Mark conceived, with his co-founder Nick Robins who is currently Co-director of UNEP Inquiry, the “unburnable carbon” and “carbon bubble” idea. Since its launch, the concept has spread globally and is now commonly used by investors, analysts, media and more recently by financial regulators including the Governor of the Bank of England, Mark Carney.

This ground-breaking theory was the result of a long journey that Mark undertook from starting in sustainable finance in the late 1980’s, when he had a chance to develop some innovative ideas around how to restructure capital markets. 


What is Carbon Tracker? Who founded it and what are its objectives? 

“The Carbon Tracker Initiative is a non-profit financial think tank of former City energy analysts, expert systems thinkers and communicators aimed at bridging the divide between the capital markets and climate change.

“It’s been almost a decade since I identified that there was more carbon dioxide being financed across the world than could be burned to safely prevent dangerous climate change: in other words, a carbon bubble.

“With seed grants from Growald Family Fund, Rockefeller Brothers Fund, and Tellus Mater Foundation, we had the necessary resources to put real time into this thesis. Bringing James Leaton, our current Research Director, on board to provide the analysis and Jeremy Leggett to steer the Board, Carbon Tracker emerged as a new voice highlighting the financial risk of climate change.”


When did you conceive the “carbon bubble”? 

“In 2011 Carbon Tracker published its first report: ‘Unburnable Carbon - Are the world’s financial markets carrying a carbon bubble?’. It was with this piece of ground-breaking analysis that we showed that there was five times more CO2 locked away in the proven reserves of fossil fuel companies than could be burned to safely keep anthropogenic global warming below two-degrees Celsius.

“This paper gained widespread attention, most notably of environmentalist Bill McKibben’s, whose Rolling Stone article, referencing this simple math, is one of the most-online-read pieces on climate change.

“Our financial analysis demostrates that most of the fossil fuels have to stay in the ground because the sector could become unprofitable through a rapid energy transition. By making investors aware of climate action risks to financial markets, Carbon Tracker is accelerating the swift allocation of capital towards a renewable energy future.”


Since the publication of the reports Unburnable Carbon 2011 and 2013, the notions “unburnable carbon,” “carbon bubble” and “stranded assets” have entered the mainstream finance and political language. Can you explain what they are about?

“You start with the maximum amount of carbon dioxide that can be put in the atmosphere while still having a reasonable chance to keep global warming below 2 °C. This is our ‘carbon budget’. If you compare this with the carbon emissions embedded in fossil fuel reserves and resources, it becomes clear that only about a third of them can be burned – this is the carbon bubble. The other two thirds need to be left in the ground – not to mention investments wasted searching for more fossil fuels in places like the Arctic or the ultra-deep sea. For clarity, we never said this is a financial bubble, but there are important financial implications. As Mark Carney, the Governor of the Bank of England, put it, if investors suddenly decide to reassess the viability of the fossil fuel sector, this ‘could potentially destabilize markets.’ This is why it is important that the world embark on an orderly transition to low carbon, which avoids financial dislocation and value destruction. 

“By introducing terms such as ‘stranded assets’ and ‘unburnable carbon’, Carbon Tracker created a new financial lexicon, with the Wall Street Journal declaring that ‘the concept of the carbon bubble has gone mainstream.’ 

“The idea of the carbon bubble warns that investors risk being left with ‘stranded assets’ – investments in fossil fuels that are rendered unprofitable by global technological advances, tougher climate regulation and the switch to renewables.

“In 2013 we found that between 60-80% of coal, oil and gas reserves of publicly listed companies are ‘unburnable’ if the world is to have a chance of not exceeding global warming of 2 °C.

“Since then we have been developing a financial model which investigates the implications of lower hydrocarbons’ demand, price and emissions scenarios for the capital expenditure plans of the fossil fuel industry.

“We argue that in order to prepare the ground for the low-carbon transition underway capital markets need to correctly price climate risk and the ‘true’ costs of investing in fossil fuels.” 


Investors, policy-makers, energy sector, grassroot movements: what are the risks that they face and what the recommendations you give them?

“First, physical risk: in order to avoid the most dangerous impacts of climate change, scientists have shown that we must limit global warming to 2 ˚C, a target now adopted unanimously by governments through the landmark Paris Agreement on climate. Yet we know that if we were to burn all known fossil fuel reserves and resources, we would go way beyond this 2 ˚C target, ushering in potentially irreversible damages from extreme weather events and rising sea levels. 

“This translates immediately into one type of financial risk: as described by the chairman of the Axa insurance company, ‘a world of 4 ˚C is uninsurable.’ Equally important – but not as obvious – are the financial risks that Carbon Tracker has brought to the attention of markets. If up to two thirds of fossil fuels cannot be burned, investors in these projects risk being left with up to $2 trillion in ‘stranded assets,’ investments rendered valueless by a combination of rapid technological progress from renewables, more stringent climate policies and shifts in market sentiment. This is why it is important to shift capital away from high-cost, high-carbon projects into the increasingly profitable green economy.”


After the Paris Agreement, what are the prospects for the financial markets investing in fossil fuels? What are the risks at stake? Can we quantify them?

“One of the latest Carbon Tracker’s analyses (‘Lost in Transition,’ ‘Danger Zone’) show that a business as usual model could put over $2 trillion of oil, coal and gas capital expenditure on high-cost projects at risk of becoming financially stranded to 2025. 

“Turning to opportunities, ‘Sense & Sensitivity,’ a report we put out this year found that oil majors would be worth up to $140 billion more if they aligned their production with a 2 ˚C target. So we are keeping an eye on both sides of the risk-reward equation. 

“We will also be launching a major piece of research in collaboration with the Grantham Institute at Imperial College London, looking at the disruptive potential of clean technologies. We want to find out how the future energy mix would look like when faced with rapidly falling costs of solar PV or electric vehicles and the decoupling of energy demand from economic growth. From Apple to Tesla, there is abundant evidence that massive changes can occur quicker than expected, so this is definitely a piece of research of interest to forward-looking investors.”


Which financial players appeared to be more responsive to your messages? Where instead did you find more obstacles?

“Several major financial and political institutions have integrated Carbon Tracker’s analysis to make financial decisions through the investment chain. 

“For example, HSBC and Citigroup borrowed from Carbon Tracker’s arguments to advise investors to manage the increasing stranded asset risk associated with fossil fuel assets. Based on the same arguments, the insurance company Axa recently sold off $500 million of coal assets.

“The divestment movement, also inspired by the ‘carbon bubble’ idea, has spread worldwide at unprecedented speed. In December 2015 over 500 institutions worth $3.4 trillion had committed to divest from fossil fuels. This movement is growing fast and we are now waiting for the group Divest-Invest to announce the 2016 number.

“Mark Carney, Governor of the Bank of England recently declared that ‘of all the recent ideas campaigners have come up with to convince the world to do more to curb global warming, none has been as potent as the concept of stranded fossil fuel assets’.

“North Europe institutional investment funds stand out as the most responsive ones to these themes. For example the Norwegian Pension Fun, the fund manager Storebrand, and the Swedish AP4 and AP2 took clear actions to integrate climate risk and decarbonize their portfolios. 

“In the US two of the majors pension funds – CalPERS (the California Public Employees’ Retirement System) and CalSTRS (the California State Teachers’ Retirement System) – are engaging with us and with the climate community to align their investment patterns to a 2 ˚C strategy.”


What was the reaction of the fossil fuel industry after the publication of “Unburnable Carbon?”

“Carbon Tracker is challenging the assumptions of the incumbent energy sector. As a result of an intense research and engagement activity, big fossil fuel corporations like Royal Dutch Shell and ExxonMobil are now openly debating how climate change can impact the global financial system.

“In 2014 we experience some significant resistance to our narrative from the industry. Both Exxon and Shell publicly dismissed the carbon bubble risk, as they sought to assure investors of their business model risk management.

“In response to this, we published two technical papers (‘Response to Exxon,’ ‘Response to Shell’), which clarified our assumptions in a series of counter-arguments. In a nutshell, while welcoming the public engagement of the industry with these issues, we argued that their approach were based on underestimating potentially weaker demand for oil due to tougher climate policies, technological advances and slower economic growth. These laid important foundations for future engagement with companies, an increasingly important focus through 2016. Further anticipating industry pushback, our report ‘Energy Access: why coal is not the way out of energy poverty,’ provided a reality-check to the notion that coal is ‘essential to meet the scale of Africa’s desperate need for electricity,’ heavily backed by coal giant Peabody Energy Corp. Only a few months later we documented the collapse of the US coal industry, a fate that continues to spread to other coal markets.”


Why does Carbon Tracker insist so much on climate disclosures and transparency?

“During the last year governments and international bodies have begun to seriously consider the financial implications of climate change and continued fossil fuel investment. Carbon Tracker’s regulatory research and engagement work is concentrated on convincing financial regulators of the need to improve the consideration of the climate risk for financial markets. “The direction of travel towards a lower-carbon economy is clear; stress-testing extractives companies’ businesses portfolios against the internationally agreed two-degree climate target is essential to quantifying their exposure. Addressing current disclosure gaps will allow users of financial disclosures to better assess how companies consider and manage climate-related risks. Investors no longer want to see regulatory filings from fossil fuel companies that fail to discuss how the low carbon transition might impact their business models.

“For this reason, we very much welcome the Financial Stability Board Task Force on Climate-related Financial Disclosures chaired by Michael Bloomberg. It represents a fundamental effort to create a set of standardized and consistent set of required climate disclosures from companies materially affected by climate change and related policies, regulations, energy transition and physical impacts.”



Unep Inquiry,

Rapporto Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble?

Bill McKibben, “Global Warming’s Terrifying New Math”, Rolling Stone 19 luglio 2012;

Report Energy Access: why coal is not the way out of energy