Carbon Tracker is an independent financial think tank that carries out in-depth analysis on the impact of the energy transition on capital markets and the potential investment in high-cost, carbon-intensive fossil fuels.
Its team of financial market, energy and legal experts apply groundbreaking research using leading industry databases to map both risk and opportunity for investors on the path to a low-carbon future.
It has cemented the terms “carbon bubble”, “unburnable carbon” and “stranded assets” into the financial and environmental lexicon.
We recognise that there is a limited global ‘carbon budget’ of cumulative emissions that must be respected to avoid overshooting 2˚C and destabilising the global climate. Our view is that capital markets are failing to align the capital allocation process, exposing the owners of fossil fuel companies – their shareholders – to potential lost value, as has already been witnessed in the EU utilities and US coal mining sectors. We further believe that companies have not sufficiently factored in the possibility that future demand could be significantly reduced by technological advances and changing policy.
Our role is to help markets understand and quantify these implied risks.
Emissions of greenhouse gases will need to fall severely if we are to avoid catastrophic levels of warming. Such constraints will have profound effects on the supply of and demand for fossil fuels, which account for the largest human source of greenhouse emissions.
We carry out scenario analysis to examine and understand how potential changes to supply and demand will impact the future of fossil fuel-exposed companies and projects. This analysis helps the investment community better understand the financial implications of tackling climate change;
- Our analytical research identifies the highest cost, riskiest investments enabling greater scrutiny by analysts, asset owners, investors, policy makers and financial regulators.
- Our regulatory research builds the case for reform of the financial regulatory system in order to improve transparency of climate-related financial risks and articulates the key changes to be made.
- We provide expert insight for those engaging with energy companies around future strategy and capital expenditure.
Our research is grounded in conventional financial analysis, and focuses on forward-looking material issues. As a not-for-profit research house we are free from the constraints that would be imposed by a commercial financial research business model. This allows us to challenge business-as-usual approaches that we consider to be unsustainable in the face of the unprecedented challenge posed by climate change.
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"Carbon Tracker is an important partner of GFANZ on our advisory board; it has done remarkable work. In fact, a lot of what we are talking about is gaps between targets and performance. In many respects, Carbon Tracker pioneered analysis around that, so it is hugely valuable."Mark Carney, Co-Chair, GFANZ UN Special Envoy for Climate Action and Finance
Carbon Tracker “spawned a financial concept powerful enough to rivet central bankers, anger oil moguls and fuel a grassroots movement to get investors to dump their fossil fuel holdings.”Reuters, 2015
Carbon Tracker has changed the financial language of climate change.The Guardian, 2014
Carbon Tracker has triggered the Climate Swerve – a major historical change in consciousness that is neither predictable nor orderly.New York Times, 2014
Governments have agreed to limit global temperature rise to less than 2 degrees Celsius. Governments have also agreed to put in place the pathways to deliver this with a new and universal agreement in Paris towards the end of 2015. In order to reach this goal, large amounts of coal and oil will have to stay in the ground, unburnt. Carbon Tracker’s new [oil and coal cost] ‘Curves’ report indicates where in respect to the oil industry some of those stranded assets and some of those red lines will lie.Christiana Figures, convenor Mission 2020 and former UNFCCC Secretary General
Carbon Tracker’s simple narrative neatly summed up climate risk exposure for investors that helped Axa to frame the issues and to begin to methodically quantify and mitigate that growing risk. The compelling “stranded assets” narrative resonated amongst our senior management teams – helping us to focus on and cut through a mountain of complex research on the subject – directly influencing our decision to divest from coal in Q2 2015.Sylvain Vanston, Head of ESG Integration, AXA, 2017
Meet The Team
Carbon Tracker is a team of financial, energy and legal experts with a ground breaking approach to limiting future greenhouse gas emissions. We have the technical knowledge, connections and reach to get inside the mind-set of the global financial community and effect change on a global scale.View The Team
Interested in joining the team? View our current vacancies
Our History, Impact & Funding
Much of Carbon Tracker’s impact has been observed in the embedding of climate change risk within conventional understanding of financial risk. A significant part of our overarching influence emerge through our work with the financial, business and general press globally, as well as engaging directly with institutional investors and the fossil fuel industry, prompting responses. We also engage with governments and regulators worldwide, greatly enhancing our ability to speak at the strategic level and influence the wider landscape. As seen from the impact of our analysis and research, the concepts and conclusions of our work has been amplified far beyond environmental circles and into the mainstream financial community.
New gas power in Japan, Vietnam and South Korea undermines net zero goals
Stop Fueling Uncertainty, continues our series exploring the long-term risks associated with investment in power sector gas infrastructure globally. It follows on from our Put Gas on Standby report from last year, with attention turning here to Asia and the extreme risks associated with nations in this region increasing their exposure to the highly volatile market for liquefied natural gas (LNG).
Oil and gas companies are still failing to commit to the absolute emissions reductions
For the third year running, we publish Absolute Impact, assessing and ranking the climate policies of 15 of the largest publicly traded oil and gas companies. The report warns that net zero targets are not enough for companies to be aligned with Paris – they need absolute limits on future emissions and significant interim targets.
Taxpayers could be forced to pay tens of billions to close and clean up oil and gas wells in the Gulf of Mexico
Double or Nothing finds that as the energy transition accelerates and oil and gas wells in the Gulf of Mexico close, taxpayers may be forced to pay tens of billions in clean-up costs. At best, only 10% of estimated decommissioning costs for the Outer Continental Shelf (OCS) are secured by bonds.
Embedded emissions of listed companies up nearly 40% in last decade
Unburnable Carbon: Ten Years On finds that the majority of embedded emissions are listed on the stock exchanges of China, USA, India, Russia and Saudi Arabia where, with the exception of the USA, emissions are dominated by the partial listings of state-owned companies.
Companies examined create 80% of corporate industrial greenhouse gas emissions
In 2021, we published our first report about the degree to which companies had disclosed taking climate risks into account within financial statements, and auditors in their audits thereof. This year, we reviewed 134 highly carbon-exposed companies and found little evidence that they had considered the impacts of material climate-related matters in preparing their financial statements.
25 nations commit to invest in clean hydrogen
Clean Hydrogen’s Place in the Energy Transition finds the surge in the gas price has caused the levelised cost of fossil-produced hydrogen to jump and accelerated investment and plans to build out more clean hydrogen assets as interest in the fuel rises, amid technological advances in its manufacture and falling costs.
Global Registry of Fossil Fuels Launch
Major boost for transparency on fossil fuel supply, as the first public database of emissions from reserves, production and use is published. New data published today shows that producing and combusting the world’s reserves would yield over 3.5 trillion tons of greenhouse gas emissions, over seven times the remaining carbon budget for 1.5C and more than all emissions produced since the industrial revolution.
Petrostates at risk from the transition
Beyond Petrostates is our first report exploring country level stranded asset risk. Fossil fuel-reliant (petrostate) countries could see a drop of 51% in government oil and gas revenues in a shift to a low-carbon world over the next two decades. There is strong need for international support to diversify economies and avoid social and political instability.
Carbon Tracker launches gas power research
February launched our first analysis on gas power with Foot Off the Gas looking at the UK and Italy’s gas competitiveness versus a clean energy portfolio. This was followed up by Put Gas on Standby finding that more than a fifth of European gas units and nearly a third in US are lossmaking.
Launch of Asset Retirement Obligations (ARO) Portal
Carbon Tracker launched the ARO portal as the US state and federal regulators failed to require oil and gas companies to provide sufficient assurance when drilling new wells. A stream of research followed focusing on the liability cost of idle or abandoned oil and gas wells in Colorado and how much companies are factoring in the cost of decommissioning them. This analysis has shaped public narrative and has been discussed in the US Senate.
Fossil fuel equity under analysis
A Tale of Two Share Issues shed light on high-carbon firms underperformance in key world indexes. The analysis found the value of share offerings in fossil fuel producing and related companies dropped by $123 billion in the last decade.
Solar and wind energy potential many times as much as global energy demand
The Sky’s the Limit finds huge falls in the cost of solar and wind power in recent years have unlocked an energy reserve that can meet world demand 100 times overs. The report made headlines globally.
Climate-aligned accounting makes waves
Flying Blind found a glaring absence of climate risks in financial reporting with over 70% of reviewed companies and 80% of auditors failing to disclose climate risk in the financials. The report has impacted company and international reporting along with observed changes in accounting standards.
First ever Global Registry of Fossil Fuels
Carbon Tracker and Global Energy Monitor announce the first open-source, independent and accessible Global Registry of Fossil Fuels to foster transparency, make governments more accountable and identify means of winding down fossil fuel production.
The emerging market leapfrog has begun
Nothing to lose but your chains and Reach for the sun found that emerging markets have the potential to lead the shift to electric vehicles and the decarbonisation of energy systems whilst reducing their dependence on fossil fuel imports and meeting climate targets.
Oil majors are adapting their strategy
In October Fault Lines highlighted the diverging strategies of oil and gas companies linked to stranded asset risk and net zero ambitions, finding US companies are lagging way behind their European rivals in adapting their businesses.
The Future’s Not in Plastics
Our first report looking into oil and petrochemical industries found that they are betting their future growth prospects on demand for plastics. However, plastics demand is likely to peak as the world starts to transition from a linear plastic system to a circular one and governments act to hit climate targets.
EU O&G companies announce climate ambitions
Repsol, BP, Eni and Shell all announced strategic shifts in their business plans to tackle rising emissions and climate risk. Ranging from emission ambitions to conscious re-branding these announcements mark a step-change in the way major oil and gas companies can approach mounting investor and societal pressure around climate.
Ranking Company Emissions Targets in Absolute Impact
Carbon Tracker’s “Hallmarks of Paris Compliance” framework was used to a derive a relative ranking of company climate targets for the seven majors plus Equinor and Repsol. This research was widely picked up by media outlets including an op-ed in the Financial Times.
Blackrock joins CA100+
Global investment behemoth BlackRock, with $7trn assets under management announced it is joining the Climate Action 100+ investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. The challenge now is to see a ‘high bar’ on climate disclosure followed, as well as business alignment by fossil fuel companies.
Covid-19 & The Energy Transition
The pandemic has had a profound and unprecedented impact on economies and energy systems around the globe. Carbon Tracker’s analysts highlighted that 2019 could have been the peak of the fossil fuel era and how recovery should be ‘green’.
Decommissioning O&G Infrastructure
The reports It’s Closing Time and Billion Dollar Orphans were our first research in US oil and gas well decommissioning, exploring the concept of stranded liabilities. The reports found that plugging 2.6 million documented onshore wells in the U.S. alone will cost $280 billion. This estimate excludes costs to plug an additional estimated 1.2 million undocumented onshore wells.
Investor action wins the day in court vs uneconomic Ostrołęka
Our analysis of Ostrołęka C resulted in a legal challenge won by ClientEarth and several institutional investors calling on management to stop pursuing the project, considered not economically viable. In August 2019, the Polish court allowed the main claim that the coal project would harm the company’s economic interests. This landmark ruling indicates a marked sea-change in coal power generation in Europe.
Carbon Tracker Analysis for the CA100+
In July, Carbon Tracker released our first company profiles for the CA100+ initiative for power utilities. Over the past year the CA100 has achieved significant results. Their work has pushed oil majors to announce carbon action plans. A BP resolution, which the CA 100+ supported, that ties the key issues of aligning capex with climate was also approved. Another example is where Glencore announced it will cap its coal production at current levels after coming under pressure from investors.
Powering Past Coal Alliance Partnership
At COP25, Carbon Tracker was announced as an official partner of the Powering Past Coal Alliance, alongside Rocky Mountain Institute, to support PPCA members through sharing their expertise and in-depth analysis. The alliance now includes 33 national governments, 27 subnational governments and 37 businesses committed to phasing out unabated coal for electricity production.
Fossils fuels could peak as early as the 2020s
Our report 2020 Vision found that an s curve of renewable growth, and the emerging market leapfrog will result in a peak in fossil fuel demand as all incremental energy demand growth is met by renewables. This report made huge waves in the media, being picked up by hundreds of news outlets across the globe, and was even tweeted by Leonardo DiCaprio and sent out in the DiCaprio foundation monthly newsletter.
Providing company-level data to CA100+
In September 2018, Carbon Tracker was announced as one of four data providers to the Climate Action 100+ initiative. This is an investor-led initiative, representing a combined $31trn in assets under management, which aims to engage systemically important greenhouse gas emitters to curb emissions and improve climate disclosures. This is a hugely important initiative, highlighted as one of 12 key global initiatives to tackle climate change.
Moving in to Carbon Markets
After carbon trading expert, Mark Lewis joined Carbon Tracker as head of research from Barclays, he wrote Carbon Tracker’s first analysis of the European Emissions Trading Scheme. The report was the first assessment of the impact of action to bring the world’s largest carbon market into line with the 2015 Paris Agreement. This was followed up with a second paper in August 2018, which found that the carbon price could increase enough to drive substantial fuel switching from coal to gas as soon as 2019-23.
Carbon Tracker work cited in 22 climate shareholder resolutions
Our 2 Degrees of Separation analysis was used in 22 shareholder resolutions on climate change during the 2018 AGM season. Most of these resolutions asked companies to explain how their businesses are aligned with a 2°C future. One such resolution was submitted by shareholders of Anadarko Petroleum, and was passed with 52% of the vote. This was the first year we saw our research being used by shareholders of oil & gas companies in climate shareholder resolutions. Other examples include Occidental Petroleum and ExxonMobil. Our research is being used by investors to ensure that companies take appropriate action to reduce their exposure to climate risk.
Carbon Tracker analysis at investors’ fingertips
In February 2018 we launched our 2˚C scenario analysis tool on the Bloomberg App Portal, powered by Rystad data. The tool puts our in-depth analysis of the impact of climate change on a company’s exposure to the carbon transition at investors’ fingertips. Using the 2 Degrees of Separation analysis as it’s basis, the app includes various indicators for select listed oil and gas companies, and gives users the ability to assess companies’ resilience under carbon constrained scenarios.
Carbon budget alignment: company by company
This report, produced in partnership with PRI and five pension funds, was launched through a series of workshops across Europe and North America, leading to direct engagement with asset owners and managers. The report also gathered high level interest in China. Those direct engagements clearly showed that the investors are becoming increasingly empowered to engage with companies to align capital allocation in accordance with the exposure to climate risks, while the Boards and executive teams of fossil fuel companies are becoming more aware, proactive and better able to manage climate risks. This area has become a major focus for PRI collaboration over the next two years.
Time to challenge assumptions
We found that the major oil and gas companies are now talking about demand destruction and even peak oil demand – a language Carbon Tracker has been using for a while. It is clear that the industry is taking our analysis seriously and our credibility gives us access to senior industry gatherings. “This is not an advocacy document or wishful thinking but a well-sourced projection based on what is already happening. It deserves to be read by everyone working in the energy sector, by policy makers and perhaps most urgently by investors. Its conclusions really do qualify for inclusion in the overused category of ‘breaking news’.” - Nick Butler, Financial Times blog.
Breaking news in the energy sector
The report generated exceptional coverage with more than 1,300 stories reproduced globally. The article on The Guardian website alone was shared over 53,000 times and generated 1,600 comments (as of April 2017), making it one of the most successful reports of Carbon Tracker in terms of media coverage to date.
Recommendations taken on board in the US
Since the report, Peabody, the largest private-sector coal company in the world, confirmed it will replace all of its self-bonds in alignment with Carbon Tracker’s recommendations.
Strengthening the global influence
Country specific research and expertise of Carbon Tracker has caught the attention of key influencers of China’s green finance agenda, where we are now engaging with the regulators concerned with systemic risks in global capital markets.
Pushing 2D scenario analysis
Carbon Tracker has contributed to the scenario analysis workstream of the Bank of England and G20 Financial Stability Board in establishing the Task Force on Climate-related Financial Disclosures (TCFD). This has fed into their thinking on assessing the ‘carbon bubble’ and ‘stranded asset’ risks of fossil fuel companies. Carbon Tracker continues its role as a convener and assessor of thoughts from different groups on decision-useful disclosure, engaging with TCFD members, policymakers, NGOs and fossil fuel companies, on how to produce useful scenario analysis.
‘Stranded assets’ on the agenda of the Bank of England
In 2013 we worked with global accounting body ACCA to map out the limited attention being paid to climate risk by accountants, reporting standards and financial regulators. Ongoing engagement with the Bank of England and other regulators has seen the issue rise up the agenda. In 2015 Carbon Tracker presented the stranded assets/unburnable carbon idea to a full meeting of central banks and regulators at the Financial Stability Board meeting on climate change hosted by Mark Carney, effectively contributing to the creation of the Task Force on Climate-related Financial Disclosures (TCFD). The Governor of the Bank of England, Mark Carney, warned investors in 2015 that the vast majority of fossil fuel are ‘unburnable’, creating financial stability risks in the event of a disorderly transition to a low-carbon economy. Echoing Carbon Tracker's warnings about the risks of a disorderly transition to a low-carbon economy, Governor Carney agreed that that a carbon budget consistent with a 2°C target “would render the vast majority of reserves ‘stranded’. He also added that "a wholesale reassessment of prospects, especially if it were to occur suddenly, could potentially destabilise markets." The establishment of the Financial Stability Board’s Task Force on Climate- Related Financial Disclosures (FSB- TCFD) is the recognition of the financial significance of climate risk we were aiming for.
Linking capital deployment to climate policy
This report was very successful in terms of global media coverage, and was instrumental in mainstreaming our research, awakening the capital markets and financial institutions to climate risk. Christiana Figueres, then-head of the United Nations’ climate division (UNFCCC), praised our work and we participated at UN Secretary General events, and those hosted by the French President at the Paris COP, alongside major corporations and financial institutions.
Changing demand assumptions
This analysis was a wake up call for investors and analysts that outdated demand assumptions were being used to justify investment in future supply. The decoupling of economic growth, energy and emissions means traditional rules no longer apply. Our focus on key reference points such as the IEA, sparked debate about how quickly the transition is already occurring. The greater scrutiny and review of renewables technology projections has resulted in significant updates from mainstream institutions.
A watershed moment in investor engagement on climate risk
Working in partnership with CERES and a number of investors we have provided the evidence needed to back up shareholder resolutions. These have focused increasingly on business fundamentals and strategy, in line with our work. Major oil and gas companies are seeing resolutions filed at AGMs on carbon asset risk where majority of shareholders are calling for business analysis of a 2˚C scenario. This shows that investors have made the link between transition risk and shareholder value as a result of our analysis.
LNG growth will disappoint
The long-heralded gas transition is running out of time as the carbon budget gets used up and renewables increasingly undercut gas. Our analysis highlighted that growth in gas may disappoint, which has become a reality as many expensive LNG projects have been put on hold. This has been used to question whether a strategy of focusing on gas will deliver shareholder value.
Challenging assumptions on Chinese peak coal demand
At a time when industry analysts laughed at the suggestion, Carbon Tracker was already modelling the impact of Chinese thermal coal demand peaking on the seaborne markets. This has now become the house view of those analysts, boosted our credibility, and demonstrated the inability of incumbents to recognise when they are facing structural decline in their markets. The the work was amplified by major media outlets including FT Lex and The Economist. This was an example of how important it is to prompt investors and analysts to challenge the assumption that the future will just repeat past trends, and provided evidence that the energy transition was underway. The reality of stranded assets has since been documented to serve as a reminder for investors, eg the decline of the US coal mining sector, the death spiral of EU utilities.
Company actions start to resonate with Carbon Tracker's findings
Our first in depth analysis on oil supply and demand demonstrated that the fundamentals did not support such a high oil price, flagging the high risk nature of high cost projects that would soon become evident as the price dropped. A number of these projects – eg Arctic or oil sands – have since been cancelled in this low price environment. This research continued to set the agenda for companies (e.g. Exxon, Shell) to respond to, which fed into shareholder resolutions. The new approach helped investors understand how to allocate the carbon budget in an economically rational and timely way as the price of oil tumbled from over $100 a barrel to under $50. This evolution of our research kept climate risk on the agenda of the fossil fuel sector by tackling the fundamentals of the business.
“Stranded Asset” enters the climate finance lexicon
This report initiated and provided the background analysis on the growing interest around stranded assets, and focused attention on capital expenditure plans being inconsistent with the 2˚C pathway. Following this, the FT, with an article written by Martin Wolf, and The Economist run articles on Stranded Assets, a term coined by Carbon Tracker. These seminal pieces changed the vocabulary of climate risk – later referred to as the “climate swerve” by the NYT. The concept of applying a carbon budget and the impact on the energy sector has since been applied by a number of major institutions, including the IEA, Citi, S&P,
Global Warming's Terrifying New Math
Setting the agenda around our key concepts of carbon bubble, unburnable carbon and stranded asset, the report gained widespread attention across range of sectors including the financial, political, academic and the environmental. Most notable includes Lord Stern’s article about our analysis in the FT and Bill McKibben's article "Global Warming's Terrifying New Math", on the Rolling Stone magazine. This became one of the most-read online-article on climate change and kick-started the global campaign to shift capital away from high-carbon investments, into renewables.
Counting the Carbon: the role of the City of London in Climate Change
The idea of ‘unburnable carbon’ is published for the first time by Mark Campanale, Founder of Carbon Tracker, and Nick Robins, now Professor in Practice for Sustainable Finance Grantham Research Institute, LSE, on the UK Quality of Life Commission’s website. That moment triggered a new generation of investor action on climate change and the interest that followed led to the launch of Carbon Tracker.
The work of Carbon Tracker has been made possible by the vision and openness to innovation shown by organisations such as the following:
European Climate Foundation
Flora Family Foundation
Frederick Mulder Foundation
Growald Family Fund
Horizon 2020 of the European Union
Kenneth Miller Trust
NextGen Climate Action
Rockefeller Brothers Fund
SEM Charitable Trust
The Ashden Trust
The Climate Change Collaboration
The Joseph Rowntree Charitable Trust
The Kestrelman Trust
The Polden Puckham Charitable Foundation
The Rockefeller Foundation
The Velux Foundation
The William and Flora Hewlett Foundation
V. Kann Rasmussen Foundation
Wallace Global Fund
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