- The Carbon Bubble: What Happens to Us When It Bursts
- Jeff Rubin
- Random House Canada
- 320 pages
There's not much subtlety to Jeff Rubin.
His new book deals with the waning golden age of fossil fuels, and in typical Rubin fashion he sees the era as ending not with a whimper but a bang. Or, more accurately given his chosen metaphor, a pop.
The former chief economist at CIBC World Markets won renown 20 years ago by accurately forecasting Toronto's real-estate slump in the 1990s. He garnered jeers by predicting in April, 2008, that oil prices would hit $225 a barrel in 2012, a bold call that was spectacularly wrong.
Since leaving the bank in 2009, Rubin has turned to writing books, specializing in a genre of popular economics that prognosticates in absolutist terms about upheaval and, indeed, chaos.
His first book was on the demise of globalization, a death, he said, that was caused by ever-rising oil prices. That effort, Why Your World Is About to Get a Whole Lot Smaller, won him Canada's National Business Book Award in 2010. His second warned of the end of economic growth itself, at least in the developed world. Again, the main culprit was triple-digit oil prices.
His just-released third book, The Carbon Bubble: What Happens to Us When It Bursts, is a feat of economics writer's jiu-jitsu.
The driver of global upheaval now is the impact of climate change – troubling now; catastrophic in the future – which Rubin accepts as being persuasively established by scientists and the UN Intergovernmental Panel on Climate Change (IPCC).
For the maverick economist, that changes everything – to borrow from Canada's internationally renowned climate Cassandra, Naomi Klein. Instead of high oil prices stunting economic growth and globalization, he now posits a world in which the imperative of climate change kills the demand for high-carbon fossil fuels such as coal and oil and drives down the value of such resources.
With an exceedingly broad brush, he paints two big losers in this scenario: the oil sands and Prime Minister Stephen Harper. Canada's oil sands sector, he argues, will not survive in a de-carbonized world. And in that scenario, Harper's vision of an oil-sands-powered economic juggernaut will turn to dust.
Rubin aims his sharpest jabs at Harper, who, he writes, "was betting the country's growth on a fuel that was not only considered an environmental pariah by the rest of the world but requires sky-high oil prices to be economically viable – attributes that render the oil sands highly vulnerable to either slower economic growth or greener growth in a carbon-constrained future."
Rubin is on solid footing with his broad thesis: that the world faces the imminent threat of major upheaval due to climate change, and that we will be forced to adjust through either slower growth or a radical effort to shift off fossil fuels.
Over time, the dominance of fossil energy will recede. The big question is, at what pace.
If quickly enough to avert the worst climate change, long-term investments in coal and oil and in the infrastructure needed to bring them to market will be stranded. Rubin notes coal companies are already reeling from a huge drop in world demand – at least some of it driven by policies aimed at cutting greenhouse-gas emissions. Oil's next, he suggests.
If the transition is as slow as companies such as Exxon Mobil Corp. suggest it will be, oil producers may enjoy some additional profitable years, but at a huge cost to the global economy as it is forced to adjust to climate change. Too many politicians, corporate executives – and indeed individuals – continue to plan as if it's business as usual, with only a slight tweak.
Or, as Rubin puts it: "Despite mounting evidence to the contrary, we've chosen to believe that we can go on living the way we've always done. We can't. Our past choices are catching up to us rapidly."
It's here that the defenders of the status quo will label Rubin a "climate alarmist." That's become the tag used to counterpunch by those who have been labelled "climate skeptics" but now might more accurately be seen as "climate ostriches."
And he is raising an alarm, in the way a man does when he smells smoke and then sees it billowing from a nearby house. (Ah, but he hasn't seen the flames.) Unfortunately, Rubin is a one-handed economist. His penchant for hyperbole and polemics invariably get the better of him, leaving him to make some questionable claims.
He suggests virtually all of central Canada's economic woes can be laid at the doorstep of the booming oil sands sector and Harper's aggressive effort to ensure their expansion by clearing the regulatory path for new pipeline construction.
Yes, the oil boom of the first decade of this century drove the Canadian dollar higher, hurting manufacturing exporters and tourism. But there were plenty of other factors in the mix.
And Rubin overstates the existential threat to the oil sands that arises from climate change and from the fact that crude prices are now forecast to be lower than the industry expected just a few years ago.
Certainly, the pace of oil-sands expansion has slowed, and projects are being shelved. We may never see massive new oil sands mines built. But companies will continue to pursue less costly options such as expansions to existing mines and the efforts to use steam and solvents to recover bitumen from deeper deposits.
Even a successful global climate policy – embraced by federal and Alberta governments that took a leadership role – wouldn't necessary kill off the oil sands.
The imposition of carbon costs and lower global demand for crude would clearly have an impact on the pace and scale of future development. However, the Paris-based International Energy Agency, which advises rich countries on energy policy, has sketched out its own two-degree scenario (a strategy for keeping the concentration of greenhouse gases below 450 parts per million, which scientists say would likely keep temperatures from rising more than 2 degrees from pre-industrial levels) and its chief economist, Fatih Birol, insists there's plenty of room for oil sands production in that scenario.
While Rubin may overreach, he does lay out a solid case that in a carbon-constrained world, Canada, and particularly Alberta, would be foolhardy to pin its economic hopes on a high-cost, emissions-intensive source of crude.