The Carbon Tracker Initiative is a non-profit financial think tank of former City analysts, expert systems thinkers and communicators. Since 2011 Carbon Tracker has been developing the ground-breaking ‘carbon bubble’ financial theory. It 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. Credited by The Guardian with “changing the financial language of climate change”, Carbon Tracker’s narrative has received high-profile endorsements, most recently by the Bank of England and the Financial Stability Board.
Carbon Tracker argues 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. Their financial model investigates the implications of lower demand, price and emissions scenarios for the capital expenditure plans of the fossil fuel industry, with our latest analyses showing that a business as usual model could put $2 trillion of capital expenditure on high-cost projects at risk of becoming financially stranded to 2025.