical trade barriers have far more value as entertainment than as policy analysis.

- Finally, Steven Greenhouse writes that the U.S. is finally seeing some legislative efforts to give part-time workers some security and control over their time - including a few ideas along the lines of what I'd proposed for Saskatchewan here.