Research conducted at the Centre for Environment, Energy and Natural Resources Governance (C-EENRG) has directly contributed to the ability of policy authorities, regulators, major investment companies and international corporations to understand both the macroeconomic implications and the financial risks arising from the transition to a low-carbon economy.
The research provides a quantitative estimation of the cost of ‘stranded assets’. These are resources that abruptly shift from high to low value as a result of an external change, for example a decline in the demand for fossil fuel stocks in a low-carbon economy, a situation sometimes referred to as a ‘bursting of the carbon bubble’.
The impact of the cost estimation has been felt in several ways, including having been expressly relied upon by the Bank of England (BoE) in taking the lead to demand disclosure by financial intermediaries of climate-related risks.
The estimation and analysis has also featured prominently in influential policy reports, such as the Intergovernmental Panel on Climate Change (IPCC)’s 2018 Special Report on 1.5°C, the 2018 Report from the Global Commission on the Economy and Climate and the Banque de France (BdF)’s The Green Swan report.
The research has attracted substantial attention and specific requests for information from senior political and governmental actors (Canadian Prime Minister Trudeau, Canadian Energy Ministry, US Senate), financial regulators (BoE, BdF), investment funds and energy companies.
It has influenced the UK government’s engagement strategy with Brazil, China and India, leading to the government supporting an extension of the research on the modelling of energy transitions in Brazil, China, India, the EU and the UK.
It has also been specifically relied upon in a major class action brought by 17,200 claimants and 7 non-governmental organisations against Royal Dutch Shell, resulting in ordering an oil company, for the first time in history, to cut down its emissions by 45% within 10 years.
“According to a study by Cambridge University, a foreseeable and inevitable drop in global demand for oil will burst the carbon bubble. This will happen between 2030 and 2050.”
– Canadian MP A. Boulerice addressing Canadian Prime Minister J. Trudeau (13 June 2018 session)
