How much more of Earth's fossil fuels can we extract and burn in the short- to medium-term future and still avoid severe global warming? A model provides the answer, and shows where these 'unburnable' reserves are. See Letter p.187
Cumulative carbon dioxide emissions must be less than 870 to 1,240 gigatonnes between 2011 and 2050 if we are to have a reasonable chance of limiting global warming to 2 °C above the average global temperature of pre-industrial times1. But the carbon contained in global resources of fossil fuels is estimated2 to be equivalent to about 11,000 Gt of CO2, which means that the implementation of ambitious climate policies would lead to large proportions of reserves remaining unexploited (Fig. 1). On page 187 of this issue, McGlade and Ekins2 comprehensively quantify the regional distribution of fossil-fuel reserves that should not be burned between 2010 and 2050, by modelling a broad range of scenarios based on least-cost climate policies.
Several studies have previously analysed the global long-term implications of climate-change mitigation on fossil-fuel markets3,4,5. The novelty of the present study stems from the detailed regional representation of fossil-fuel reserves used in the authors' model, which are based on well-established data sources. In each of the 16 regions modelled, fossil fuels are divided into 21 categories that include various types of coal, oil and gas. Each category further accounts for key characteristics, such as recoverable resources, production and trade costs, as well as natural decline rates of production (the rates of fall that would occur in the absence of any further investment).
This approach allows the authors to emphasize differences in unburnable fossil-fuel reserves. About 80%, 50% and 30% of coal, gas and oil reserves, respectively, would need to remain below Earth's surface if the world is to limit an increase in global mean temperature to 2 °C. The uneven distribution of unburnable carbon has far-reaching consequences for fossil-fuel owners.
For example, the Middle East, which holds the bulk of conventional oil reserves, would need to leave about 40% of those reserves underground. This corresponds to about 8 years of global production at current levels6 (87 million barrels per day). Similarly, countries with large coal endowments would face great challenges. China and India would have to discard 66% of their reserves, whereas Africa would have to leave 85% of them. In addition, the United States, Australia and countries of the former Soviet Union would need to leave more than 90% of their coal reserves underground, in stark contrast to the renaissance of coal use currently under way in many places7.
Gas-fired power plants emit less CO2 per unit of energy produced than coal-fired plants, and so 'unconventional' sources of natural gas, such as shale gas, have been touted as a bridge to the projected global transition to carbon-free, renewable energy technologies (although this bridging role has recently been challenged8). Encouraged by the recent shale-gas production boom in the United States, several world regions, including China, India, Africa and the Middle East, are seeking to unlock their large endowments or increase existing production. However, McGlade and Ekins' analysis shows that Africa and the Middle East would have to leave their entire unconventional gas resources underground, and that about 10% of the combined endowment of China and India (which includes substantial amounts of coal-bed methane) could be produced.
McGlade and Ekins' figures, computed for the period 2010–50, show that the amounts of unburnable fossil fuels are modestly sensitive to the availability of carbon capture and sequestration technology. When this technology is not available, even less coal, oil and gas can be extracted, and natural gas must be used in preference to coal because of the gas's lower ratio of emissions to energy produced. The future use of CO2-removal technologies might allow further extraction of all fossil fuels after 2050, but there are many uncertainties associated with predicting the availability of these young technologies.
The authors' insights echo calls9 in the past few years for society to divest itself of fossil fuels. Such calls have been made by organizations in an attempt to influence institutional investors, such as pension funds, to shift their portfolios towards clean-energy investments. These organizations also draw attention to a potential bursting of the 'carbon bubble' that would result from the adoption of ambitious climate policies, leading to severe devaluations of fossil-fuel reserves, which are currently worth about US$27 trillion9. Fossil-fuel companies must therefore ask themselves whether they should continue to invest in exploration for, and processing of, oil, gas and coal, or risk losing billions of dollars of stranded assets. Given the political influence of the fossil-fuel industry, policy-makers must design solutions that ensure stakeholders' acceptance.
Importantly, McGlade and Ekins' results clearly highlight the distributional challenge of climate policy: imposing a limit on the use of fossil fuels transfers economic benefits (known as rents) from resource owners to those who obtain the right to use the remaining burnable reserves. Hence, successful climate policy will crucially hinge on the question of whether this 'climate rent' can be shared in an equitable way that also ensures resource owners are compensated for their losses4. This could be achieved by an appropriate allocation of emissions permits in an international carbon market, or by payments through the Green Climate Fund (which was set up by the United Nations to assist developing countries in adopting practices that counter climate change). Other proposals include alleviating national debt in exchange for emissions reductions10, or using some part of the climate rent to finance access to basic infrastructure services, such as water, sanitation and electricity11.
But given the crucial role of energy in economic development, how can countries be convinced to forgo the use of fossil fuels if this is perceived to imperil primary policy objectives such as poverty reduction? During the US–Africa Leaders' Summit last August, for example, Tanzania's energy minister, Sospeter Muhongo, said12: “We in Africa, we should not be in the discussion of whether we should use coal or not. In my country of Tanzania, we are going to use our natural resources because we have reserves which go beyond 5 billion tons.” Only a global climate agreement that compensates losers and is perceived as equitable by all participants can impose strict limits on the use of fossil fuels in the long term. By identifying potential winners and losers of climate-change mitigation, analyses such as the one by McGlade and Ekins provide valuable support for the design of such an agreement, and inform short-term measures that can pave the way to an accord13.