'Unburnable' fossil fuels set to leave investors stranded

Apr 19, 2013 by James Whitmore, The Conversation
But that’s exactly what investors are doing, says a new report. Credit: Takver/Flickr

Investors are contining to pour money into fossil fuel reserves that could end up being worthless due to efforts to combat climate change, a new report has found.

The Climate Tracker report found that investors are set to waste US$6 trillion on fossil fuel reserves in the next ten years if they fail to account for budgets.

To keep under the globally agreed-upon figure of 2°C by 2050, emissions must be kept to under 900 gigatonnes (Gt) CO2, the report says.

If the budget is allocated according to how much each source (, housing, transport etc) contributes to emissions, investment in fossil fuels must be limited to the equivalent 125-225 Gt CO2 until 2050.

Last year companies invested US$674b in developing new fossil fuel reserves. Under the new budget scenario 60-80% of this investment in fossil fuel reserves will be wasted.

Globally 200 publicly listed companies currently invest in the equivalent of 762Gt CO2. There are further interests in undeveloped reserves which could double the size to 1,541Gt CO2.

Professor Tony Wood at University of Melbourne said there's a disconnect between what's necessary to avoid the worst aspects of climate change, and what's actually happening, and "this report has put that disconnect into numbers."

Businesses continue to invest in these "stranded" because of continuing uncertainty over carbon pricing, he said. "Governments around the world have moved away from discussing climate change in a policy sense."

Energy economist Professor Barry Naughten at University of Melbourne said investors don't believe governments will put a high enough price on CO2 emissions to cause them a problem.

"In Australia there's a lot of as to whether the will be maintained in any shape or form if there's a change of government this year," he said.

The new is higher than previous assessments because it assumes efforts to reduce non- from waste and agriculture, such as methane, will increase.

Professor Wood said there were signs of hope that emissions from waste and agriculture could be reduced.

The report reveals Australian companies have interests in 26Gt CO2, including 1Gt CO2 in gas, 2Gt CO2 in oil, and 23Gt CO2 in coal.

The highest investment is via the New York Stock Exchange with 215Gt CO2. The majority of this is invested in oil. Companies listed in London have interests in 113Gt CO2, with a greater proportion devoted to coal.

After 2050 carbon budgets must remain very low, with only 75Gt CO2 allowed in order to keep warming below 2°C.

Explore further: Grouse moor burning causes widespread environmental changes

add to favorites email to friend print save as pdf

Related Stories

CO2 emissions continue significant climb

Nov 24, 2009

The annual rate of increase in carbon dioxide emissions from fossil fuels has more than tripled in this decade, compared to the 1990s, reports an international consortium of scientists, who paint a bleak picture of the Earth's ...

Pricing can cut CO2 emissions from electric generators

Apr 28, 2008

Levying a price on carbon dioxide released by electric generators could considerably reduce greenhouse gas emissions — even before the deployment of any environmentally friendly technology — according to scientists in ...

China produces as much CO2 per person as Europe: report

Jul 18, 2012

China's carbon dioxide (CO2) levels soared in 2011, putting its per capita emissions on a par for the first time with those of Europe, while global levels of the greenhouse gas hit another all-time high, a ...

Burning coal worse for climate than clearing rain forests

Nov 26, 2009

Deforestation has had a big influence on the increase of carbon dioxide (CO2) emissions in the past three centuries, but its impact is tapering off relatively. Nowadays, the burning of fossil fuels is a more crucial factor. ...

Recommended for you

Rating the planet's oceans

9 hours ago

The most comprehensive assessment conducted by the Ocean Health Index rates the Earth's oceans at 67 out of 100 in overall health. In addition, for the first time, the report assessed the Antarctic and the ...

Feds to unveil cleanup plan for nuke waste dump

12 hours ago

After nearly eight months, the U.S. Department of Energy has formalized a plan for cleaning up the federal government's troubled nuclear waste dump in southeastern New Mexico.

User comments : 26

Adjust slider to filter visible comments by rank

Display comments: newest first

Maggnus
3.1 / 5 (15) Apr 19, 2013
So much for there beng no financial incentive for oil producers. No wonder they fund Heartland and Watts.
Shootist
2.1 / 5 (22) Apr 19, 2013
So much for there beng no financial incentive for oil producers. No wonder they fund Heartland and Watts.


Wattsup, and the rest, apparently have higher standards of ethics than Mann, et. al. At least they haven't been caught discussion how to fudge data to better match their predictions.
tadchem
3.1 / 5 (15) Apr 19, 2013
The belief that fossil fuel reserves "could end up being worthless" is self-delusion. There will always be a need for the unique products they can produce. Even now industry is developing plastic-based batteries, electronics, and visual displays. Someday in the not-too-distant future the need for rare-earth elements and expensive mineral concoctions for electronic chips will give way to organic (read ' oil-based') semiconductors and solar cells currently being developed.
Fortunately an empirical scientist can readily distinguish objective facts from wishful thinking.
Lurker2358
2.7 / 5 (14) Apr 19, 2013
investors don't believe governments will put a high enough price on CO2 emissions to cause them a problem.


These people don't understand how economics works for middle income and low income families. A normal person can't spend 45k or more on ONE fricken electric automobile, because it's impracticale by the time you count two working adults plus a family, all of whom need cheap transportation for work and school.

Even if you got your fairy tale wish in the developed nations, the cheaper oil prices that would result would just lead to increased demand in less developed nations, where people who want/need technology certainly don't make anywhere near enough to buy ridiculously expensive, impractical EVs.

You think Iran, Iraq, the Saudis, and Kuwait are all just going to stop selling oil just because the west in some fairy tale stops using it? No, they'll sell it to India, China, and Africa.

Don't be morons.

You've been told this repeatedly, but be naive fools if you like.
Porgie
2.5 / 5 (15) Apr 19, 2013
Get real, this is a thinly veiled liberal attempt to thwart fossil investments. Not much chance of this happening. Even so, cracking natural gas is one of the largest industries in the US and that will not change soon. Poor article for Phy.sorg.
antigoracle
1.8 / 5 (20) Apr 19, 2013
If anyone outside the AGW Alarmist Cult believe fossil fuels are going away anytime soon, then they are bigger fools than those in the cult. They don't realize that the alarmism is to hurry along the Carbon Tax, before the AGW Lies hit the fan. Carbon Tax designed to line the pockets of the wealthy and increase the suffering of the rest. Just look at Haiti and the decimation those people have done to their country all in search of cheap fuel. That's the future these fools have no idea that they seek.
Neinsense99
2.9 / 5 (15) Apr 19, 2013
Bullshootist trots out the old debunked lie to support the discredited conspiracy blog and insult to intelligence Wattsup.
rwinners
3.3 / 5 (12) Apr 19, 2013
I think it is sad that there exists so little agreement within governments about how to deal with climate change. Not to mention, any semblance of interest on the part of nations.
Caliban
4 / 5 (8) Apr 20, 2013
Burned by their own greed. I love it!

There is nothing "unique" about the products that can be made from petroleum. Even as we speak, the technology to manufacture plastics and the like from plant-derived hydrocarbons is being developed.

The only thing that petro has going for it is ease of access, and thus -huge profitability.

If you aren't going to get rid of your tinfoil hat, at least wear it straight.

Benni
1.4 / 5 (10) Apr 20, 2013
The depths from which oil & natural gas are extracted do not contain the remains of dinosaurs. It is well known to science that oil & natural gas continue to be produced by natural forces of heat & pressure from just below the earth's crust.

Coal is a fossil fuel, that is settled science, ban it's use. Oil & natural gas are not fossil fuels, well settled science proves this to be true, only the "political class" wants us to think differently. The "political class" is a group so mathematically challenged that they are unable to pass a chemistry course that would educate them for a scientifically accurate understanding of the differences between coal , and that of natural gas & oil.

ValeriaT
1 / 5 (8) Apr 20, 2013
You cannot ignore the climatic changes - but that's exactly what investors are doing, says a new report
The investors will always follow the principles of free market, which has no memory and its driven with actual prices at the market. The more distant perspective of human society, the more it's separated from principles of free market. But the climatic change problem is heavily politicized - we still have no reliable evidence, that the carbon emissions is what participates at the global warming (the another planets exhibit the signs of climatic changes too). But what we can be perfectly sure is, the fossil carbon fuels are unsustainable. The proponents of green lobby are motivated with highest occupation of people into green alternatives, not into effective replacement of fossil fuels. So far I don't know about any green activist, who is willing to support the cold fusion, which could bring the actual progress of energetic and environmental crisis.
ValeriaT
2.1 / 5 (12) Apr 20, 2013
We should say clearly, that the current fight against global warming is lead with people, who are motivated into nuclear projects, biofuels and electromobiles, i.e. into just another ways, how to drain the rest of natural resources - not into research of their methodical replacement. I don't want to have Earth covered with wind/solar plants, dangerous nuclear reactors and biofuel farms killing the biodiversity. We have the Earth for living, not for production of energy for this living.
ShotmanMaslo
3 / 5 (9) Apr 20, 2013
Unless there is a cheap enough and practical alternative by that time, then not only are those fossil burnable, they will be burned for sure, you can count on that. You can push the market with carbon pricing schemes only so far, but in the end we need a solution.
Cave_Man
2.5 / 5 (4) Apr 20, 2013
We should say clearly, that the current fight against global warming is lead with people, who are motivated into nuclear projects, biofuels and electromobiles, i.e. into just another ways, how to drain the rest of natural resources - not into research of their methodical replacement. I don't want to have Earth covered with wind/solar plants, dangerous nuclear reactors and biofuel farms killing the biodiversity. We have the Earth for living, not for production of energy for this living.


This could be the smartest comment every by this user. No offense.
ScooterG
1.8 / 5 (10) Apr 20, 2013
This article is nothing but propaganda for the AGW choir, as [I'm guessing] very few investors will take financial advice from a climate change-fanatical university professor.
Bill_Collins
3 / 5 (4) Apr 20, 2013
We will continue to prioritize immediate needs over the long term health of the planet. Until an energy source becomes economically feasible without subsidies, we will continue burning fossil fuels. I would hope that this is not true, but it is who we are. It should remind us that we need to find clean solutions that make economic sense.
Sanescience
2.3 / 5 (3) Apr 21, 2013
Any discussion of the future of energy must contemplate how many people will live on the planet and how/where they will be concentrated. Over population in any region with hydrocarbon/coal resources will eventually use them.

And of course war may eventually result from over population, especially if prolonged food shortages enter into play. At which point the concerns of burning fossil fuels will be completely abandoned.
antigoracle
1.8 / 5 (10) Apr 21, 2013
Burned by their own greed. I love it!

There is nothing "unique" about the products that can be made from petroleum. Even as we speak, the technology to manufacture plastics and the like from plant-derived hydrocarbons is being developed.

The only thing that petro has going for it is ease of access, and thus -huge profitability.

If you aren't going to get rid of your tinfoil hat, at least wear it straight.


And where is the ENERGY coming from to convert plants to hydrocarbon and then to plastics?
If you aren't going to get rid of your AGW stupidity, at least think before you post.
italba
1.8 / 5 (5) Apr 21, 2013
I don't want to have Earth covered with wind/solar plants...

Wrong. The amount of energy we get from the sun is so great that we will not ever need more than a little amount of land (or sea!) for it. I try to calculate the worst case:
Average solar power on the whole earth = 164 Watts per square meters (day and night, summer or winter, tropics or polar regions).
Average energy from a 1 square meter assuming a 10% efficient solar cell in one year = 143,644 Wh
Total energy needed per year = 146 PWh
You'll need about 1 000 000 000 000 square meters, that is 1 000 000 square kilometers.
It is about 1/10 of the sahara desert!
Benni
2 / 5 (4) Apr 21, 2013
Average solar power on the whole earth = 164 Watts per square meters (day and night, summer or winter, tropics or polar regions).


Good post:

But if you discount the polar regions where nobody lives you get almost 1000 watts average per sq meter, or about 90 watts per sq foot. This would dwarf your number of 146 "PWh", and you wouldn't even need an area 1/10 of the Sahara to do it.

Caliban
3.4 / 5 (5) Apr 21, 2013
Burned by their own greed. I love it!

There is nothing "unique" about the products that can be made from petroleum. Even as we speak, the technology to manufacture plastics and the like from plant-derived hydrocarbons is being developed.

The only thing that petro has going for it is ease of access, and thus -huge profitability.

If you aren't going to get rid of your tinfoil hat, at least wear it straight.


And where is the ENERGY coming from to convert plants to hydrocarbon and then to plastics?
If you aren't going to get rid of your AGW stupidity, at least think before you post.


Well now you've stepped in it, clown. What do you think is used to provide the energy to process fossil fuels? Sweet dreams?

No, you moron --more fossil fuel. Same principle applies to biofuels -some portion of the fuels produced goes back into further production, along with other energy provided via the grid, whether that be wind-, solar-, nuclear-, fossil-, or otherwise derived
italba
2 / 5 (4) Apr 22, 2013
@Benni: Thank you for your answer, but I have to point out something.

you get almost 1000 watts average per sq meter...


1000 Watts is the peak power you can get. The maximum energy (Watts * hours) you can get for a WHOLE DAY, night included, is about 9 kWh. See http://store.sund...ama.html

This would dwarf your number of 146 "PWh"...


This number (146 PWh is PetaWatt * hour, 10^15 Watts * hours) means the total amount of energy we need every year, generated now from oil, coal, nuclear, whatever.

and you wouldn't even need an area 1/10 of the Sahara to do it.


I tried to calculate the maximum surface we have to cover with solar panels to get all the energy we need, so I choose the worst possible parameters. I agree that the million square kilometers I calculated should be, more correctly, divided by 10 or 100 but, I repeat, I only wanted to get a maximum and to point out that even this maximum is a very small slice of our earth.
_traw_at
4.2 / 5 (5) Apr 22, 2013
I wonder what amazing contortions of logic the Climate Change Denialists will use to explain why it is that Saudi Arabia and other Mideast and African oil producing nations are fast-tracking a switch to solar power.

Renewable energy sources are expected to be less expensive than non-renewable ones by the end of 2015 or early 2016, even without subsidies. And the cost will continue downward as more advances are made in technologies to make and store the power.

Yeah, go ahead and invest in petroleum and coal, either directly or through your pension and/or mutual funds: Your dividends will be paid in Confederate money or 1920s era Deutschmarks. :-)
antigoracle
1.4 / 5 (9) Apr 22, 2013
I wonder what amazing contortions of logic the Climate Change Denialists will use to explain why it is that Saudi Arabia and other Mideast and African oil producing nations are fast-tracking a switch to solar power.

Well, for the limited mind of the AGW Alarmist Zealot like yourself, it requires "contortions of logic" to realize that if they don't burn it themselves, then they have more to export. Amazing, isn't it? Some day soon, when the whole AGW scam hits the fan, perhaps you'll be amazed again.
antialias_physorg
4.2 / 5 (5) Apr 22, 2013
I tried to calculate the maximum surface we have to cover with solar panels to get all the energy we need,

People have been doing that for you. A square with 92 miles on a side would do it for the US.
http://www.ecogee...ower/991

I wonder what amazing contortions of logic the Climate Change Denialists will use to explain why it is that Saudi Arabia and other Mideast and African oil producing nations are fast-tracking a switch to solar power.

While I'd like to think that they're starting to smell the roses (read: the pollution in the air) it's more likely that they know EXTREMELY well how fast they will run out of oil...and that they'd better be fully switched over by the time that happens or they'll be up a certain creek big-time.

..and any country still on the oil-train when the Middle East runs out will be up that creek even worse.
italba
1 / 5 (2) Apr 23, 2013
People have been doing that for you. A square with 92 miles on a side would do it for the US.

It may sound strange to somebody but the world does not ends at Canadian and Mexican borders. This study ( http://www.estela...IST_.pdf ) calculate the surface needed to generate energy for all the world, about 2% of Sahara desert. That is 5 times better than my estimate, but, as I said, I have chosen the worst possible parameters.