Presentation short abstract

The carbon budget for 1.5 °C will be exhausted by 2028, requiring not only halting new fossil fuel projects but also decommissioning many existing ones. We estimate the economic impact of leaving 58% of reserves unextracted and outline strategies for a just transition.

Presentation long abstract

Global warming has already reached 1.3 °C above pre-industrial levels and is projected to exceed 2.4 °C by 2100 unless urgent action is taken. To maintain a 50% chance of limiting warming to 1.5 °C, the remaining carbon budget of 130 GtCO₂ will be exhausted by 2028 at current emission rates. This scenario requires not only halting new fossil fuel projects but also prematurely decommissioning a significant share of existing oil and gas operations. Using Rystad Energy’s UCube database, this study estimates the economic implications of leaving developed reserves unextracted. Active and under-development projects contain 1,381 GBOE, equivalent to 593.9 GtCO₂. Meeting the 1.5 °C target demands that 58% of these reserves—around 801 GBOE—remain in the ground. Premature decommissioning would result in US$ 20.78 trillion in forgone benefits and affect US$ 7.29 trillion in capital expenditures, posing major financial risks for companies and investors. We discuss strategies to manage these risks, including ending fossil fuel subsidies, reforming investment treaties, and removing incentives that artificially lower production costs. The paper argues against compensating corporations for stranded assets, advocating instead for support to workers and communities to ensure a just transition. Finally, we call for massive investments in clean energy to guarantee affordable access and accelerate the global energy shift. While the costs of early termination are substantial, they are outweighed by the societal benefits of avoiding climate damages, estimated at US$ 69.6 trillion by mid-century.