Stranded Fossil Fuel Assets and the Carbon Bubble

In following the topic of economic bubbles, it’s worthwhile looking into what’s called the “Carbon Bubble.” The idea behind the Carbon Bubble has to do with stranded assets — assets that are on the books of a company but that can never be exploited for profit. This is potentially the case with companies that are in the business of extracting and exploiting fossil fuels — coal, oil, and gas. The problem is that such fuels are causing climate change and are thus becoming increasingly subject to regulation. It’s possible that a significant volume of fossil fuels now on the books of coal and oil companies will never come to the surface and will eventually have to be written off at massive loss.

This problem was well explained recently by Joel Makower at — see “Exxon, stranded assets and the new math.” Makower’s piece was prompted by¬†an announcement that ExxonMobil, the U.S.’s largest energy company, will be releasing the first Carbon Asset Risk report by any such company. A press release from Arjuna Capital says that the forthcoming report “will provide investors with greater transparency into how ExxonMobil plans for a future where market forces and climate regulation makes at least some portion of its carbon reserves unburnable.”

ARB — 25 March 2014


How Can Local Economies Transition to a Petroleum-Scarce World?

Today I read an interview in New Scientist with Rob Hopkins, a key figure in the Transition Towns movement — see “Rob Hopkins: Getting over oil, one town at a time.” He writes about how communities can transition to a more sustainable economy at Transition Culture.

Hopkins describes the Transition Towns concept as follows:

A Transition Town is formed when a group of individuals gets together to ask how their community can mitigate the effects of a potential reduction in oil and drastically reduce their carbon emissions to offset climate change. The scheme has become so successful we now have 250 official Transition Towns and Cities worldwide, with many more interested in becoming involved.

One of the strategies being used to help communities transition to a petroleum-scarce economy is EDAP (Energy Descent Action Plan). Here’s a Slideshare presentation that explains how this process is working for some communities:

AB — 7 February 2010

Energy Economist Says Oil Will Peak Sooner Than Expected

In an interview with The Independent, Dr. Fatih Birol of the International Energy Agency (IEA) says that most of the world’s major oil fields are already past their peak production — see today’s article, “Warning: Oil supplies are running out fast,” by Steve O’Connor.

When O’Connor asked Birol to explain the concept of “peak oil,” Birol replied:

This is the point when the maximum rate at which oil is extracted reaches a peak because of technical and geological constraints, with global production going into decline from then on.

The UK Government, along with many other governments, has believed that peak oil will not occur until well into the 21st Century, at least not until after 2030. The International Energy Agency believes peak oil will come perhaps by 2020. But it also believes that we are heading for an even earlier “oil crunch” because demand after 2010 is likely to exceed dwindling supplies.

For more information on peak oil, see my previous blog post “Peak Oil Notes.”

AB — 3 August 2009