Quantcast
Environmental News for a Healthier Planet and Life

Help Support EcoWatch

UN Climate Chief: Carbon Bubble Is Now a Reality

Climate

The so-called "carbon bubble" is no longer a concept, it's a reality, according to UN climate chief Christiana Figueres, who will oversee the crucial UN climate conference in Paris in December.

Investments in fossil fuels are becoming a losing bet as the so-called "carbon bubble" bursts.
Photo credit: Shutterstock

Investors who sunk their money into the fossil fuel sector are going to come up losers, she suggested, as plummeting oil prices have made new extraction projects too costly to continue to pursue and concerns about global warming have made them too risky.

"A lot of the stranded asset conversations we’ve been having for a long time are now coming true,” she told RTCC, speaking from the World Future Energy Summit in Abu Dhabi. “Those expensive oil projects—deep sea, Arctic, tar sands—those are actually beginning to be taken off the table because of the low oil prices.”

That's good news for the environmental groups that have long warned about "stranded assets"—coal, oil and gas that would have to be left in the ground to slow climate change—and how that was leading to an overvaluation of these reserves.

RTCC cited a number of expensive exploration and extraction projects that have already been cancelled. Chevron has delayed plans to drill in the Canadian Arctic. Norway's Statoil has returned three licenses to explore for oil off the Greenland coast. And Shell and Qatar Petroleum announced last week they were scrapping a planned $6.5 billion petrochemical project in Qatar, saying it was "commercially unfeasible, particularly in the current economic climate prevailing in the energy industry." Qatar's state-controlled petrochemical company Industries Qatar abandoned plans for another $6 billion plant last September. Many of these projects were planned when oil was $100 a barrel. It's now under $50.

In the U.S., Texas is feeling the brunt of the oil bust, as extraction companies lay off workers. The New York Times reported yesterday, "With oil prices plummeting by more than 50 percent since June, the gleeful mood of recent years has turned glum here in West Texas as the frenzy of shale oil drilling has come to a screeching halt. Every day, oil companies are decommissioning rigs and announcing layoffs. Small companies that lease equipment have fallen behind in their payments." And the once seemingly unstoppable growing of fracking in North Dakota's Bakken shale region has also come to a screeching halt.

Carbon Tracker Initiative, a independent nonprofit think tank that analyzes energy from both an environmental and financial standpoint, coined the term "carbon bubble" and has continuously warned investors about the risks of sinking money into fossil fuel-related businesses, due to the 2c target of limiting global warming to 2 degrees to stave off the worst impacts of climate change.

"If the 2C target is rigorously applied, then up to 80 percent of declared reserves owned by the world’s largest listed coal, oil and gas companies and their investors would be subject to impairment as these assets become stranded,” the group said in its report Unburnable Carbon.

Figueres told RTCC she believed investors and investment firms would be taking notice, opening up the possibility that investment assets might begin to shift more decisively to renewables.

“When you begin to see very specific examples of a concept that was previously only a concept, I do think it’s going to be taken much more seriously on the part of investors,” she said. “That volatility in prices is one that incrementally and gradually makes investment in oil and gas more risky than investment in renewables, where it is very predictable what the upfront cost of infrastructure is, and then the price of fuel from then on is very predictable and certain.”

YOU MIGHT ALSO LIKE

Plunging Oil Prices Trigger Economic Downturn in Fracking Boom Town

OPEC Decision Likely to Crash U.S. Fracking Industry

OPEC Wants to “Crush U.S. Shale”

EcoWatch Daily Newsletter

Women walk from Santa Monica beach after a social media workout on the sand on May 12, 2020 in Santa Monica, California. Al Seib / Los Angeles Times via Getty Images

Independence Day weekend is a busy time for coastal communities as people flock to the beaches to soak up the sun during the summer holiday. This year is different. Some of the country's most popular beach destinations in Florida and California have decided to close their beaches to stop the surge in coronavirus cases.

Read More Show Less
Daily fireworks in many U.S. cities in recent weeks have no doubt been interfering with the sleep and peace of mind of thousands of veterans and others who suffer from PTSD. Flickr / CC by 2.0

By Arash Javanbakht

For some combat veterans, the Fourth of July is not a time to celebrate the independence of the country they love. Instead, the holiday is a terrifying ordeal. That's because the noise of fireworks – loud, sudden, and reminiscent of war – rocks their nervous system. Daily fireworks in many U.S. cities in recent weeks have no doubt been interfering with the sleep and peace of mind of thousands of veterans.

Read More Show Less
Koala populations across parts of Australia are on track to become extinct before 2050 unless "urgent government intervention" occurs. Mathias Appel / Flickr

Koala populations across parts of Australia are on track to become extinct before 2050 unless "urgent government intervention" occurs, warns a year-long inquiry into Australia's "most loved animal." The report published by the Parliament of New South Wales (NSW) paints a "stark and depressing snapshot" of koalas in Australia's southeastern state.

Read More Show Less
NASA is advancing tools like this supercomputer model that created this simulation of carbon dioxide in the atmosphere to better understand what will happen to Earth's climate if the land and ocean can no longer absorb nearly half of all climate-warming CO2 emissions. NASA/GSFC

By Jeff Berardelli

For the past year, some of the most up-to-date computer models from the world's top climate modeling groups have been "running hot" – projecting that global warming may be even more extreme than earlier thought. Data from some of the model runs has been confounding scientists because it challenges decades of consistent projections.

Read More Show Less
A child stands in what is left of his house in Utuado, Puerto Rico, which was almost completely destroyed by Hurricane Maria, on Oct. 12, 2017. U.S. Coast Guard Petty Officer 1st Class Jon-Paul Rios. Flickr, CC by 2.0
By Mark Hertsgaard and Kyle Pope

To hear many journalists tell it, the spring of 2020 has brought a series of extraordinary revelations. Look at what the nation has learned: That our health-care system was not remotely up to the challenge of a deadly pandemic. That our economic safety net was largely nonexistent. That our vulnerability to disease and death was directly tied to our race and where we live. That our political leadership sowed misinformation that left people dead. That systemic racism and the killing of Black people by police is undiminished, despite decades of protest and so many Black lives lost.
Read More Show Less
President Trump's claim last September that Hurricane Dorian was headed for Alabama's gulf coast was quickly refuted by employees at the National Oceanic and Atmospheric Administration (NOAA). An independent investigation found that NOAA's chief violated the agency's ethics when he backed Trump's warning and doctored map that used a Sharpie to alter the storm's path, as EcoWatch reported.
Read More Show Less

Trending

African bush elephants in the Makgadikgadi Pans Game Reserve in Botswana on Nov. 22, 2016. Michael Jansen / Flickr

More than 350 elephants have died in Botswana since May, and no one knows why.

Read More Show Less