Unburnable Carbon refers to fossil fuel energy sources which cannot be burnt if the world is to adhere to a given carbon budget. Some aspects to consider:

  • Some fossil fuels may be used for other purposes which do not involve combustion, eg as petrochemical feedstocks. Hence we use the term unburnable rather than unusable.
  • There are a number of pilot Carbon Capture and Storage (CCS) projects now operating. Further deployment in decades to come could extend the carbon budget if the technology becomes commercial at scale.
  • Different organisations may apply a range of carbon budgets, meaning the precise amount of unburnable carbon cited varies. However there is a consensus that there is a clear overhang, and the level of potential carbon emissions exceeds any reasonable carbon budgets

Carbon Tracker has produced a series of reports themed on Unburnable Carbon which have prompted a new debate around the future of energy and investment. This has prompted organisations ranging from the IEA, oil companies, NGOs, accountants, investors, the OECD and investment banks to consider the issue. Given that the IEA and even oil companies such as BP and Shell have confirmed that burning all known fossil fuels would result in more than 2°C of warming, we feel there is reasonable consensus around this issue.

Our carbon supply cost curves research is a response to demand from investors to understand which projects are less likely to be developed in a world where global warming is limited to 2°C. This determination is made on economic grounds, with the most competitive oil, gas and coal projects being assumed to go ahead in preference to high-cost alternatives.

Useful links:

IEA: “No more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 °C goal, unless carbon capture and storage (CCS) technology is widely deployed.”

Shell: “The issue of the bubble arises because the combined proven oil, gas and coal reserves currently on the books of fossil fuel companies (and governments in the case of NOCs) will produce far more than this amount of CO2 when consumed.

BP:  “We agree that burning all known reserves would probably cause global temperatures to rise by more than 2°C – and that addressing this issue will require the efforts of governments, industry and individuals. However, we believe that the unburnable carbon approach to assessing the impact of potential climate regulation on a company’s value oversimplifies the complexity of the issue and overstates the potential financial impact.