Carbon bubble will plunge the world into another financial crisis – report

[alp227]

Source: The Guardian

The world could be heading for a major economic crisis as stock markets inflate an investment bubble in fossil fuels to the tune of trillions of dollars, according to leading economists.

"The financial crisis has shown what happens when risks accumulate unnoticed," said Lord (Nicholas) Stern, a professor at the London School of Economics. He said the risk was "very big indeed" and that almost all investors and regulators were failing to address it.

The so-called "carbon bubble" is the result of an over-valuation of oil, coal and gas reserves held by fossil fuel companies. According to a report published on Friday, at least two-thirds of these reserves will have to remain underground if the world is to meet existing internationally agreed targets to avoid the threshold for "dangerous" climate change. If the agreements hold, these reserves will be in effect unburnable and so worthless – leading to massive market losses. But the stock markets are betting on countries' inaction on climate change.

The stark report is by Stern and Carbon Tracker, a thinktank supported by organisations including HSBC, Citi, Standard and Poor's and the International Energy Agency. The Bank of England has also recognised that a collapse in the value of oil, gas and coal assets as nations tackle global warming is a potential systemic risk to the economy, with London being particularly at risk owing to its huge listings of coal.

Read more: http://www.guardian.co.uk/environment/2013/apr/19/carbon-bubble-financial-crash-crisis

[Malik Agar]

1. Bubble this bubble that

It seems every article out now is talking about some kind of bubble...

[Benton D Struckcheon]

2. Most of it would have to stay underground to meet carbon targets

That doesn't mean it will. You really want to bet against Exxon and BP and Royal Dutch Shell? Good luck.

[abelenkpe]

3. They should stay underground

wealth is an illusion. Polluted water, air and land is real.

[Macoy51]

8. Very True

True, but good luck getting the oil companies to see it that way. In their minds, billions in the bank is worth more than clear air or water.





macoy

[mrdmk]

11. This is why dirty air is free to use, even breath if necessary!

[Macoy51]

13. Shhhhhh

Don't give the corporations any ideas, I am sure they would love to sell us the air we breath.



Macoy

[Arctic Dave]

4. Yet another reason why the oil corporations don't want acknowledge climate change.

Their business model would collapse if they did and the countries started to get serious about renewables.

[Flying Squirrel]

5. So... damned if we do, damned if we don't. more good news :/

[modrepub]

6. Oil is Essential

for the pharmaceutical and fertilizer industry. We have alternatives for transportation other than oil and gas. I don't think there are alternatives for making drugs or fertilizer. (I have no idea how much these activities contribute to global warming but I'd think relatively little compared to current practices)

[muriel_volestrangler]

9. There are alternatives

The basic ingredient needed for fertiliser is hydrogen (which is then combined with nitrogen, from the air, in the Haber process to produce ammonia, which can then be made into nitrates in further reactions). At the moment, the cheapest way to obtain hydrogen is from methane, which is usually sourced as natural gas. Methane can, however, be produced from fermentation of biomass; and hydrogen can be obtained from electrolysis of water - which requires electrical energy.

The pharmaceutical industry needs organic compounds, but not in large amounts. These can be synthesized from biological material; it just might cost them a little more to do it (but I don't know if it would, really).

[antigone382]

12. Agriculture is a major source of emissions...by some counts the largest.

And while a lot goes into that in terms of mechanization and transportation, fertilizer use is not an insignificant amount. Fertilizer-use also produces nitrous oxide, an incredibly powerful greenhouse gas which, molecule for molecule, has almost 300 times the warming potential of carbon dioxide over a 100-year period. Fortunately N2O is produced at much lower rates than CO2, but fertilizer production and use is not innocent in that regard either. This is just one reason it is critical that we dramatically reduce synthetic fertilizer amounts as quickly and as universally as possible and replace them with organic alternatives.

Here are some links with info written by much smarter people than myself:

http://newscenter.berkeley.edu/2012/04/02/fertilizer-use-responsible-for-increase-in-nitrous-oxide-in-atmosphere/

http://www.mnn.com/earth-matters/climate-weather/blogs/the-quiet-greenhouse-gas-nitrous-oxide

[Nihil]

7. The sooner the better.

> "The financial crisis has shown what happens when risks accumulate unnoticed"

Yep, the rich get richer and the poor get shafted three times (once by the crash,
once by the bailout and once by the measures put in place in the vain hope that
they will prevent it happening again - but never do).


> the stock markets are betting on countries' inaction on climate change.

Sadly, that's a pretty damn safe bet - right up to the time when something major
happens to the Western world at which point the "traders" will suddenly bail to
move onto the next winning game in the casino.

[M Kitt]

10. Carbon Footprint balanced against "Bubble"

Thanks Alp227.

Surprises me that any "thinktank" tied to International Oil would A) admit to let alone B) promote the link between Petroleum Market sales (and related manipulation IE "Speculation&quot as being potentially disastrous investment behavior, since the current bubble profits that industry in the short term.

So long as they dump that stock before the crash, they leave we "Investors" holding the bag, as they've done with previous "Bubbles"

Publication of that article implies that to some extent they're "Shooting themselves in the foot" to metaphor that context, by making public an article containing information that could negatively effect their profits in the short term.

Sort of like Goldman Sachs, let's say, promoting made-for-tv ads describing our 2008 U.S. market meltdown and advising that "Regulation of the market COULD have prevented this crash, in particular, especially corrosive to the market were Derivatives and related Hedge Fund behavior".

Which although completely TRUE, would generally encourage the Public to distrust the current market (investment money lost!) and could result in calls for necessary REFORM measures.

Something Goldman Sachs would certainly NOT approve of

Regarding the Petroleum Industry:

Political ties to Petroleum aren't even debatable, our Iraq/Afghanistan invasions and subsequent Occupations were almost certainly in support of Corporate Profiteering ambitions that haven't panned out.

We simply no longer have National Support for those ambitions, as a Nation we're increasingly tired of our Military being used in that particular way, toward an outdated, dysfunctional mission of Empire.

We "The Public" don't have the National drive to profits that the Petroleum Industry relies on, we don't "Share" their ambitions of Middle East Oil control. So the Iraq/Afghanistan Corporate Profiteering venture has been ABORTED.

http://www.thomhartmann.com/users/mfkmail7/blog/2012/05/99-still-disregarded-conservative-media#comment-137255

Thanks again.