Fossil fuel investors stand to lose US$2 trillion due to global climate action and surging clean energy technology, concludes a new report released this week by the UK-based Carbon Tracker Initiative.
The “heavy cuts in carbon emissions” required to limit average global warming to 2ºC above pre-industrial levels “would mean no new coal mines at all are needed and oil demand peaking in 2020,” The Guardian reports. It concluded the United States is at risk of “stranding” US$412 billion worth of projects, followed by Canada at US$220 billion, China at $179 billion, and Australia at $103 billion.
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“Business history is littered with examples of incumbents—like Kodak and Blockbuster—who failed to see a transition coming,” said Carbon Tracker CEO Anthony Hobley. “Our report offers these companies a warning [about] avoiding significant value destruction.”
Although the draft deal under negotiation in Paris will only be sufficient to limit average warming to 2.7ºC, it is widely seen as a stepping stone to deeper emission cuts through a series of five-year action periods beginning in 2020.
Carbon Tracker “looked at existing and future projects being considered by coal, oil, and gas companies up to 2025 and determined which could proceed if carbon emissions are cut to give a 50% chance of keeping climate change under 2C,º” Carrington writes. “Many high-cost projects, including Arctic and deep-water drilling, tar sands, and shale oil are unneeded, and therefore uneconomic in the 2Cº scenario, the report found, although some are required to replace fields that are already depleting.” (h/t to InsideClimate News for pointing us to this story)