Investors in fossil fuel firms given CO2 warning

10th May 2013


Related Topics

Related tags

  • Energy ,
  • Conventional

Author

IEMA

The majority of fossil fuel reserves cannot be burned if we are to limit global temperature rises to 2°C, warns a new report from Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment

According to the analysis, only a fraction of the 2,860Gt of carbon embedded in fossil fuel reserves already identified can be burned if we are to avoid a rise in global temperatures of more than 2°C above pre-industrial levels by 2050. Just 900GtCO2 can be burned for an 80% probability to stay below 2°C, states the report.

It adds that investors need to understand that as much as 80% of the coal, oil and gas reserves of listed companies is unburnable.

It describes the $674 billion invested in 2012 by the top 200 oil and gas and mining companies to find and develop more reserves and new ways of extracting them, as wasted capital, with the reserves likely to become “stranded assets”, replaced by low-carbon alternatives.

“Smart investors can already see that most fossil fuel reserves are essentially unburnable because of the need to reduce emissions in line with the global agreement by governments to avoid global warming of more than 2°C,” commented Nicholas Stern, chair of the Grantham Research Institute and author of the influential 2006 report on the economics of climate change.

“Investors can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision.”

The report warns that the share values of the top fossil fuel companies, which currently have a collective market value of $4 trillion, could fall by up to 60% in a low-emissions scenario.

Stern points out that the continuing financial crisis shows what can happen when risks accumulate unnoticed, and advises companies and regulators to work together to quantify the risks associated with high-carbon assets.


Transform articles

National climate plans could see fossil fuel demand peak by 2025

Demand for fossil fuels will peak by 2025 if all national net-zero pledges are implemented in full and on time, the International Energy Agency (IEA) has forecast.

15th October 2021

Read more

The Green Homes Grant is set to deliver only a fraction of the jobs and improvements intended, leading to calls for more involvement from local authorities in future schemes.

23rd September 2021

Read more

COVID-19 recovery packages have largely focused on protecting, rather than transforming, existing industries, and have been a “lost opportunity” for speeding up the global energy transition.

23rd September 2021

Read more

Half of the world's 40 largest listed oil and gas companies will have to slash their production by at least 50% by the 2030s to align with the goals of the Paris Agreement, new analysis has found.

9th September 2021

Read more

None of England’s water and sewerage companies achieved all environmental expectations for the period 2015 to 2020, the Environment Agency has revealed. These targets included the reduction of total pollution incidents by at least one-third compared with 2012, and for incident self-reporting to be at least 75%.

30th July 2021

Read more

The UK’s pipeline for renewable energy projects could mitigate 90% of job losses caused by COVID-19 and help deliver the government’s ‘levelling up’ agenda. That is according to a recent report from consultancy EY-Parthenon, which outlines how the UK’s £108bn “visible pipeline” of investible renewable energy projects could create 625,000 jobs.

30th July 2021

Read more

Billions of people worldwide have been unable to access safe drinking water and sanitation in their homes during the COVID-19 pandemic, according to a progress report from the World Health Organisation focusing on the UN’s sixth Sustainable Development Goal (SDG 6) – to “ensure availability and sustainable management of water and sanitation for all by 2030”.

30th July 2021

Read more

The oil and gas industry is set to burn through its allocated carbon budget 13 years early unless decisive action is taken immediately, new analysis has found.

22nd July 2021

Read more

The UK will no longer use unabated coal to generate electricity from October 2024, one year earlier than originally planned, the Department for Business, Energy & Industrial Strategy has announced.

2nd July 2021

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert