What is the carbon bubble and what will happen if it bursts?

As the world moves towards a low-carbon economy, fossil fuel investments worth trillions of dollars, from oil wells to cars, will lose their value

Read more: ‘Carbon bubble’ could spark global financial crisis, study warns

Investments amounting to trillions of dollars in fossil fuels – coal mines, oil wells, power stations, conventional vehicles – will lose their value when the world moves decisively to a low-carbon economy. Fossil fuel reserves and production facilities will become stranded assets, having absorbed capital but unable to be used to make a profit. This carbon bubble has been estimated at between $1tn and $4tn (£3tn), a large chunk of the global economy’s balance sheet.