Carbon ‑ Burn It All?!

"What happens if we burn it all?" (i.e., burn all known reserves on balance sheets) is the question Michael Mainelli and Jan-Peter Onstwedder asked the BP and London Accord teams back in 2006, based on the concern that finance was not valuing carbon properly. Z/Yen’s Dr Kevin Parker (ex BP chemist) pulled together the spreadsheet “Global Warming”, for the total ppm results of burning current known reserves. Jan-Peter Onstwedder had a look from the point of view of the head of risk at BP. BP’s research team did their own digging and both sides effectively came up with the same numbers.

Figure 1 - CO2 levels caused by burning known fossil fuel reserves

With fracking and shale gas the numbers get higher, about 1600 ppm.

The London Accord shared this with Andy Haldane at the Bank of England, and Mark Campanale, who back then, working with Nick Robins of HSBC, took this forward to create Carbon Tracker with James Leaton. Andy raised the systemic issues more widely. Terminology moved from 'burn-it-all' to 'stranded assets' and then 'unburnable carbon'. Mark and James produced their first report in 2011, and a significant report it turned out to be, “Unburnable Carbon: Are the World’s Financial Markets Carrying A Carbon Bubble?” . The report, despite not being by an investment bank, was highly commended for Long Finance's Farsight Award 2011/12.

A thorough review and update was published in March 2024:

Kevin M A Parker & Michael R Mainelli, “What Happens If We ‘Burn All The Carbon’? Carbon Reserves, Carbon Budgets, And Policy Options For Governments”, Royal Society of Chemistry (March 2024), 20 pages - : DOI: 10.1039/d3ea00107e.

More Information

"Global Warming" spreadsheet - 2006 calculations of CO2 levels caused by burning known fossil fuel reserves
Argument's first outing on 29 January 2007 at the City Debate.
"Oil Companies & PPM Exposure" spreadsheet
The London Accord 2007
Carbon Tracker website

Related London Accord Reports

Carbon Tracker (July 2011): “Unburnable Carbon: Are the World’s Financial Markets Carrying A Carbon Bubble?”.
HSBC (January 2013): "Oil & Carbon Revisited: Value at Risk from 'Unburnable' Reserves"
Carbon Tracker (April 2013): "Unburnable Carbon 2013: Wasted Capital and Stranded Assets"
Kepler Cheuvreux (April 2014): "Stranded Assets, Fossilized Revenues"
Carbon Tracker (May 2014): "Carbon Supply Cost Curves: Evaluating Financial Risk To Oil Capital Expenditures"