There's a new meme running wild on the internet.

The idea, spread virally, goes something like this: The world's energy majors are valued by the market on the basis that coal, oil and gas reserves can be turned into real economic value, making them an attractive punt for investors. However, if tough climate-change legislation kicks in through international regulation, then the majors are in trouble and may be massively overvalued. The claim is that we now have a rapidly inflating carbon bubble of unburnable fossil fuels. If it bursts, investors will lose their shirt.

But there are two problems with this argument. First, as economist Richard Tol points out, from the valuation of coal, oil and gas companies it's clear that the market expects us to be burning fossil fuels for some time to come. Share price is, after all, an estimate of future expectations, not just current value. That's not to say the market is correct, but prices simply reflect a cold assessment of reality as seen by investors. Based on current valuations, their call is that governments will not enact draconian restrictions on fossil fuel use any time soon.

However, a second, largely ignored point is this: We don't extract hydrocarbon fossil fuels for their carbon, we extract them for hydrogen. As their name suggests, hydrocarbons are a mix of carbon and hydrogen atoms. But carbon is simply the chemical anchor to which hydrogen atoms are bonded. And when we burn hydrocarbons, the energy released comes from these bonds. We can therefore view carbon as a mere freeloader which comes along for the ride.

So, given that we're actually interested in hydrogen, rather than carbon, it's no surprise that fossil fuels which are hydrogen-rich and carbon-light have gained market share over time.

For example, before the industrial revolution, energy was produced by burning carbon-rich, hydrogen-light wood, with poor energy density. In contrast, the great transition towards coal during the 18th and 19th centuries was driven by its superior energy density.

Compared with wood, coal has fewer free-loading carbon atoms and more energy-loaded bonds with hydrogen atoms. The result is that coal has a better energy density, packing more energy per unit weight. And it does so precisely because it carries less carbon baggage than wood.

As cleverly pointed out by Jesse Ausubel at the Rockefeller University and others, we've been slowly kicking carbon out of our energy mix for over 200 years through transitions from wood to coal, then oil and methane.

This isn't just because the more energy dense hydrocarbons are cleaner, it's simply because they're better.

But just so we understand the pace of change, historically these energy transitions have been slow affairs. This is due to the time required to build-out the infrastructure required for new hydrocarbon extraction and use.

So in terms of the share of primary energy in OECD countries, coal overtook wood about 1870 and peaked in the early 1900s, oil overtook coal about 1960 and peaked in the mid-1970s, while methane is set to rise. It is little known that the relative mix of our energy economy has been out of carbon and into hydrogen long before climate became a hot political issue. And when the rate at which we displace carbon from each unit of energy produced eventually outpaces growth in global energy demand, carbon emissions will begin to fall in absolute terms.

These long-wave energy transitions are ultimately the reason behind the excitement over shale gas. Methane has four hydrogen atoms for each carbon atom and so is energy dense, and it can be burned in compact, ultra-efficient combined-cycle gas turbines. The fact that it's much cleaner than coal is a free kick-back that we get from its superior energy density.

And globally, if methane becomes cheap through shale gas extraction, it will help displace coal, as is happening in the US.

But when it comes to energy density, nuclear fuels beat hydrocarbons hands down. Think about it, a city-powering, essentially carbon-free 1000MW nuclear plant requires only 27 tonnes of fuel per year and a plot of land the size of a modest industrial estate. Moreover, we've only scratched the surface of nuclear. Current pressurised water reactors are the early Newcomen engines of the nuclear age. We've yet to see the equivalent of efficient Watt engines. These will likely be modular fast spectrum reactors which consume what we now classify as waste.

In stark contrast, compared with the long historical journey of increasing energy density, some mainstream Greens plan to deflate the carbon bubble through a rapid and wholesale shift from energy-dense fossil fuels to diffuse and intermittent renewables.

But as leading climate scientist James Hansen points out, trusting that renewables alone could allow a transition away from fossil fuels is equivalent to "believing in the Easter Bunny".

From what's emerged from energy policy circles in Europe, a small army of rabbits appears to be on the loose.

As Hansen notes, renewables are simply not up to the job of providing socially progressive low cost energy and environmentally progressive clean energy on a truly global scale. The problem is one of poor energy density, and so a massive build-out of infrastructure to harvest dilute renewable energy, whether wind, sun or biomass, and turn it into concentrated electrical energy or liquid fuels; and of course there is the perennial issue of fitting the square peg of wind and solar intermittency into the round hole of continuous consumer demand.

So rather than bursting the carbon bubble through a rapid collapse of the fossil fuel industry, a pragmatic way forward is to continue the historical journey of displacing carbon through improvements in energy density. This will require that, globally, we move out of coal and probably much later oil, and into unconventional gas and nuclear – ironically two energy technologies zealously opposed by mainstream Greens.

Going forward, it's clear that global demand for energy of whatever mix will continue to inflate as the rapidly growing economies of the developing nations rightly look to rising per capita energy consumption, even if consumption in the developed economies flatlines. The future therefore needs to be one of socially progressive lower cost energy and environmentally progressive cleaner energy.

We cannot have one without the other. And we cannot afford to be swayed by internet memes and misplaced attempts by some to crash the hydrocarbon and nuclear industries, just at the time when we need them to help accelerate the historical swing away from carbon through improving energy density.

Colin McInnes is Professor of Engineering Science at the University of Strathclyde