The International Energy Agency has noted that if global warming is to be kept under a 2°C above pre-industrial levels, a large share of all proven reserves of oil, gas and coal will have to be left undeveloped. At the same time, the IEA has found that enough new infrastructure is slated to come online by 2017 to lock in the remainder of CO2 emissions allowable under a 2°C limit.
Findings such as these raise questions about the implications and wisdom of further investments in fossil fuel supply infrastructure. What are the long-term emissions consequences of major new investments in unconventional oil and gas development, or in new coal mines and ports? Who is accounting for these consequences in financial markets or in longterm planning, especially in countries that are increasingly focused on green growth and Low Emissions Development Strategies (LEDS)? And if countries move decisively to reduce global emissions, who gets to benefit from exploiting the remaining fossil fuel budget?
SEI is exploring these and other questions through case studies and by developing new analytical and accounting frameworks. The work is based on three premises.
The first is that world leaders need to enact policies and measures that substantially curtail global CO2 emissions – and they will ultimately succeed in doing so. As daunting and wishful as that premise may seem, it is useful to note that many major energy companies already assume a significant price on carbon in their future business planning.
The second premise is that despite its promise to turn high-carbon fossil fuels, especially coal, into low-carbon resources, carbon capture and storage (CCS) will not be widely deployed in the coming decades. Progress on CCS has been much slower than hoped, and many barriers and uncertainties remain. Without widespread CCS, a low-carbon future will severely constrain fossil fuel exploitation.
The third premise is that policies to slow or limit fossil fuel extraction, not just fossil fuel use, will be needed. This is an area that has so far been largely overlooked in efforts to mitigate climate change. New analytical tools and approach are needed to help policy-makers understand the implications of new fossil fuel supply infrastructure.
Read the discussion brief (PDF, 2.5MB)