Globally, 80% of coal reserves must go unused along with 50% of gas and 33% of oil, according to the new research from the UCL Institute for Sustainable Resources.

“Policy makers must realise that their instincts to completely use the fossil fuels within their countries are wholly incompatible with their commitments to the 2°C goal,” said the study’s lead author Dr Christophe McGlade.

“If they go ahead with developing their own resources, they must be asked which reserves elsewhere should remain unburnt in order for the carbon budget not to be exceeded.”

Specifically, 260,000 barrels of Middle Eastern oil should go unused along with the overwhelming majority of vast coal reserves in China, Russia and the United States.

Drilling in the arctic was also found to be inconsistent with efforts to limit climate change.

Institutional re-think

Co-author Professor Paul Ekins said: “Companies spent over £430 billion last year searching for and developing new fossil fuel resources. They will need to rethink such substantial budgets if policies are implemented to support the 2°C limit, especially as new discoveries cannot lead to increased aggregate production.

“Investors in these companies should also question spending such budgets. The greater global attention to climate policy also means that fossil fuel companies are becoming increasingly risky for investors in terms of the delivery of long-term returns. I would expect prudent investors in energy to shift increasingly towards low-carbon energy sources.”

Last year, Shell dismissed claims that its oil and gas reserves would become unusable as a result of climate change regulation; maintaining the view that fossil fuels will continue to play a major role in the global energy system through to 2050 and beyond.

The problem is not limited to companies, as research suggests G20 governments spend approximately $88bn a year looking for oil, gas and coal reserves.

Brad Allen

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