Thanks to Will Raap for this article. See http://www.capitalinstitute.org/blog/big-choice-0
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The Big Choice
Submitted by John Fullerton on Tue, 07/19/2011 – 12:47
Author: John Fullerton
– A $20 trillion “externality” appears to present civilization with its BIG CHOICE: economic destruction or ecological destruction, both with chilling global security implications. Here’s why, along with a practical and more hopeful alternative to “Sophie’s Choice.”
Carbon Tracker has released an illuminating report, “Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble?”
The report nicely describes the potential “stranded asset risk” to resource company investors, and calls for a regulatory response on disclosure. What the report does not make explicit is the BIG CHOICE: Barring a miracle technology advance in the next decade (keep working brilliant scientists and entrepreneurs), if we want to avoid civilization-transforming and global security threatening climate change, we must absorb a global security threatening $20 trillion write off (that’s 40 percent of global GDP) into our already stressed global economy. Even if gradually spread over a decade or more, with partial offsetting value creation in sustainable energy industries, this is an unprecedented challenge.
First the essential facts as per the report:
- The Potsdam Institute calculates that in order to reduce the risk of exceeding 2 degrees Celsius warming to a 20 percent chance (not all that comforting), the global carbon budget for 2000 – 2050 cannot exceed 886 GtC02. Minus emissions in the first decade of the century, this leaves a budget of 565 GtC02 over the next 40 years.
- Total “proved” fossil fuel reserves listed on public company balance sheets and State reported reserves is estimated at 2795 GtC02, nearly 5 times the remaining budget, implying 80 percent of these reserves should be left in the ground.
- Seventy four percent of these reserves are State owned (Russia, China, Saudi, Venezuela, Iran, Iraq, etc.) or owned by private companies, 26 percent are owned by the 200 largest public energy companies.
To read the full article, please click here: http://www.capitalinstitute.org/blog/big-choice-0
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