75 Gideon Forman

The Carbon Bubble: What Happens to Us When it BurstsJeff Rubin, Toronto: Random House Canada, 2015, 304 pages

The Carbon Bubble: What Happens to Us When it Bursts

Even if you care nothing about climate change and human health, you should still support a phase-out of Alberta’s tar sand projects. That sentiment is what makes Jeff Rubin’s The Carbon Bubble an exhilarating read. Rubin claims that you should support this policy for one overriding reason: the sale of Canada’s unconventional oil makes no economic sense.

Rubin sets the scene with an overview of climate-related disasters – heat-waves, drought, flooding – then offers positive ways forward including wind and solar power as well as de-carbonization. Approvingly he cites an Intergovernmental Panel on Climate Change report saying over 75 percent of known fossil fuel should remain buried. Coming from a man who spent decades analyzing world markets for a bank, this admonition is potent. Rubin wants Alberta crude left in the ground not just because it contributes to climate chaos, but because it is a poor investment.

Owing to the tremendous challenge of getting bitumen out of the land, the cost of producing the resource is extremely high. Rubin calls it “one of the most expensive fuels on the planet.” That cost might be acceptable if the amount it sold for were soaring but in recent years that hasn’t been the case. For the tar sands to be viable, the price needs to be $65-$100 (US) a barrel – in July 2015 it was around $50. Plans for up to 10 oil upgraders and refineries have already been shelved and the International Energy Agency predicts more projects will be killed in the tar sands than any other oil-producing area on Earth. 

Compounding the problem is the fact the United States has been the largest market for our bitumen but – due to fracking – that country is now awash in oil. Its product is generally cheaper to produce than ours and, in any case, US consumption is on a downward trajectory.

Rubin recognizes there’s a contradiction at the tar sands’ very heart: to be profitable, the projects require high oil prices. But these prices are a brake on the world economic growth that propels the need for fuel. The very condition that makes tar sands expansion possible also threatens expansion. Little wonder Rubin calls the sector “a sunset industry.”

To those seeking a moratorium on unconventional oil, this is all good news. But it doesn’t stop there. The tar sands’ contraction is happening in the context of a worldwide divestment movement, which is stripping fossil fuel companies of billions of dollars. In 2014, Stanford University promised to sell the coal stock in its massive endowment, and the governments of Sweden and Norway have taken fossil fuel out of their pension plans. Rubin’s crucial insight is that the very nature of investment is changing – and in a most positive way. In the past, the absence of fossil-fuel stocks hurt one’s portfolio. Now it’s their presence that’s detrimental. “A portfolio divested of fossil fuels is far more likely to beat the overall performance of the stock market,” Rubin writes.

Also hopeful is the fact that, in a warming world, Canada will enjoy new economic opportunities that do not involve oil extraction. One such is the production of prairie corn. Formerly difficult because of brief growing seasons, corn-based agriculture is now increasingly viable as temperatures in Manitoba, Saskatchewan and Alberta continue to rise. In 2011, prairie farmers planted about 61,000 hectares of corn. Two years later they grew more than twice that. This development puts money in farmers’ pockets and could make a vital grain more accessible to hungry people. It would be especially beneficial if it were grown organically given that conventional corn uses a lot of pesticides. No one thinks that this crop will wholly replace oil as an Alberta staple. But Rubin is helpful in suggesting – at least in outline – what a saner economy might look like. 

At times The Carbon Bubble is problematic. Rubin’s commitment to the environment is unmistakable, but he still endorses the notion of economic growth – not a small concern in a world of seven billion persons. He supports “green growth” but does not address the underlying question: In order to be happy, must we grow at all? 

At points he fails to consider the new economic opportunities’ implications. He notes that, due to loss of sea ice, cargo ships can now save time by taking the Northwest Passage and cites approvingly the example of a vessel carrying BC coal through the Passage to Finland. But surely there’s a problem if this new Arctic seaway expedites the movement of goods, such as coal, which contribute to climate change.

These flaws notwithstanding, the book’s importance is great. If environmentalists are to build a broad constituency, they need arguments that have purchase with people different from themselves. They need to speak the language of business. Rubin has given us powerful new evidence in our case against the unconventional oil-patch – this is not a good place to make money. 

Reviewer Information

Gideon Forman is a long time peace and environmental activist.