The world’s financial markets are inflating a “carbon bubble” that could lead to a loss of value like that of the dot.com collapse. This is the claim from the Carbon Tracker Initiative, a project from Investor Watch, a non-profit company set up to bring capital markets closer to efforts to tackle climate change.
Their analysis suggests that the amount of money currently invested in fossil fuels is out of proportion with the amount of carbon emissions that the world can burn if it wants to prevent a 2% rise in global temperature by 2050.
The CTI found that the world has already used over a third of its 50-year carbon budget in 2011, leaving only two thirds left for the remaining forty years.
Only 20% of fossil fuel reserves held by the by the top 100 listed coal, oil and gas companies could be used to keep to this carbon budget.This would leave up to 80% of assets “technically unburnable” leaving an inconsistency between the money invested in them and their actual value, the research suggests.