Bubbles are bad – how can we forget the internet bubble of the 90s or the recent subprime mortgage crisis? Now it seems that we have gotten ourselves into a new bubble – and the consequences of ignoring it could be disastrous for the planet. A recent report by the Carbon Tracker Initiative shows that companies invested 674 billion dollars last year in developing nonrenewable energy assets globally. Add that to the fact that fossil fuel reserves already exceed the carbon budget and you get an unsupportable surplus – aka a “bubble.”
Many of the world’s countries have voluntarily agreed to reduce carbon emissions in an effort to limit global warming to a 2° C temperature increase. If we stick to the 2 degree limit, 60 to 80 percent of the world’s oil and coal reserves owned by publicly listed companies would be unburnable — that’s about a third of the world’s fossil fuel reserves. This would drop the value of those companies by 40 – 60 percent. The world’s fossil fuel reserves far exceed the world’s carbon limit, so if we cut down on carbon we also hurt the global economy.
The problem isn’t without some sort of solution, however. According to the report, if we act now, phasing in the carbon limit could help ease the impact on these corporations. It’s clear that finding the balance between economic collapse and limiting carbon emissions is key to both our short term and long term survival.
Via New Scientist