How Big is the Global Stranded Carbon Assets Problem?


The tragedy of the horizon (John Lorinc, Corporate Knights, Jan. 19, 2016)

Also discussed here: The $2 trillion stranded assets danger zone: How fossil fuel firms risk destroying investor returns (32 page pdf, Carbon Tracker, Nov. 2015)

Today we review a speech by the former Governor of the Ban of Canada (currently Governor for the Bank of England) given just before the Climate Conference in Paris and a report by Carbon Tracker which defined what oil, gas and coal resources must be left in the ground if the atmospheric CO2 has to be kept below 450 ppm which is equivalent to keeping the rise of global temperatures to less than 2 deg C. The best estimates are that between a fifth to one third of existing carbon reserves must be kept in the ground with most attention to coal then oil then natural gas. The Carbon Capture and Storage (CCS) “solution” (which is hyped by politicians, especially in Canada, adverse to restricting oil production) is not seen as having a significant role until 2050 or later- when action between now and 2050 is the critical period to reduce CO2 emissions, confirmed by the conclusions and agreement at Paris. Put in banking terms, the total value of stranded assets could be over $100 trillion. The other reality is that when the market discovers that there is no future for carbon fuels beyond the short term, the prices and intrinsic value of equities in these markets will be “re-priced”- which is what gets the attention of people like Carney.

stranded carbon history

To see Key Quotes and Links to key reports about this post, click HERE

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