The carbon bubble will burst with or without government action, according to a new study. That will hurt people who invest in fossil fuels.
As energy efficiency and renewable energy technologies improve and prices drop, global demand for fossil fuels will decline, “stranding” new fossil fuel ventures — likely before 2035, according to the study in Nature Climate Change, “Macroeconomic impact of stranded fossil fuel assets.”
Researchers from Cambridge University and elsewhere found technological advances will strand fossil fuel assets regardless of “whether or not new climate policies are adopted,” but that “the loss would be amplified if new climate policies to reach the 2°C target of the Paris Agreement are adopted and/or if low-cost producers (some OPEC countries) maintain their level of production (‘sell out’) despite declining demand.”
That could “amount to a discounted global wealth loss of US$1–4 trillion,” and Russia, the U.S., and Canada could see their fossil fuel industries nearly shut down, the report says.
The best way to limit these negative impacts is to divest from fossil fuels and speed up the transition to a diversified, energy-efficient, clean-energy economy. Investing tax dollars to expand fossil fuel development and infrastructure, including pipelines, is irresponsible and incompatible with Canada’s Paris Agreement commitments, putting everyone at economic risk, and leaving us with polluted air, water and land, and increasing climate impacts and healthcare bills.
Lead author Jean-François Mercure told the Guardian, “With more policies from governments, this would happen faster. But without strong [climate] policies, it is already happening. To some degree at least you can’t stop it. But if people stop putting funds now in fossil fuels, they may at least limit their losses.”
Co-author Jorge Viñuales said, “Individual nations cannot avoid the situation by ignoring the Paris agreement or burying their heads in coal and tar sands.”
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