I was reading Bill McKibben's Why the Energy-Industrial Elite Has It In for the Planet when I ran across this text.
When I talked about a carbon bubble at the beginning of this essay, this is what I meant. Here are some of the relevant numbers, courtesy of the Capital Institute: we’re already seeing widespread climate disruption, but if we want to avoid utter, civilization-shaking disaster, many scientists have pointed to a two-degree rise in global temperatures as the most we could possibly deal with.
If we spew 565 gigatons more carbon into the atmosphere, we’ll quite possibly go right past that reddest of red lines. But the oil companies, private and state-owned, have current reserves on the books equivalent to 2,795 gigatons -- five times more than we can ever safely burn. It has to stay in the ground.
Put another way, in ecological terms it would be extremely prudent to write off $20 trillion worth of those reserves. In economic terms, of course, it would be a disaster, first and foremost for shareholders and executives of companies like ExxonMobil (and people in places like Venezuela).
2795 gigatons? (A gigaton (gt) = 1 billion tons.) That didn't sound right. The number was too large. Way too large. I went over to the Capital Institute, which is where McKibben got the number.
First the essential facts as per the report:
- The Potsdam Institute calculates that in order to reduce the risk of exceeding 2 degrees Celsius warming to a 20 percent chance (not all that comforting), the global carbon budget for 2000 – 2050 cannot exceed 886 GtC02. Minus emissions in the first decade of the century, this leaves a budget of 565 GtC02 over the next 40 years.
- Total “proved” fossil fuel reserves listed on public company balance sheets and State reported reserves is estimated at 2795 GtC02, nearly 5 times the remaining budget, implying 80 percent of these reserves should be left in the ground.
- Seventy four percent of these reserves are State owned (Russia, China, Saudi, Venezuela, Iran, Iraq, etc.) or owned by private companies, 26 percent are owned by the 200 largest public energy companies.
According to James Leaton at Carbon Tracker, the market value of the top 100 public oil and gas companies and the top 100 public coal companies listed in the report exceeds $7 trillion, approximately 12% of the global public equity market. Making a simple assumption that State-owned companies and reserves have an equivalent market value per unit of carbon would suggest the global market value of proved fossil fuel reserves equals $27 trillion.
A real cap on carbon emissions designed to limit warming to two degrees implies sovereign states and public corporations will need to strand 80 percent of their $27 trillion of proved reserves. Rounding down, this implies a potential $20 trillion write off.
There it was again! From the Potsdam Institute. Notice that this text mentions public coal companies and fossil fuel reserves, but McKibben refers explicitly to oil companies. I refused to chase down this number any further. I would have to get some conversion factors and do some math.
I found the "proved" reserves in the BP Statistical Review of World Energy, June 2011. (All numbers are therefore as estimated for 2010.) The first table in the review gives us oil reserves, which includes natural gas liqiuds and gas condensate as well as crude oil.
- 1,383,000,000,000 barrels (1.383 trillion)
- 143,000,000 barrels (143 billion, tar sands)
- 1,526,000,000,000 (1.526 trillion, total)
I needed a conversion factor, which I found at this EPA web page.
- 5.81 mmbtu/barrel * 20.17 kg C/mmbtu * 44 g CO2/12 g C * 1 metric ton/1000 kg = 0.43 metric tons CO2/barrel
Multiplying 1.526 trillion barrels by 0.43 metric tons CO2/barrel yielded
- 656,180,000,000 metric tons of CO2 (656.18 gigatons, billions)
Now I had to add in the natural gas reserves. According to BP's statistical review, gas reserves stood at
- 6,609,000,000,000,000 cubic feet (6,609 trillion, 6.609 quadrillion)
Again, I needed a conversion factor, which I found at another EPA page.
- Carbon coefficient for natural gas: 117 pounds of CO2 per million BTU, or 0.12 pounds per cubic foot of gas
Multiplying 6,609 trillion cubic feet by 0.12 pounds per cubic foot yielded
- 793,080,000,000,000 pounds of CO2
Using the standard 2,204 pounds equals 1 metric ton conversion, the conversion to metric tons yielded
- 359,836,660,617 metric tons of CO2 (359.84 gigatons, billions)
Adding the oil reserves and the natural gas reserves together, expressed in terms of metric tons of CO2, I got the following
- 656,180,000,000 metric tons of CO2 (oil, including gas liquids and condensates)
- 359,836,660,617 metric tons of CO2 (natural gas)
- 1,016,016,660,617 metric tons of CO2 (total, in proved reserves of oil and natural gas, 1.016 trillion)
Getting back to Bill McKibben, who used the Potsdam Institute data in a misleading way, we get the following comparison.
- 2795 GtCO2 (gigatons of CO2, McKibben, oil companies)
- 1016 GtCO2 (gigatons of CO2, my calculations as shown above)
That's a pretty large discrepancy. While some would call it an exaggeration, others would call it a major error. Still others might call it a lie. Do the facts matter anymore? Or not?
McKibben referred to "carbon in the atmosphere" while the Capital Institute (citing the Potsdam Institute) referred to metric tons of carbon dioxide. I found a conversion factor for those at Grist.
The biggest source of confusion and errors in climate discussions probably concerns “carbon” versus “carbon dioxide.” I was reminded of this last week when I saw an analysis done for a major environmental group that confused the two and hence was wrong by a large factor (3.67). The paragraph I usually include in my writing:
Some people use carbon rather than carbon dioxide as a metric. The fraction of carbon in carbon dioxide is the ratio of their weights. The atomic weight of carbon is 12 atomic mass units, while the weight of carbon dioxide is 44, because it includes two oxygen atoms that each weigh 16. So, to switch from one to the other, use the formula: One ton of carbon equals 44/12 = 11/3 = 3.67 tons of carbon dioxide. Thus 11 tons of carbon dioxide equals 3 tons of carbon, and a price of $30 per ton of carbon dioxide equals a price of $110 per ton of carbon.
Converting my 1016 gigatons of CO2 to carbon yielded
- 276,843,776,734 tons of carbon (276.84 gigatons, billions, in proved oil and gas reserves)
Now, if you look carefully, you will notice that the McKibben estimate for oil companies is almost exactly a factor of 10 greater than my number as expressed in gigatons of carbon. That's an interesting result which highlights the egregious error in his presentation. Of course the data McKibben cited seems to include coal reserves, but he ignored that fact, preferring to dwell on the evil oil (and gas) companies.
If you're going to indict the elites—in this case the oil and gas companies—for wanting to trash the planet to maintain the cash value of their reserve holdings, you ought to at least get the math right. You should also indict the right people.
I should also clear up the fundamental confusion. McKibben explicitly referred to oil companies. So I stuck to oil companies, who typically produce crude oil, gas liquids and (dry) natural gas. That generally excludes coal companies, who typically mine coal, although a few have some oil and gas interests. The global warming catastrophe (in terms of levels of CO2 in the atmosphere) is predominantly a coal problem, not an oil and gas problem. This result has been known since Pushker A. Kharecha and James E. Hansen published Implications of “peak oil” for atmospheric CO2 and climate (2008, also see here).
Coal is where the carbon is, but the conversion from "proved" reserves to metric tons of CO2 is not straightforward because the carbon content of coal varies widely. And "proved" coal reserves have been declining in recent surveys. See my post Coal, Climate And Confusion, where I make the simple point that the world's coal reserves need to be reassessed. All blanket claims should be examined closely. If they are not, all you've got is propaganda.