LONDON -- The United Kingdom's Oxford University has begun a four-year research program into the risks that climate change and related regulations will pose to the assets and investment plans of companies around the world that remain wedded to high-carbon business models.

With the carbon price at record lows, the international political climate process momentarily stuck, and many countries pulling back from policies promoting low carbon in the face of faltering economies and dwindling budgets, the problem of corporate assets becoming worthless or stranded is real but still finding little interest in many boardrooms.

The researchers at the university's Smith School of Enterprise and the Environment want to change that.

"We are looking at how changes in regulation, pricing, technology, society and climate could be a risk to a range of polluting assets and how this could be a material risk to investors and businesses involved as well as for policymakers and regulators," the school's director, professor Gordon Clark, said at the launch of the program.

Initially concentrating on the international supply chain in agriculture, the program will then move on to transport, power generation, real estate and an array of commodities with the aim of identifying the major areas at risk and educating investors, companies and policymakers on how to avoid the worst of the expected problems.

"Climate change, scarcer resources and new disruptive technologies will reduce value and strand assets," said John Gummer, head of the U.K. government's advisory Committee on Climate Change. "If investors better understand the risks of investing in these assets, they will be attracted to greener alternatives and see them as better business propositions and safer places for their funds."

There has been little work done on the value of corporate assets globally that could become stranded as a result of changing regulations or technologies related to climate change, but even selective studies have suggested that the phenomenon could be as dangerous to the world financial system as the subprime mortgage crisis that triggered the global meltdown and subsequent recession in 2008.

Concerns of a carbon bubble

"The implications of an economywide overexposure to fossil fuel investments could be even more severe and wide-ranging than those of the recent financial crisis," said Ben Caldecott, head of policy at green investment fund Climate Change Capital. "Regulators need to figure out how to make the transition from the old, high-carbon economy and carefully deflate a bubble in environmentally unsustainable assets."

A study last year by the nonprofit Carbon Tracker Initiative identified the London Stock Exchange as having among the highest exposures of stock exchanges around the world to high-carbon business assets.

It said the London market had accumulated the equivalent of 106 billion metric tons of carbon dioxide emissions through investments globally in fossil fuels by its members. Of that, 45 billion metric tons alone was coal.

The Carbon Tracker Initiative described the crisis-in-waiting as a carbon bubble and warned that it could have the same impact as the dot-com collapse, when billions of dollars was wiped off investment and share values as the values of their hugely overpriced assets tumbled, and the group urged the Bank of England to undertake an urgent review of the risk exposure.

To drive home the point, Carbon Tracker said it had calculated that 80 percent of the world's fossil fuel reserves had to remain in the ground if there was to be a serious chance of limiting the planet's warming to less than 2 degrees Celsius above preindustrial levels this century.

"The Bank of England has now accepted that this is one of the systemic risks it should look at. But we would argue that it doesn't have the necessary data or indicators to help it do so," James Leaton, Carbon Tracker's research director, said by telephone Monday.

When business as usual isn't

"The few analysts who have started looking at this tend to take it from a business-as-usual perspective when we all know that with climate change the one thing that you can be sure of is that it will not be business as usual," he added.

Adding its analysis to the gradually growing global discussion, HSBC Bank has recently published a report around the implications of a scenario last year by the International Energy Agency of a world sticking to 450 parts per million of atmospheric carbon dioxide, equivalent to an average warming of 2 C.

The HSBC report shows a reduction in demand for high-carbon fuels resulting in a fall in prices and a sharp drop in the stock valuations of fossil-fuel-based companies.

Leaton said a case in point was the dramatic decline in the valuation of some major U.S. coal companies last year due to the wholesale switch to shale gas, forcing them to chase export markets where prices consequently dropped sharply.

"The stock prices of ... the biggest U.S. coal mining companies halved in the first six months of 2012. That reflected the fact that their market was disappearing," he said.

Leaton said the idea that a U.S. investor holding stocks in a company listed in London with assets in Australia and exporting to China could simply rely on what was happening on the London stock market was rapidly becoming out of touch with reality.

Investors and analysts, he said, need to start taking a more in-depth look at company supply chains and investment strategies and the events and developments likely to affect them if they are to stay ahead.

"If you wait until the market has caught up, you will probably have left it too late," he said.

Markets may not give a clear warning

But the message was only slowly filtering through, with the major fossil fuel companies largely ignoring the looming threat to their business models and balance sheets, and even the financial world and ratings agencies being slow to come to grips with the climate-changed corporate environment, Leaton said.

"There is a range of technological, market and regulatory factors that all add up to making it more difficult for carbon-intensive options. What we are saying to investors and companies is that they need to start looking much more closely at the capital investment plans of these companies," he said.

"In an ideal world, there would be a clear global signal. But that seems politically difficult," he added. "In the meantime, some countries are already taking action. That is making it much more difficult for the market. There is not a global carbon price that they can simply plug into their models -- or where there is a price, it is far too low to have any bearing.

"The concept of the carbon budget has started to catch on, but more work needs to be done on the details of where the stranded assets will appear. That is what we are working on now," Leaton added.