Quantcast
Business

Banks Fear Risk of Investment in Fossil Fuels

In a move that’s likely to cause consternation in some of the world’s most powerful corporate boardrooms, the Bank of England has disclosed that it is launching an inquiry into the risks fossil fuel companies pose to overall financial stability.

A growing number of senior figures in the financial community—some of them controlling many millions of dollars worth of investment funds—have been pressing fossil fuel companies to disclose how investments would be affected if energy reserves became frozen or stranded by regulatory moves associated with tackling climate change. Photo credit: Ellen Gibson / Fossil Free Future

Mark Carney, governor of the UK’s central bank, has written to British Members of Parliament telling them that his officials have been discussing whether or not coal, oil and gas reserves held by the fossil fuel industry are, in fact, unburnable.

“In light of these discussions, we will be deepening and widening our inquiry into the topic,” Carney says.

The burning of fossil fuels releases hundreds of thousands of tons of climate-changing greenhouse gases into the atmosphere.

Catastrophic change

The idea is that if global warming is to be tackled and catastrophic climate change averted, such energy resources will have to be left where they are—under the ground. They will, in effect, become frozen or stranded financial assets.

Carney’s letter, written at the end of the October this year but only recently made public, is addressed to the British parliament’s Environmental Audit Committee.

Carney tells the Committee—which has been carrying out its own investigation into the frozen assets question—that a special unit within the Bank of England responsible for identifying and reducing risks in the financial system, will also be considering the issue “as part of its regular horizon-scanning work on financial stability risks”.

Joan Walley, the head of the Audit Committee, told London’s Financial Times that investors should consider what effect regulatory action on climate change would have on their fossil fuel investments.

“Policy makers and now central banks are waking up to the fact that much of the world’s oil, coal and gas reserves will have to remain in the ground unless carbon capture and storage technologies can be developed more rapidly,” Walley said.

A growing number of senior figures in the financial community—some of them controlling many millions of dollars worth of investment funds—have been pressing fossil fuel companies to disclose how investments would be affected if energy reserves became frozen or stranded by regulatory moves associated with tackling climate change.

Carbon Tracker, a not-for-profit thinktank based in London, has been warning of what it sees as the dangers to investors and to the entire financial system of continued investment in the fossil fuel industry.

Vulnerability of assets

“The Bank of England has set a new standard for all central banks and financial regulators on climate risks by agreeing to examine, for the first time, the vulnerability that fossil fuel assets could pose to the stability of the financial system in a carbon constrained world,” Carbon Tracker says.

The question of stranded or frozen assets has been raised at the latest round of global negotiations on climate change taking place in Lima, Peru.

Christiana Figueres, the head of the UN’s Climate Change Secretariat, told the Reuters news agency that the long-term goal of negotiations must be the elimination of all greenhouse gas emissions by 2100—a goal that could not be achieved unless most fossil fuels were left in the ground. “We just can’t afford to burn them,” Figueres said.

YOU MIGHT ALSO LIKE

Cities Around the World Take Lead on Tackling Climate Change

Low-Carbon Economies Most Promising Pathway to Meaningful Global Climate Agreement

3 Key Issues Governments Must Agree On at Lima Climate Talks

Show Comments ()
Sponsored
Popular
Desperate for water, Puerto Ricans are resorting to any available sources, such as this stream in Cayey. Angel Valentin / NPR

Desperate Puerto Ricans Are Drinking Water From Hazardous Waste Sites

The ranking Democrat on the House Homeland Security Committee called for an investigation into the availability of potable water in Puerto Rico following reports Friday that residents are scrounging for water from hazardous waste sites.

After the U.S. Environmental Protection Agency (EPA) confirmed residents were trying to access water from three Superfund sites, and following a CNN story Friday featuring Puerto Ricans taking water from a fourth site, Rep. Bennie Thompson (D-MS) wrote a letter to acting DHS Secretary Elaine Duke asking if she knew about the situation and calling the reports "beyond disturbing."

Keep reading... Show less
Brant at Izembek Lagoon. Kristine Sowl / USFWS

Groups Slam Zinke's 'Backroom Deals' to Build Road Through Alaskan Wildlife Refuge

Ryan Zinke's Interior Department is working behind the scenes to build a controversial and long-contested road through the heart of Alaska's Izembek National Wildlife Refuge, documents show.

The refuge was established more than 30 years ago to conserve wetlands and habitats for migrating birds, brown bears and salmon and other wildlife. 300,000 of its 315,000 acres has been designated as Wilderness in 1980 under the Alaska National Interest Lands Conservation Act.

Keep reading... Show less
FAO / Giulio Piscitelli

On World Food Day, Pope Francis Says Link Between Climate Change and Hunger Is Undeniable

By Andrew McMaster

Speaking at the United Nations Food and Agriculture Organization (FAO) on World Food Day, Pope Francis addressed the need for governments around the world to acknowledge that climate change and migration were leading to increases in world hunger.

Francis received a standing ovation after a stirring speech in which he said all three issues were interrelated and require immediate attention.

Keep reading... Show less
The pallid bat is native to the western U.S., where the spread of white-nose syndrome is a threat. Ivan Kuzmin / Shutterstock

Why Are America's Bats Disappearing?

By John R. Platt

It's Friday evening in Pittsburgh, and the mosquitoes are out in force. One bites at my arm and I try to slap it away. Another takes the opportunity to land on my neck. I manage to shoo this one off before it tastes blood.

I'm at Carrie Furnaces, a massive historic ironworks on the banks of Pennsylvania's Monongahela River. Stories-tall rusting structures loom all around me, as do the occasional trees poking their way out of the ground. A tour guide, leading a group from the Society of Environmental Journalists conference, tells me the soil here is full of heavy metals and other pollutants from the factory, which operated for nearly a century before closing in 1982.

Keep reading... Show less
Sponsored
The Amur tiger is the extinct Caspian tiger's closest living relative. Mathias Appel / Flickr

After a Half-Century, Tigers May Return to Kazakhstan

Wild tigers may be on their way back to Kazakhstan.

This news is surprising for a few reasons. First, most people associate tigers with the jungles of India or Sumatra, even the snowy slopes of eastern Russia—not the dry landscapes of Central Asia. But Iran, Turkey and Kazakhstan were once home to thriving populations of Caspian tigers. Unfortunately, sometime between the 1940s and '70s, this subspecies went extinct due to widespread trapping, hunting, poisoning and habitat degradation.

Second, Kazakhstan isn't a nation that often comes up in conversations about conservation. In fact, if Americans recognize the world's largest landlocked nation for anything, it's probably the movie Borat.

Keep reading... Show less
www.youtube.com

California Wildfires: One of 'Greatest Tragedies' State Has Ever Faced

With aid from easing winds, the 11,000 firefighters beating back the Northern California wildfires are making "good progress," as the number of major blazes dropped to 15, the state's fire agency Cal Fire announced Sunday.

But as Cal Fire noted‚ "Sadly, the death toll has risen to 40 people."

Keep reading... Show less
Sponsored
Bonn Climate Change Conference, June 4 2015. UNclimatechange / Flickr.

UN Urges World Leaders to Heed Climate Risk, Warns of More Severe Disasters

By Paul Brown

The hurricanes and wildfires that have severely damaged large areas of the U.S. in recent weeks have had no impact on President Donald Trump's determination to ignore the perils of climate change and support the coal industry.

In a deliberate denial of mainstream science, the Trump administration has issued a strategic four-year plan for the U.S. Environment Protection Agency that does not once mention "greenhouse gas emissions," "carbon dioxide" or "climate change" in its 48 pages.

Keep reading... Show less
Popular
www.youtube.com

Oil Rig Explodes in Louisiana: 7 Injured, 1 Missing

An oil rig exploded on Lake Pontchartrain, Louisiana Sunday night, injuring seven crew members, with an eighth believed to be missing, authorities said.

The explosion was reported at 7:18 p.m. near St. Charles Parish and the city of Kenner. The platform, located in unincorporated Jefferson Parish, is owned by New Orleans-based Clovelly Oil Company.

Keep reading... Show less
Sponsored

mail-copy

Get EcoWatch in your inbox