The report today by Lord Stern and the think tank Carbon Tracker shows that over 66% of oil owned by stock market companies will have to stay in the ground if governments are to achieve their plans to limit climate change to a 2C increase in average temperatures. The report calls this situation a Carbon Bubble because these oil assets are therefore at risk of being over-valued if they have to remain in the ground forever.

Alternatively, there is a view that oil and coal are too good to burn. The rich mix of hydrocarbons in crude oil varies from place to place, and like coal it can provide a strong stream of raw materials for a range of valuable materials from plastics to pharmaceuticals. We can even imagine a hydrocarbon refining process powered by renewable energy sources such as solar power.

However, for this new economic model to work we need to reduce the demand for energy sourced by burning carbon. A carbon tax would have the effect of pushing production towards higher value-added processes as well as providing a new revenue source for the transition to sustainable production and consumption. We can imagine and create a better use of sustainable plastics than the current overproduction of water bottles.

Link:
http://m.guardian.co.uk/environment/2013/apr/19/carbon-bubble-financial-crash-crisis