The best of EcoWatch, right in your inbox. Sign up for our email newsletter!
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.
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.
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.
A 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
EcoWatch Daily Newsletter
By Coral Natalie Negrón Almodóvar
The Earth began to shake as Tamar Hernández drove to visit her mother in Yauco, Puerto Rico, on Dec. 28, 2019. She did not feel that first tremor — she felt only the ensuing aftershocks — but she worried because her mother had an ankle injury and could not walk. Then Hernández thought, "What if something worse is coming our way?"
President Trump has long touted the efficacy of walls, funneling billions of Defense Department dollars to build a wall on the southern border. However, when the U.S. Army Corps of Engineers (USACE) released a study that included plans for a sea wall to protect New Yorkers from sea-level rise and catastrophic storms like Hurricane Sandy, Trump mocked it as ineffective and unsightly.