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The Carbon Ask: effects of climate policy on the value of fossil fuel resources and the implications for technological innovation

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  • Peter Linquiti

    (George Washington University)

  • Nathan Cogswell

    (George Washington University)

Abstract

Strong policies to address climate change will almost certainly require that large quantities of oil, natural gas, and coal remain underground. Because these resources have economic value, action to reduce carbon emissions means that fossil fuel owners and producers, and other entities in the fossil fuel supply chain, will experience a reduction in wealth. They will be on the receiving end of what we call the “Carbon Ask.” We compile disparate data sources, make some simplifying assumptions, and approximate the value of the Carbon Ask for the world as a whole. We find that the value of the world’s fossil fuel enterprise in a business-as-usual case, unconstrained by climate policy, is about $295 trillion. In a world with a strong climate policy, the value of these resources drops to about $110 trillion, a decrease of $185 trillion, or 63 %. The Carbon Ask is equivalent to 2.4 years of global GDP. After reviewing the literature on resistance to technological innovation during the past two centuries and examining legal challenges to recent US greenhouse gas regulations, we find it unsurprising that the Carbon Ask creates powerful incentives for many stakeholders—who may be firms, workers, consumers, and governments—to resist policies to speed the development and diffusion of new, more environmentally benign technologies. We also find few precedents for policy-driven, rather than market-driven, technological transformations with a scale and scope similar to decarbonization of the global economy.

Suggested Citation

  • Peter Linquiti & Nathan Cogswell, 2016. "The Carbon Ask: effects of climate policy on the value of fossil fuel resources and the implications for technological innovation," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 6(4), pages 662-676, December.
    • Handle: RePEc:spr:jenvss:v:6:y:2016:i:4:d:10.1007_s13412-016-0397-2
    DOI: 10.1007/s13412-016-0397-2
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    Cited by:

    1. Frank W. Geels & Jonatan Pinkse & Dimitri Zenghelis, 2021. "Productivity opportunities and risks in a transformative,low-carbon and digital age," Working Papers 009, The Productivity Institute.
    2. Rempel, Arthur & Gupta, Joyeeta, 2021. "Fossil fuels, stranded assets and COVID-19: Imagining an inclusive & transformative recovery," World Development, Elsevier, vol. 146(C).
    3. Louis Daumas, 2024. "Financial stability, stranded assets and the low‐carbon transition – A critical review of the theoretical and applied literatures," Journal of Economic Surveys, Wiley Blackwell, vol. 38(3), pages 601-716, July.
    4. John H. Perkins, 2022. "Climate: change, crisis, and contention," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 12(2), pages 398-408, June.
    5. Don Grant & Tyler Hansen & Andrew Jorgenson & Wesley Longhofer, 2024. "A worldwide analysis of stranded fossil fuel assets’ impact on power plants’ CO2 emissions," Nature Communications, Nature, vol. 15(1), pages 1-10, December.
    6. Gentile, Giuliana & Gupta, Joyeeta, 2025. "Orchestrating the narrative: The role of fossil fuel companies in delaying the energy transition," Renewable and Sustainable Energy Reviews, Elsevier, vol. 212(C).
    7. Joyeeta Gupta & Yang Chen & David I. Armstrong Mckay & Paola Fezzigna & Giuliana Gentile & Aljoscha Karg & Luc Vliet & Steven J. Lade & Lisa Jacobson, 2024. "Applying earth system justice to phase out fossil fuels: learning from the injustice of adopting 1.5 °C over 1 °C," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 24(1), pages 233-255, March.
    8. Hansen, T.A., 2022. "Stranded assets and reduced profits: Analyzing the economic underpinnings of the fossil fuel industry's resistance to climate stabilization," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    9. Lukas Folkens & Petra Schneider, 2022. "Responsible Carbon Resource Management through Input-Oriented Cap and Trade (IOCT)," Sustainability, MDPI, vol. 14(9), pages 1-17, May.

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