Quantcast

Canada Risks Billions in a 'Carbon Bubble' as Kinder Morgan Execs Get Big Bonuses

Energy
Oil sands, Fort McMurray, Alberta on Nov. 11, 2010. eryn.rickard / CC BY 2.0

By Andy Rowell

Days after Justin Trudeau blew an estimated $15 billion of hard-earned Canadian taxpayer money on Kinder Morgan's Trans Mountain pipeline, scientists are warning just how financially and ecologically stupid and short-sighted the investment was.

In a peer reviewed scientific paper published Monday, the scientists warn of the existence of a "carbon bubble," due to the plunging price of renewables and improved energy efficiency measures, which will make many fossil fuel projects "stranded assets."


The abstract in the prestigious journal Nature could make Trudeau choke on his morning coffee: "Several major economies rely heavily on fossil fuel production and exports, yet current low-carbon technology diffusion, energy efficiency and climate policy may be substantially reducing global demand for fossil fuels."

It continues: "This trend is inconsistent with observed investment in new fossil fuel ventures, which could become stranded as a result."

Crucially, the scientists argue that many fossil fuel projects will become stranded due to changing market conditions, especially with the cost of renewables rapidly decreasing.

But this economic loss of "stranded fossil fuel assets" will be exemplified if "new climate policies to reach the 2°C target of the Paris Agreement are adopted and/or if low-cost producers (some OPEC countries) maintain their level of production ('sell out') despite declining demand."

If this happens there will be winners and losers, with "winners (for example, net importers such as China or the EU) and losers (for example, Russia, the United States or Canada, which could see their fossil fuel industries nearly shut down)."

So Canada will be a net loser. And the reason will be the tar sands. And if the tar sands are "shut down," Kinder Morgan is a pipeline to nowhere.

Professor Jorge Viñuales, co-author, told The Guardian: "Contrary to investor expectations, the stranding of fossil fuel assets may happen even without new climate policies. Individual nations cannot avoid the situation by ignoring the Paris agreement or burying their heads in coal and tar sands."

Dr. Jean-François Mercure, the lead author, from Radboud and Cambridge universities, also told the newspaper: "If people stop putting funds now in fossil fuels, they may at least limit their losses."

Trudeau has just done the opposite. As the prime minister buries his political future in the tar sands, others have criticized last week's bail-out as a clear "subsidy" to the oil industry, which goes against a G7 pledge to phase out "inefficient" support for polluting sectors by 2025.

"The decision by the Canadian government to acquire the Trans Mountain pipeline from Kinder Morgan has essentially been taken because, given the risk, no other private investor would step in," argues Mark Campanale, the executive director of Carbon Tracker. "It is government subsidizing a market failure."

But it gets worse: As Trudeau invests in "carbon bubbles" and "market failures," two Kinder Morgan bosses are literally laughing all the way to the bank. Two senior executives have each been awarded $1.5-million "retention bonuses" in connection with the $4.5 billion sale of the pipeline.

Opposition MPs were outraged at the news: One, the B.C. New Democrat MP Nathan Cullen, said in the House of Commons: "Adding insult to injury to this public bailout, it includes a $3 million bonus to Kinder Morgan executives."

Canadian economist Robyn Allan, who has spent the past few years analyzing the dodgy finances behind the Trans Mountain project, also criticized the payouts: "It's a large amount of money and it's something that most people are going to be shocked about."

They are right to be shocked about another example of rewarding big oil executives for climate failure.

Reposted with permission from our media associate Oil Change International.

EcoWatch Daily Newsletter

Scanning electron micrograph of Yersinia pestis, which causes bubonic plague, on proventricular spines of a Xenopsylla cheopis flea. NIAID / Flickr / CC BY 2.0

A middle-aged married couple in China was diagnosed with pneumonic plague, a highly infectious disease similar to bubonic plague, which ravaged Europe in the middle ages, as CNN reported.

Read More Show Less
Milk made from almonds, oats and coconut are among the healthiest alternatives to cow's milk. triocean / iStock / Getty Images Plus

Dairy aisles have exploded with milk and milk alternative options over the past few years, and choosing the healthiest milk isn't just about the fat content.

Whether you're looking beyond cow's milk for health reasons or dietary preferences or simply want to experiment with different options, you may wonder which type of milk is healthiest for you.

Read More Show Less
Sponsored
Greta Thunberg stands aboard the catamaran La Vagabonde as she sets sail to Europe in Hampton, Virginia, on Nov. 13. NICHOLAS KAMM / AFP via Getty Images

Greta Thunberg, the teenage climate activist whose weekly school strikes have spurred global demonstrations, has cut short her tour of the Americas and set sail for Europe to attend COP25 in Madrid next month, as The New York Times reported.

Read More Show Less
The Lake Delhi Dam in Iowa failed in 2010. VCU Capital News Service / Josh deBerge / FEMA

At least 1,688 dams across the U.S. are in such a hazardous condition that, if they fail, could force life-threatening floods on nearby homes, businesses, infrastructure or entire communities, according to an in-depth analysis of public records conducted by the the Associated Press.

Read More Show Less

By Sabrina Kessler

Far-reaching allegations about how a climate-sinning American multinational could shamelessly lie to the public about its wrongdoing mobilized a small group of New York students on a cold November morning. They stood in front of New York's Supreme Court last week to follow the unprecedented lawsuit against ExxonMobil.

Read More Show Less
Sponsored

By Alex Robinson

Leah Garcés used to hate poultry farmers.

The animal rights activist, who opposes factory farming, had an adversarial relationship with chicken farmers until around five years ago, when she sat down to listen to one. She met a poultry farmer called Craig Watts in rural North Carolina and learned that the problems stemming from factory farming extended beyond animal cruelty.

Read More Show Less
People navigate snow-covered sidewalks in the Humboldt Park neighborhood on Nov. 11 in Chicago. Scott Olson / Getty Images

Temperatures plunged rapidly across the U.S. this week and around 70 percent of the population is expected to experience temperatures around freezing Wednesday.

Read More Show Less
A general view of the flooded St. Mark's Square after an exceptional overnight "Alta Acqua" high tide water level, on Nov. 13 in Venice. MARCO BERTORELLO / AFP / Getty Images

Two people have died as Venice has been inundated by the worst flooding it has seen in more than 50 years, The Guardian reported Wednesday.

Read More Show Less