Coal investors could suffer heavy losses in the future as carbon assets are frozen by regulators to achieve global warming targets, a new research report has found.
The report, “Unburnable Carbon: Australia’s carbon bubble,” launched jointly Monday by the Carbon Tracker Initiative and the Climate Institute, claims that Australian coal companies are irresponsibly investing large amounts in developing coal reserves that will ultimately have to go unburnt if the nation is to achieve its carbon reduction commitments.
“Much of our reserves of potential resources rest on a speculative bubble of climate denial, indifference or dreaming,” said John Connor, CEO of the Climate Institute, an independent Australian research organization.
“In Australia, coal-related companies spent more than 6 billion AU dollars last year expanding those reserves and infrastructure. It’s clear from this report they are being gambled on a world that may not and should not exist,” said Connor.
The report follows Carbon Tracker’s recent global analysis which stated that for there to be an 80 percent chance of achieving internationally agreed targets of limiting global warming to two degrees Celsius, only 20 percent to 40 percent of existing coal, gas and oil reserves can be burnt.
Taking Australia as a case study, the new report found that the 51 gigatons of carbon pollution in Australian coal companies’ reserves represents about 25 percent of a global carbon budget for coal. Australian coal exports only represent 11 percent of the global market.
“There is a clear unbalance between the current level of Australia’s coal production and their share of a global coal budget. To us, this says that Australian coal companies are planning for a five to six degree future. We feel this is a really risky assumption which is fundamental to the future financial value of these companies,” said principle author Luke Sussams. [PNA/Xinhua]
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