Quantcast

Future Investments in Fossil Fuels Look Dim

Business

Like most central bank governors, Mark Carney, the Governor of the Bank of England, chooses his words carefully.

So the financial community—and government policy makers—sat up and took notice earlier this month when Carney, addressing a World Bank seminar on corporate reporting standards, said he was concerned about investments in fossil fuels.

Investors are being repeatedly told that money sunk into fossil fuels is not only bad for the climate, but is also potentially seriously dangerous to financial health.
Photo credit: Shutterstock

“The vast majority of reserves are unburnable,” Carney said.

"Tragedy of horizons"

He warned companies, investors and policy makers that they need to avoid what he described as the “tragedy of horizons,” and to look further ahead to meet challenges such as climate change.

Investors are being repeatedly told that money sunk into fossil fuels is not only bad for the climate, but is also potentially seriously dangerous to financial health.

The fundamental idea espoused by a wide spread of influential voices—ranging from theInternational Energy Association (IEA) to finance funds that have many billions of dollars worth of investments under their control—is that, in order to combat climate change, a large portion of the world’s remaining fossil fuel reserves must stay in the ground.

“Not more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2˚C goal,” the IEA says.

Limiting a rise in average global temperatures to 2˚C by mid-century is considered to be the minimum necessary to prevent catastrophic climate change.

As action is taken and regulations are tightened, investments in fossil fuels, whether in a coal mine or in oil or gas exploration and production, will become frozen—or, in the parlance of the finance industry, “stranded”.

In the lead up to a major UN conference on climate change in New York last month, a group of high-roller investment funds—which, together, control more than $24 trillion worth of assets—called for an end to fossil fuel subsidies and for urgent action on climate change.

Barack Obama, the U.S. president, has joined in the chorus, calling for fossil fuels to stay in the ground. “We’re not going to be able to burn it all,” Obama said earlier this year. “Science is science. And there is no doubt that if we burned all fossil fuels that are in the ground right now that the planet’s going to get too hot, and the consequences could be dire.”

Major campaigns calling for divestment from fossil fuels have been launched. Groups such as 350.org, which campaigns for more awareness on climate issues, have had considerable success in persuading various bodies—from universities to the UK’s leading medical association—to stop investing in fossil fuels.

A number of pension funds, with billions of dollars worth of investments under their control, have said they will either cut back or stop putting money into the fossil fuel industry.

Public pressure

Meanwhile, giant coal, oil and gas corporations have been told they could face a public backlash if they seek to avoid or deny public pressure on climate change issues.

But for those who want to see an end to the fossil fuel industry, the battle is by no means won. It is only just starting.

report by the Carbon Tracker Initiative and the Grantham Research Institute on Climate Change and the Environment says the world’s 200 largest publicly-quoted fossil fuel companies spent an estimated total of $674bn on exploring and developing new reserves in 2012. And that figure does not include the hundreds of billions of dollars spent on exploiting existing fossil fuel sites.

Coal, the most polluting of fossil fuels, is still king in many regions of the world, particularly in the fast-growing economies of China and India. Coal companies, urged on by politicians, are still investing billions in new facilities.

Tony Abbott, Australia’s prime minister, opening a huge new mine in Queensland that will produce about 5.5 million tonnes of coal each year, said last week: “Coal is vital for the future energy needs of the world. So let’s have no demonization of coal—coal is good for humanity.”

YOU MIGHT ALSO LIKE

160 Leaders Urge Foundations to Divest From Fossil Fuels

Rockefellers Join $50B Divestment from Fossil Fuels

Pentagon Declares War on Climate Change

EcoWatch Daily Newsletter

Pexels

By Ketura Persellin

Global consumption of beef, lamb and goat is expected to rise by almost 90 percent between 2010 and 2050. But that doesn't mean you need to eat more meat. In fact, recent news from Washington gives you even less confidence in your meat: Pork inspections may be taken over by the industry itself, if a Trump administration proposal goes into effect, putting tests for deadly pathogens into the hands of line workers.

Read More Show Less
Pexels

By Kaitlyn Berkheiser

While enjoying an occasional alcoholic beverage is unlikely to harm your health, drinking in excess can have substantial negative effects on your body and well-being.

Read More Show Less
Sponsored
MStudioImages / E+ / Getty Images

By Jillian Kubala, MS, RD

Backpacking is an exciting way to explore the wilderness or travel to foreign countries on a budget.

Read More Show Less
Tim P. Whitby / 21st Century Fox / Getty Images

The beauty products we put on our skin can have important consequences for our health. Just this March, the U.S. Food and Drug Administration (FDA) warned that some Claire's cosmetics had tested positive for asbestos. But the FDA could only issue a warning, not a recall, because current law does not empower the agency to do so.

Michelle Pfeiffer wants to change that.

The actress and Environmental Working Group (EWG) board member was spotted on Capitol Hill Thursday lobbying lawmakers on behalf of a bill that would increase oversight of the cosmetics industry, The Washington Post reported.

Read More Show Less
A protest march against the Line 3 pipeline in St. Paul, Minnesota on May 18, 2018. Fibonacci Blue / CC BY 2.0

By Collin Rees

We know that people power can stop dangerous fossil fuel projects like the proposed Line 3 tar sands oil pipeline in Minnesota, because we've proved it over and over again — and recently we've had two more big wins.

Read More Show Less
Sponsored
Scientists released a study showing that a million species are at risk for extinction, but it was largely ignored by the corporate news media. Danny Perez Photography / Flickr / CC

By Julia Conley

Scientists at the United Nations' intergovernmental body focusing on biodiversity sounded alarms earlier this month with its report on the looming potential extinction of one million species — but few heard their calls, according to a German newspaper report.

Read More Show Less
DoneGood

By Cullen Schwarz

Ethical shopping is a somewhat new phenomenon. We're far more familiar with the "tried and tested" methods of doing good, like donating our money or time.

Read More Show Less
Pixabay

Summer is fast approaching, which means it's time to stock up on sunscreen to ward off the harmful effects of sun exposure. Not all sunscreens are created equally, however.

Read More Show Less