More shareholders and investors should take note of the carbon bubble Media Release

May 22, 2013 - 2:01pm

Shareholders of Shell at its annual meeting in The Hague yesterday raised questions about how the oil giant is addressing the carbon bubble and stranded assets, a development The Climate Institute welcomes, as it seeks to highlight Australia’s own growing carbon bubble. 

“It is a concern that fossil fuel companies are using optimistic forward assumptions around carbon as a basis on which to justify further exploration for fossil fuels that may well never be allowed to be burned,” said John Connor, CEO of The Climate Institute. 

“It is very encouraging to see shareholders raising this question to a company like a Shell – more should be doing so, especially in Australia.” 

In a recent report with the Carbon Tracker Initiative called Unburnable Carbon, Australia’s carbon bubble , the Institute found that  investments in Australian coal resources rest on a speculative bubble that ignore their impact on global carbon budgets and their exposure to rapid devaluation. 

A conservative estimate of all the potential Australian coal resources is 150 gigatonnes of carbon pollution (GtCO2), which is as much as 75 per cent of the global coal carbon budget to 2050, the report found. 

This report follows Carbon Tracker’s recent global analysis, which confirmed that for there to be an 80 per cent chance of achieving internationally agreed targets of limiting global warming to 2°C, only 20-40 per cent of existing coal, gas and oil reserves can be burnt. 

There are signs globally that some companies are worrying about the carbon bubble. In a recent survey in the United States, 53 per cent of institutional investors said they will increasingly look to fossil fuel-free portfolios over the next decade. The survey also found that 77 per cent of the more than 2,000 survey participants forecast increased risk for investors with fossil fuel investment holdings. Moreover, 30 per cent are already – or preparing to – offer their investors fossil-fuel free portfolios. 

“In an economy as heavily dependent on fossil fuels as Australia is, we should be seeing more of this kind of action by concerned shareholders and citizens,” said Connor. “The reality is that today, taxpayers’ funds, retirement nest eggs and shareholder value is being gambled on investments in a world that may not, and should not, exist.” 

“Fossil fuel companies have clearly come under unique scrutiny as a result of the analysis regarding the carbon bubble and potential stranded assets. It is critical that Australian companies avoid the position that Shell has taken and consider the potential impacts of carbon on both its reserves and its capital expenditure decisions.” 

For more information on Australia’s carbon bubble, please see http://climateinstitute.org.au/unburnable-carbon.html/section/478 

For more information
Kristina Stefanova, Communications Director, The Climate Institute, 02 8239 6299


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