Unburnable Carbon

Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble?

This new analysis by Carbon Tracker discovers that:

  • Already in 2011, the world has used over a third of its 50-year carbon budget of 886GtCO2, leaving 565GtCO2
  • All of the proven reserves owned by private and public companies and governments are equivalent to 2,795 GtCO2
  • Fossil fuel reserves owned by the top 100 listed coal and top 100 listed oil and gas companies represent total emissions of 745GtCO2
  • Only 20% of the total reserves can be burned unabated, leaving up to 80% of assets technically unburnable
(click image for larger version of map)

Carbon dioxide emissions potential of listed fossil fuel reserves  

Distribution of reserves across exchanges

By allocating reserves to exchanges, it is possible to build up a picture of where reserves are listed. The map shows how the listings of coal, oil and gas reserves are distributed, indicating that capital markets are supporting the continued exploitation of fossil fuel reserves around the world.

Relevance for investors

Asset owners typically invest large amounts in passive funds which track the market, or active funds which are benchmarked against market indices. This means many investors are backing huge fossil fuel reserves purely as a result of the structure of the financial products they invest in. The continued focus on short term returns perpetuates the status quo.