The Carbon Budget

Science, Context, & Background

Following the publication of the latest findings by the Intergovernmental Panel on Climate Change (IPCC), some commentators zeroed in on a short paragraph in the Summary for Policymakers. This brief section lays out a “carbon budget,” defined as the precise quantity of carbon dioxide that humans can emit and still limit warming to 2ºC above pre-industrial levels. 

The IPCC budget comes on the heels of other budget estimates, underscoring the growing importance of this concept. Despite variations between different groups’ budgets, all illustrate that meeting the 2ºC limit will be impossible without significant reductions in greenhouse gas pollution.

Major challenges stand in the way of meeting the budget, including impacts to fossil fuel companies and financial markets, as well as thorny debates over international fairness. But sticking to a budget is essential if humans are to avoid the most severe impacts of global climate change.


The Two-Degree Target

Based on climate scientists’ consensus and projections of the likely impacts of climate change, world leaders at the 2009 Copenhagen Accord agreed to work to limit warming to 2ºC above pre-industrial levels. It was understood that this two-degree target required substantial emissions reduction commitments, but the exact amount of permissible emissions was less clear.

One way of simplifying this problem is through the idea of a carbon budget. This translates the target into a concrete quantity of allowable emissions, which can be “used up” at various rates, depending on emissions levels.

The exact value for our global budget differs based on factors such as consideration of greenhouse gases other than carbon dioxide, time horizon used, and desired probability of reaching the two-degree target. More detail on those variables and how they affect the budget conversion is provided below, but the important fact is that most budget estimates fall between 850-1550 GtCo2 (gigatons of carbon dioxide).

Once the world emits greenhouse gas pollution in excess of this amount — or “breaks the budget,” so to speak — we will have destroyed our chance of limiting warming to 2ºC. Because temperature warming lags behind emissions, there will be a delay before we observe the full amount of warming. But once we break the budget, we’re committed to that warming.


Breaking the Budget

When the IPCC was deliberating whether to include a carbon budget in its recent Fifth Assessment Report, Justin Gillis of The New York Times reported: “If [an IPCC statement of the carbon budget] were adopted, it would make starkly clear how far the world remains from having any meaningful policy to tackle climate change.”

The IPCC did end up including budget numbers, and just as Gillis predicted, the conversation turned to the imminent prospect of breaking the budget.

Climate scientists use a set of standardized scenarios, called Representative Concentration Pathways (RCPs), to envision what future conditions will look like based on different emissions levels. RCP 8.5 is the scenario for the highest levels of greenhouse gas pollution. This scenario represents a future with no major emissions reduction measures, a situation some refer to as the “business-as-usual” scenario. Most budget estimates show that under business-as-usual emissions, we’ll break the budget in about 20 to 30 years.          

Many countries have already stated voluntary emissions reduction goals. If met, these would put us on a better track than RCP 8.5, but other investigations have shown that we would still be on a path to exceed the budget and miss the two-degree target. A new report by the United Nations Environmental Programme (UNEP) confirms this finding and suggests ways to bridge this “emissions gap” between rhetoric and reality.

If world leaders are serious about meeting the established target, we need a set of emissions cuts that is stronger than the voluntary goals already in place. Right now, the policy and regulatory framework to make those cuts does not exist, and big challenges stand in the way. 

But there’s still hope. Many experts believe that the explicit quantification of our carbon budget will serve as a wake-up call to world leaders. Lord Stern, author of the influential Stern Report on the economics of climate change, told The Guardian: “I think nations, cities, communities and companies will recognize the importance of these findings and will increase the urgency and scale of the emissions reductions that they are planning to undertake.”

Carbon budget graph from Carbon Tracker


Challenge: Stranded Fossil Fuel Reserves

Fossil fuel companies and their existing investments pose a critical challenge to meeting any carbon budget.

According to calculations by Carbon Tracker, fossil fuel reserves (deposits confirmed to exist but not yet extracted) contain around 2860 GtCO2 — enough to more than double almost every budget estimate. This means that no matter what, if we want a chance of hitting the two-degree target, the majority of known fossil fuel reserves will need to remain in the ground. 

Contemporary accounting practices assume those reserves will be burnt, however, and continue to bolster fossil fuel companies’ share prices. Not only are these “unburnable fuels” inflating the perceived value of fossil fuel companies, but these same companies are also spending $674 billion each year to find more reserves — despite the fact that we already have more known fuel reserves than we can safely use.

If we are to meet the two-degree target, this is wasted capital. Leaders of fossil fuel companies are aware of the target. So why would they make these investments? One possibility is that they don’t believe world leaders are serious about meeting the two-degree target. They don’t anticipate any enforced restrictions to meet the budget and don’t care if we exceed it.

Organizations like Carbon Tracker are dedicated to exposing the error in this way of thinking. As the impacts and costs of climate change mount, these groups argue that we will find a way to stick to the budget. Commitments to leave “unburnable” fossil fuels in the ground would mean energy companies would be forced to revise the projected profits from those reserves and investments. In other words, the “carbon bubble” will burst and create potentially serious economic consequences. 

Carbon Tracker advances a variety of policy recommendations to help investors understand the true value of fossil fuel companies and minimize the financial risks associated with a carbon bubble and a warming future. See their site andmaterials for more information.


Challenge: International Fairness

In addition to economic issues, the carbon budget raises some serious questions for international politics. Swiss scientistReto Knutti has described the budget as “inconveniently simple.” There’s nowhere to hide from the question on everyone’s mind: who gets to use the remaining budget?

When asked about the potential for negotiations dividing up the rights to future emissions, Executive Secretary of the U.N. Framework Convention on Climate Change Christina Figueres told The Guardian, “I don’t think it’s possible… Politically it would be very difficult. I don’t know who would hold the pen [in setting out allocations of future budgets].”

High-emitting countries argue charting a course of lower emissions would create economic stress, while low-emitting countries maintain the high emitters have already used more than their share of the budget. They argue that countries like Canada and the United States need to give others such as China and India a chance to develop economically.

Additionally, countries are likely to find it difficult to agree on how stringent the budget should be. Budgets are not completely certain in their efficacy. Instead, they are organized by the likelihood that they will result in successfully meeting the two-degree target. Some will argue that it’s good enough to have a 50% chance of meeting the two-degree target, while countries more exposed to immediate climate risks will likely champion a stricter budget — one more certain to limit the warming to two degrees. For example, the leaders of an island nation like the Maldives might prefer a budget with an 80% chance of keeping us below 2ºC.

These differences will not be easily resolved, but new perspectives may help negotiations move forward. For example, some experts argue that rather than consider budget allocation by country, we should consider it by company. A short list of global corporations is responsible for the majority of greenhouse gas pollution, and comparing their contributions may bring additional insight to the idea of fairness in climate policy. Research on this new way of characterizing emissions is currently in development.


Technical Details: Factors Affecting the Carbon Budget

A variety of factors play into the calculation of the final budget. These include:

  • Time horizon. The time horizon of any budget is relevant because Earth’s biological systems absorb carbon slowly over time. Human emissions are proceeding faster than nature can absorb them, but a longer timeframe would allow for a bit more emissions in the budget.
  • Target temperature. World leaders have agreed that to avoid the worst impacts of climate change, we must limit warming to two degrees, a goal established during international negotiations. Some argue even two degrees is too high. A lower temperature target would mean a smaller budget.
  • Units used. Some estimates measure the budget in gigatons of carbon (GtC), while other estimates use gigatons of carbon dioxide (GtCo2). A gigaton of CO2 contains less carbon than a gigaton of carbon itself, because it includes the weight of the oxygen molecules as well as the carbon. Thus one GtC equals 3.67 GtCo2.
  • Land use and deforestation. Human activities like deforestation and agriculture produce greenhouse gas emissions directly and indirectly by disrupting natural systems that absorb them from the atmosphere. Some budget estimates take this into account; others don’t. Budget estimates that take land use changes into account will be smaller because some of the “available” emissions will be consumed by land use change.
  • Projected aerosol emissions. Aerosols are tiny particles emitted by human industrial activities, as well as some natural sources like volcanoes. They reflect sunlight back into space and thus have a cooling effect on the climate. This effect is represented numerically as “aerosol forcing.” A more negative forcing estimate means more future aerosol emissions and a stronger cooling effect. This translates into a larger carbon budget.
  • Emission of non-COgreenhouse gases. Other gases besides CO2 also contribute to global warming. For example, methane is 34 times stronger than C02 when it comes to trapping heat. Budget estimates that account for the continued output of methane and other greenhouse gas pollution will allow correspondingly lower amounts of CO2.
  • Climate sensitivity. Climate sensitivity means the change in global temperature affected by doubling CO2 concentrations. Much has been made of AR5 expanding the lower bound of possible climate sensitivities, but the median value remains 3ºC. All current budget estimates use this value.
  • Probability of success. All predictions involving climate are subject to uncertainty, and the carbon budget is no different. Based on uncertainty in the many factors mentioned above, any budget estimate includes a probability that the temperature target will be met. If a 50% chance of meeting the temperature target is considered sufficient, that will allow for a larger budget than a more risk-averse scenario demanding an 80% chance of meeting the target.

Technical Details: Existing Carbon Budget Estimates

All budget estimates are in GtCO2. Some reporting on the IPCC budget has used GtC, so where relevant those values are shown in parentheses. Unless indicated otherwise by link or footnote, all numbers are from Carbon Tracker’s Unburnable Carbon report and FAQ.

Carbon tracker allows for methane, but does assume that methane and other non-CO2 GHG emission rates will decrease relative to today.

**Numbers extrapolated by Carbon Tracker based on IPCC values for 30%, 50%, and 66% success rate.

† Year broken numbers calculated from raw data based on budget numbers.

†† Cumulative budget estimated based on annual emissions figures in Table 3.1 (first row).

Revised Nov. 12 in response to errata released by the IPCC.


Comparing Budget Accuracy

The varying budget estimates by different groups leave open-ended the question of which is best. 

Some factors unambiguously improve the accuracy of the budget. For example, we may not know the exact quantity of future deforestation or methane pollution, but we know that they will occur. Thus, budgets that account for land use change and non-CO2 greenhouse gas emissions will be more accurate than those that do not. Only the IPCC estimates include both of these factors.

Other factors are more subjective. For example, countries and groups will differ in the chance of success required of a budget. In cases in which missing the two-degree target is truly unacceptable, a group would advocate for a small budget with a greater probability of meeting the target. On the other hand, those who believe that adaptation could compensate for the negative impacts of missing the budget may suggest a larger budget with a lower chance of success.

Regardless of which estimates end up figuring most prominently in policymaking, it’s important to emphasize that the differences between possible budgets are very small compared to known fossil fuel reserves. Even the riskiest, least stringent budget will require reductions in greenhouse gas pollution far beyond the measures currently in place. So it’s not necessary for world leaders to agree on a precise number before taking action. We already know strong action is needed.

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