According to NASA , the “greenhouse effect” is the warming of climate that results when increased levels of CO2 and other greenhouse gases block the passage of heat radiating from Earth into space. NASA reports that over the last century the burning of fossil fuels like coal and oil has dramatically increased the concentration of atmospheric CO2. This happens because the fossil fuel burning process releases the carbon (C) that has been trapped in the fuels for millennia with oxygen (O2) in the air to make CO2.
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A 1982 internal study by oil giant Exxon Mobil reported that the level of CO2 in the atmosphere had increased 8% in the prior 25 years, rising to 340 ppm at that time. Exxon reported that the observed trend is believed to have begun in the Industrial Revolution and was due to fossil fuel combustion and deforestation. The continuation of the trend could lead to “considerable adverse impact including the flooding of some coastal land masses” due to melting Antarctic ice sheets. According to Exxon, the science was unambiguous and “mitigation of the ‘greenhouse effect’ would require major reductions in fossil fuel combustion.”
Without dramatic action, global CO2 emissions will continue to rise. The scientific consensus is that atmospheric carbon levels above 450 ppm will bring a 2° C rise in temperature, which could result in catastrophic implications. The total incremental amount of CO2 that can be emitted by 2050 before global warming increases by that 2° C is 565 billion tons. Global emissions are currently 38 gigatons per year. That 565 billion ton “Carbon Budget” only accounts for the utilization of 20% of all current coal, oil and gas reserves. The rest will have to be left in the ground to meet the Carbon Budget targets, just as Exxon had predicted in the 1980s.
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The 2015 Paris Climate Accords aim to keep the global temperature increase well below 2° C above pre-industrial levels through pledges to reduce greenhouse gas emissions. The US announced that it will withdraw from the climate pact, becoming the only developed country in the world (and the second largest carbon emitter) to not participate. Nevertheless, all major world countries and 24 US states are continuing to work toward compliance with the Paris goals.
What is CAPM 2.0? Climate change will bring seismic shifts in asset prices and the economy. We want you to be ready.
