To remain under the two-degree threshold, we—as a global population—must burn no more than 886 billion tons of carbon between the years 2000 and 2049 (according to the International Energy Agency). But the global oil and gas companies have declared the existence of 2.8 trillion tons of carbon reserves, and their shares are valued as if those reserves are burnable. As the Carbon Tracker Initiative warned investors: “They need to understand that 60 to 80 percent of coal, oil and gas reserves of listed firms are unburnable”—that is, if we burn them, the atmosphere will warm to a catastrophic degree.
Yet rising energy prices are a market signal. They tell energy firms that it’s a good idea to invest in new and more expensive ways of finding carbon. In 2011, they invested $674 billion on exploration and development of fossil fuels: tar sands, fracking and deep-sea oil deposits. Then, as global tensions increased, Saudi Arabia decided to collapse the price of oil, with the aim of destroying America’s new hydrocarbon industries, and in the process bankrupting Putin’s Russia.
This, too, acted as a market signal to American drivers: buy more cars and do more miles. Clearly, somewhere, the market as a signaling mechanism has gone wrong.
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