page_title: Fossil fuel divestment
section_title: Stranded assets – the carbon bubble
hierarchical_section_title: Fossil fuel divestment / Motivations for divestment / Economic / Stranded assets – the carbon bubble
caption_attribution_description: Deutsch: Aktivisten im Tagebau auf einem Förderband, Creative Commons Lizenze Ende Gelände
context_page_description: Fossil fuel divestment or fossil fuel divestment and investment in climate solutions is an attempt to reduce climate change by exerting social, political, and economic pressure for the institutional divestment of assets including stocks, bonds, and other financial instruments connected to companies involved in extracting fossil fuels. Fossil fuel divestment campaigns emerged on campuses in the United States in 2010 with students urging their administrations to turn endowment investments in the fossil fuel industry into investments in clean energy and communities most impacted by climate change. By 2015, fossil fuel divestment was reportedly the fastest growing divestment movement in history. In April 2020, a total of 1,192 institutions and over 58,000 individuals representing $14 trillion in assets worldwide had begun or committed to a divestment from fossil fuels.
context_section_description: Stranded assets, which are known in relation to fossil fuel companies as the carbon bubble, occur when the reserves of fossil fuel companies are deemed environmentally unsustainable and so unusable and so must be written off. Currently the price of fossil fuels companies' shares is calculated under the assumption that all of the companies' fossil fuel reserves will be consumed, and so the true costs of carbon dioxide in intensifying global warming is not taken into account in a company's stock market valuation.
  In 2013 a study by HSBC found that between 40% and 60% of the market value of BP, Royal Dutch Shell and other European fossil fuel companies could be wiped out because of stranded assets caused by carbon emission regulation. Bank of England governor Mark Carney, speaking at the 2015 World Bank seminar, has stated: "The vast majority of reserves are unburnable" if global temperature rises are to be limited to below 2 °C. In 2019, Carney suggested that banks should be forced to disclose their climate-linked risks within the next two years, and said that more information would prompt investors to penalise and reward firms accordingly. He warned that companies and industries that are not moving towards zero-carbon emissions could be punished by investors and go bankrupt.
  In June 2014, the International Energy Agency released an independent analysis on the effect of carbon emissions controls. This estimated that $300 billion in fossil-fuel investments would be stranded by 2035 if cuts in carbon emissions are adopted so that the global mean surface temperature increases by no more than 2 °C.
  A report by the Carbon Tracker Initiative found that between 2010 and 2015 the US coal sector had lost 76% of its value including the closure of 200 mines. It found that Peabody Energy, the world's largest private coal mining company, had lost 80% of its share price over this time. This was attributed to Environmental Protection Agency regulations and competition from shale gas.
  In 2013, fossil fuel companies invested $670 billion in exploration of new oil and gas resources.
caption: 3500–4000 environmental activists blocking a coal mine in Germany to limit climate change (Ende Gelände 2016)
exif: {}