Carbon bubble

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Carbon bubble (also "carbon bubble") according to the calculations of the Carbon Tracker Initiative 2013

The carbon bubble (also “CO 2 bubble”) is understood to mean an assumed overvaluation of companies in the field of fossil fuels , resulting from the incompatibility of the 2 ° C climate target agreed at the Copenhagen climate summit and from exploitation and use of large parts of the currently known fossil fuel deposits such as oil , coal and natural gas . Proponents of this theory speak of a speculative bubble .

Since global warming of around two degrees Celsius threatens irreversible tipping points , this value is considered non-negotiable in large parts of science and the international community. If global greenhouse gas emissions continue unchecked, enough fossil CO 2 could have been introduced into the atmosphere by the end of the 2020s to exceed this value: In order to prevent warming by more than 2 ° C , large parts of the current would have to be known reserves of fossil fuels remain unused; There is a risk of a significant decrease in value for numerous companies in the fossil energy industry , which have already acquired the mining rights to a large part of these reserves and have included them as assets in their balance sheets. The value of these fossil energy reserves is estimated with reference to the Carbon Tracker & Grantham Institute at 27 trillion US dollars . The hypothesis of a carbon bubble assumes that the value of these companies was currently assessed on the dubious assumption that fossil fuel reserves, which are economically viable under the current framework conditions, can also be mined and sold in the future.

background

The already known fossil reserves exceed the remaining “ carbon budget ” to meet the internationally agreed 2 ° C climate target many times over. It must therefore be assumed that the signatory states of the Copenhagen Accord will take political steps in the next few years to prevent the continued uncontrolled burning of fossil fuels. Should such measures be taken, most of the known deposits could remain untouched. Even without new climate policy measures, the further development and spread of efficient and climate-friendly technologies can lead to a decline in the value of fossil fuels. This would drastically reduce the value of companies and entire economies that would have benefited from the exploitation of these resources. Seven of the ten largest companies in the world are active in the oil and gas sector and would therefore be directly affected by the carbon bubble.

The majority of scientific opinions in this area say that burning large parts of the previously known fossil fuel reserves is incompatible with limiting global warming to two degrees Celsius. A warming beyond this limit is seen as no longer controllable and was therefore unanimously recognized in Copenhagen in 2009 as a development that must be prevented. However, many companies use e.g. For example, the oil industry continues to spend billions of euros a year to discover more deposits. So the bubble is growing.

The moment investors in this market become aware of the carbon bubble, most of the money would likely be divested as quickly as possible and the alleged overvaluation would quickly be reduced.

How big is the carbon bubble?

The Carbon Tracker Initiative , a London non-governmental organization founded by financial analysts, compiles figures on the “carbon bubble” and has published the report Unburnable Carbon together with the London School of Economics : It quantifies the maximum amount of CO 2 that can still be emitted in order to To be able to keep the ° C climate target to less than 565 Gt (565 billion tons) CO 2 . These figures roughly coincide with the above-mentioned carbon budget of the German Advisory Council on Global Change (WBGU).

According to calculations by the Carbon Tracker Initiative, all of the world's known deposits of crude oil, coal and natural gas owned by companies and governments correspond to around 2,795 Gt CO 2 . The deposits known up to now contain around five times what mankind is still allowed to emit under the premise of limiting climate change to 2 ° C. About 80% of these commodities are likely, therefore, no longer be promoted and would have as unburnable (engl., Dt. Incombustible ) remain undeveloped and ungefördert.

The 100 leading coal, oil and gas companies have an amount of fossil fuels equivalent to 745 Gt of CO 2 emissions (also based on calculations by the Carbon Tracker Initiative). That alone would be enough to exceed humanity's remaining carbon budget and potentially make global warming irreversible by reaching tipping points.

Large investors such as Citigroup or HSBC therefore consider a drastic fall in the share price of large oil companies in the next few years to be conceivable. A study by HSBC assumes losses of up to 60% of the company's value.

Divestment movement

A student divestment group protests against Tufts University (Massachusetts, USA) investments in the fossil fuel industry

On the initiative u. a. by the US environmentalist and author Bill McKibben , a comparatively strong climate protection movement has formed in the United States in recent years. The broader public first became aware of the carbon bubble problem through Bill McKibben's article "Global Warming's Terrifying New Math" in Rolling Stone Magazine. To this day, it is the magazine's most shared post in social networks.

The global climate protection organization 350.org , founded by McKibben, has set itself the goal of withdrawing as much public money as possible from the fossil fuel industry. The group's divestment campaign is primarily aimed at cities, municipalities, pension and pension funds, universities, churches and other public investors and tries to get them to withdraw from corresponding investments. The main argument is the impending stock exchange bubble associated with investments in fossil fuels. However, the group itself says that the economic impact of the campaign on the companies concerned is not the focus. Rather, it is a matter of raising public awareness of the problem of the carbon bubble and removing moral legitimacy from the fossil fuel industry. In Germany, the group has so far been active in Münster, Konstanz and Berlin. In particular, this involves loans from the state-owned KfW bank for the construction of new coal-fired power plants.

In November 2015, Münster was the first German city to decide not to invest any more money in companies in the fossil fuel industry.

In September 2014, the Rockefeller Brothers Fund , a charitable foundation belonging to the Rockefeller family, announced that it would withdraw all of its US $ 860 million assets from fossil fuel companies. Foundations, pension funds and other asset managers with total assets of over USD 50 billion have thus declared their exit. The Rockefeller family's involvement in the divestment from fossil fuels is considered a milestone because John D. Rockefeller made his fortune largely in oil. By December 2016, a total of 688 institutions and 58,399 individuals from 76 countries with assets under management of well over 5,000 billion US dollars had committed to some form of divestment; in September 2019, according to Fossil Free, it was 11,480 billion US dollars.

Warnings against stranded investments

In October 2013, Michael Bloomberg , Henry Paulson and Tom Steyer founded the Risky Business Project, which aims to quantify and publish the economic risks of the consequences of global warming. In June 2014 a report was published describing the economic risks of global warming in the USA.

In March 2015, the Bank of England warned insurance companies not to invest in fossil fuels. According to this, 670 billion US dollars were invested in the search for new fossil deposits in 2013; Capital that could be lost in the course of advancing climate protection measures.

The British think tank Carbon Tracker published the report "Breaking the habit - Why none of the large oil companies are Paris-aligned, and what they need to do to get there" in September 2019. The report found that in 2018, more than half of the investments made by the major oil and gas companies relied on a strategy that is inconsistent with the Paris 1.5-degree target. According to Carbon Tracker, companies could lose money if they don't adapt their business models. This risk is increasingly deterring investors. When the University of California announced its divestment from the fossil industry in September 2019, the avoidance of financial risks was cited as the central reason.

Possible effects

If the fear of a loss of value of the fossil fuel reserves were to prevail, it would be rational for the current owners (above all the oil states ) to increase the output quickly in order to be able to sell as much of these reserves as possible. Such behavior would increase the supply and cause prices to fall sharply. Such a "sale" would (at least in the short term) increase consumption and CO 2 emissions.

criticism

The journalist Tim Worstall cites a counter-argument that the markets have always determined the value of a company not according to the current situation, but according to the business conditions to be expected in the future. If the markets were to expect that fossil fuels would become less important in the foreseeable future, this development would already be taken into account in the market prices. David Hone from Shell, in turn, argued that even with the maximum expansion of renewable energies, the global energy demand could not be met for the foreseeable future and that fossil fuels could therefore not be dispensed with. He also argued that CCS (Carbon Capture and Storage) would have to be used more intensively in the coming decades in order to prevent dangerous climate change. Richard Tol points out that the market capitalization of the companies active in the field of fossil fuels is large, but small compared to the total market volume of all traded companies, so that their disappearance would not have any major effects on the global economy.

See also

Web links

literature

Individual evidence

  1. ↑ Michael Jakob, Jerome Hilaire: Unburnable fossil-fuel reserves . In: Nature 517, (2015), 150f, doi : 10.1038 / 517150a
  2. ↑ WBGU special report 2009 , "Kassensturz for the global climate treaty"
  3. ↑ J.–F. Mercure u. a .: Macroeconomic impact of stranded fossil fuel assets . In: Nature Climate Change . June 2018, doi : 10.1038 / s41558-018-0182-1 .
  4. ^ Jillian Ambrose: Rise of renewables may see off oil firms decades earlier than they think . In: The Guardian . October 14, 2019, ISSN  0261-3077 ( theguardian.com [accessed October 18, 2019]).
  5. ↑ Felix Rohrbeck: Drilling until the bubble bursts , Die Zeit , February 21, 2014, accessed on December 12, 2016.
  6. ^ Damian Carrington: Firms ignoring climate crisis will go bankrupt, says Mark Carney . In: The Guardian . October 13, 2019, ISSN  0261-3077 ( theguardian.com [accessed October 18, 2019]).
  7. ↑ Carbon - Are the world's financial markets carrying a carbon bubble? ( Memento from August 18, 2013 in the Internet Archive ) Carbon Tracker Initiative , 2013.
  8. ^ Citigroup study on the carbon bubble , documentcloud.org, March 26, 2013.
  9. ↑ HSBC study on the carbon bubble , documentcloud.org, January 25, 2013.
  10. ↑ Bill McKibben: Global Warming's Terrifying New Math , Rolling Stone Magazine, July 19, 2012.
  11. ↑ Earth Island Journal on Rolling Stone article "Global Warming's Terrifying New Math"
  12. ↑ GoFossilFree campaigns website of 350.org.
  13. ↑ Withdraw money, save the climate . Article in the TAZ from September 20, 2014.
  14. ^ Campaign website ( Memento from April 20, 2014 in the Internet Archive ) of fossil free Münster
  15. ^ Website of the Climate City of Constance Initiative.
  16. ^ KfW campaign by fossil free Germany.
  17. ^ Divestment of the city of Munster in the Huffington Post.
  18. ↑ Rockefellers, Heirs to an Oil Fortune, Will Divest Charity of Fossil Fuels , New York Times, September 21, 2014.
  19. ^ Divestment Commitments. In: www.gofossilfree.org. Retrieved September 29, 2019 (American English).
  20. ^ About the Project . riskybusiness.org. Retrieved August 27, 2014.
  21. ^ Henry M. Paulson Jr .: The Coming Climate Crash . In: The New York Times . June 21, 2014. Retrieved August 27, 2014.
  22. ^ The Economic Risks of Climate Change in the United States . riskybusiness.org. June 2014. Archived from the original on August 27, 2014. Retrieved on August 27, 2014.
  23. ^ Bank of England warns of huge financial risk from fossil fuel investments . In: The Guardian , March 3, 2015, accessed March 5, 2015.
  24. ↑ Verena Kern: Investments in the oil industry undermine Paris climate targets. In: Klimareporter. September 6, 2019, accessed on September 17, 2019 (German).
  25. ↑ Felicia Mello: Citing 'financial risk,' UC pledges to divest from fossil fuels. September 18, 2019, Retrieved October 27, 2019 (American English).
  26. ↑ The petroleum sale ; in: FAZ of October 14, 2015, p. 15.
  27. ↑ Tim Worstall: Lord Stern's Unburnable Carbon Bubble: From Not Quite Right To Nonsense , forbes.com.
  28. ↑ David HOne, Climate Change Advisor for Shell: The carbon bubble reality check , blog.shell.com.
  29. ↑ Richard Tol: Blowing carbon bubbles .