After sustained pressure from shareholder groups, Exxon Mobil has indicated it will reveal just how much of its oil, coal, and gas reserves could become worthless if governments around the world finally agree to restrict carbon emissions, NewScientist has reported.
We’ve previously discussed the fact that the world will have to leave the majority of known fossil fuel reserves in the ground in order to avoid the worst impacts of climate change. This means that the companies with those known fossil fuel reserves currently on their books are exposed to this financial carbon bubble. A good deal of their assets could become worthless in a low carbon world economy.
Exxon Mobil will be the first fossil fuel company to reveal how much of its assets could have to remain in the ground, and shareholder groups are urging other major fossil fuel companies to do the same â€“ so that investors can assess the financial risks. Shareholder groups also say that providing more transparency and disclosure now will make a market crash and wider economic crisis less likely in the future.
The Carbon Tracker Initiative has estimated that burning all the known fossil fuel reserves, let alone those still being found, would release five times the amount of allowable carbon dioxide, if global warming is to be kept under the 2 degree celsius rise governments have already agreed to. In other words, as much as 80% of known fossil fuel reserves could well become worthless when governments finally act to restrict carbon emissions.
Image CC licensed byÂ SeÃ±or Codo: Coal-fired power plant.
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