Have you heard about the “carbon bubble?” It’s like the “housing bubble” or the “dotcom bubble” in that it describes a situation in which investors have too much, well, invested in a specific kind of industry, artificially inflating the value of that industry. Eventually, something comes up, whether people saw it or not, which proves that the bubble in question was just that, and, like a real bubble, it pops, resulting in economic chaos and financial loss.

The carbon bubble is estimated at a value of about $2 trillion, which is a lot of money and could seriously affect global markets and the global economy. See, we learned from the Great Depression that global capitalism is more than just opening plants oversees or selling things to people in other countries: it’s interconnected at a deep, structural level, so when one country’s economy collapses, like Germany’s did, the effects ripple out into other countries. In that case, Britain, France, and the United States were affected, since all of them had a lot of money tied up in Germany paying war reparations following World War I.

But to get back to the carbon bubble, the hypothesis goes like this: in order to keep global climate change to no more than two degrees Celsius over pre-industrial levels by the end of the century, a mark that climate scientists agree is absolutely crucial, we’ll have to keep most of the fossil fuels that are still in the ground right where they are. And, since climate change policy is important to governments and people everywhere but the United States, that’s going to affect the energy industry.

So when we cut emissions across the globe and invest in green energy options, the coal and oil reserves are going to be worth less and less. Eventually, the bubble will burst. But if people start divesting now, that bubble should shrink, and when it bursts, it will do less damage. Of course, just divesting might not be enough, because those shares have to go somewhere.

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