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The Carbon Bubble and Disappearing Value

Burning all the carbon reserves currently in corporate and government hands would take atmospheric carbon dioxide levels way beyond what scientists consider safe. As a result, the powerful and deep-pocketed fuel lobby has a vested interest in convincing people that burning fossil fuel is unrelated to climate change. Indeed, companies like ExxonMobil (NYSE: XOM  ) spend a lot of money trying to discredit climate science in the public domain.

HSBC recently conducted an analysis that looked at European oil majors' at-risk carbon reserves. The study found Norway's Statoil (NYSE: STO  )  to be the worst affected, with approximately 17% of its market capitalization at risk. HSBC also calculated that 6% of BP's  (NYSE: BP  ) reserves are at risk, along with 5% of Total's (NYSE: TOT  ) and 2% of Shell's  (NYSE: RDS-A  ) . 

John Vechey of PopCap Games recently joined The Motley Fool for a climate change summit. His first panel guests were Dr. Rachel Cleetus, a climate economist with the Union of Concerned Scientists, and Dr. Joe Casola, the program director for science and impacts at the Center for Climate and Energy Solutions. They both offer insights in this video into what may be a looming carbon bubble.

With the swelling of the global middle class, energy consumption will skyrocket over the next few decades, just as climate change and environmental pressures are putting the squeeze on carbon-intensive energy sources. Long-term investors know that you want exposure to energy solutions now. We've picked one incredible natural gas company that presents a rare "double-play" investment opportunity today. We're calling it "The One Energy Stock You Must Own Before 2014," and you can uncover it today, totally free, in our premium research report. Click here to read more.

Read/Post Comments (14) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On July 11, 2013, at 2:36 PM, rocket7777 wrote:

    So silly. There's no UNSAFE carbon level from earth. What's happening now is global warming AND ice melting. It CANNOT be stopped without huge risk. Even if 0 human carbon output, it will NOT be stopped.

    Of course it can be delayed few years or hundred years.

    Anyway, there will be longer harsher winter and hotter summer as well various more extreme weather.

  • Report this Comment On July 11, 2013, at 3:19 PM, cafields8675309 wrote:

    More CO2, Global Warming BS, Plants Absorb and Use CO2 During Photosynthesis to Produce Chlorophyll, which is Plant Food and in the Process, Plants Produce Five Times the Oxygen from the CO2 they Absorb. The Higher the CO2 Levels, the Cooler the Planet will be and Plants Will Produce More Oxygen and Produce Better Crops.

    InfoWars *Dot*Com* PrisonPlanet *Dot*TV*

  • Report this Comment On July 11, 2013, at 3:33 PM, tigerade wrote:
  • Report this Comment On July 11, 2013, at 3:35 PM, agsb2 wrote:

    I am a scientist and no one contacted me. Carbon is the molecule of life as ALL life on Earth is carbon based. 97% of carbon in the atmosphere comes from natural sources. CO2 exchanges will probably be deemed by the government as too big to fail so the US taxpayer will have to bail them out.

  • Report this Comment On July 11, 2013, at 3:52 PM, tigerade wrote:
  • Report this Comment On July 11, 2013, at 4:05 PM, yonkmember wrote:

    I sure wish a scientist wouldn't call carbon a molecule

  • Report this Comment On July 11, 2013, at 4:22 PM, Dutchman61 wrote:

    There are a lot of issues with this blog. First, even the UN admits we have had 15 years of flat temperature even though CO2 has grown. Second, CO2 is the least potent greenhouse gas and accounts for only 0.003% of all greenhouse gas effect in the atmosphere per NASA and NOMA. Third, every pro global CO2 warming study is based on computer models and not one is based on direct hard data. Yet not one of the computer models has been opened to public vetting. In fact an FOI act lawsuit to doe just that to hansen's model may have been why he suddenly retired.

    There is in fact a detailed study backed by verifiable hard information that freon was the guilty party not CO2. If that is true, then the pursuit of CO2 is a Motley Fool's errand. There is in fact no direct evidence that CO2 does anything to warm the globe.

  • Report this Comment On July 11, 2013, at 4:31 PM, RedScourge wrote:

    Tigerade, what's your opinion on water vapor as a greenhouse gas? Isn't it a little strange that it comprises 97% of all greenhouse gases and that humans do not produce a significant amount of it?

    More importantly, how about the fact that CO2 levels were higher millions of years ago and yet the temperatures were bearable?

  • Report this Comment On July 11, 2013, at 8:10 PM, tigerade wrote:


    Explaining how the water vapor greenhouse gas works:

    Does high levels of CO2 in the past contradict the warming effect of CO2?

  • Report this Comment On July 11, 2013, at 8:12 PM, tigerade wrote:

    Dutchman, here are your rebuttals:

    1. What has global warming done since 1998?

    2. CO2 is just a trace gas

    3. How reliable are climate models?

    4. Does CO2 always correlate with temperature (and if not, why not?)

  • Report this Comment On July 12, 2013, at 6:30 AM, EllenBrandtPhD wrote:

    Sara, those who wish to make investment or trading decisions based on their political biases are more than welcome to do so - but it usually leads to very poor investment or trading.

    Statoil (STO) is about to be very influenced by political events, but I assure you they won't have anything to do with the environment.

    In about five weeks, Norway is set to elect its most business-friendly - which in Norway means Statoil-friendly - government in over 50 years.

    The latest proposed taxes from the Stoltenberg incumbent government, which are the proximate reason, along with a weak Norwegian Krone, for Statoil having slightly lagged its nearest peers the past few months, will be off the table and probable tax cuts for STO on the table in their place.

    This is not speculation. This is fact based on challenger Erna Solberg's campaign planks. Solberg's Christian Democrats have a lead over Stoltenberg's Social Democrats by as much as 30 percent in the latest polls. Norwegians want a big change, and they are going to get it.

    Even more germane to STO and its share price: Solberg has stated repeatedly that she wishes to spin off some more of the government's stake in Statoil into private hands. The stake should be reduced from about 75 percent to about 50 percent.

    And Solberg vows to get Norway a "very good price" - her words - for that stake.

    Many observers of the stock think that means that Norway wants STO trading at 30 or above by the time of the spinoff, which is possible, anyway, based on the European Big Oils entering their strongest seasonal period of the year just about NOW. It generally picks up steam counter to some of the rest of the market through hurricane/typhoon season in the Northern Hemisphere - in other words, into November. There are also some important sectoral conferences in early autumn. And geopolitical stress, of course, may make this season even more Bullish for the group.

    So, those who wish to make decisions about STO based on their Green politics are more than welcome to do so.

    Those who wish to trade STO based on more important matters should keep those more important matters in mind.

  • Report this Comment On July 12, 2013, at 8:22 AM, cwon14 wrote:

    The board is deeply censored to favor alarmism. "skepticalscience" is another propaganda site and it appears chaps like tigerade are controlling the flow.

    Not unusual but it reflects the intellectual dishonesty of the warmer culture;

    So does the left-wing media.

  • Report this Comment On July 12, 2013, at 8:22 AM, sciencesource wrote:

    the climate debate looks like a carefully created media diversion so people won't focus on co2 and respiration. at 1200 ppm you will fell like you smoked 4 packs of cigarettes/day. don't forget you breath in oxygen and exhale 50,000 ppm co2. at what point do people see rising co2 as a health issue rather than environmental? either way endlessly rising co2 is unsustainable.

  • Report this Comment On July 14, 2013, at 12:44 AM, Blastarius wrote:

    A fully loaded commercial jet flying from ny to tokyo dumps 10 tons of particulate. Worse, it consumes about 800,000 cubic ft of air.The worlds forests are being felled lowering exchange replacement, as old growth trees are felled at an alarming rate.When the then occupant of the white house ordered a "ground stop" of air traffic,(this after the WTC Pearl Harbor attack) -the ambient temperature of the lower level atmosphere dropped 2 degrees F....The climate wonks never talk of air depletion more serious than hydrocarbon emissions....If you want to battle global warming - don't fly

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