The Disastrous Carbon Bubble

Co-authored with Lew Daly, Director of the Sustainable Progress Initiative and a Senior Fellow at Demos.

While the year’s end saw an uptick in concern about a new tech bubble, the truth is that there’s a much different, scarier bubble we need to worry about: the carbon bubble. What is the carbon bubble? Basically, it’s just another way to describe the worrisome fact that many energy companies are hoarding oil and gas, despite the rest of the world’s effort to move to a more environmentally sustainable economic system. In much the same way that governments fail to accurately measure social progress and sustainability, these companies are stuck in a dying paradigm. As The Economist puts it, “either governments are not serious about climate change or fossil fuel firms are overvalued.”

It’s simple math. In the 2010 Cancun Agreements, the international community pledged to prevent global temperatures from rising by more than 2 degrees Celsius above pre-industrial levels. But even this number is likely far too high. After all, the .8 degrees Celsius temperatures have risen thus far has already severely damaged ecosystems and economies. But given that the current trajectory would, according to IEA economist Fatih Birol, increase global temperatures by 6 degrees, 2 degrees is a politically and scientifically feasible red line. And it won’t be easy: The most recent Carbon Tracker report estimates that to have an 80% chance of holding temperatures below that threshold, no more than 900 gigatonnes of carbon dioxide (GtCO2) can be released into the atmosphere between 2013 and 2049. This range is called the international “carbon budget.”

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