'Carbon bubble' could spark global financial crisis, study warns

[nitpicker]

https://www.theguardian.com/environment/2018/jun/04/carbon-bubble-could-spark-global-financial-crisis-study-warns

'Carbon bubble' could spark global financial crisis, study warns

Advances in clean energy expected to cause a sudden drop in demand for fossil fuels, leaving companies with trillions in stranded assets

Fiona Harvey Environment correspondent

Mon 4 Jun 2018 16.00 BST

Plunging prices for renewable energy and rapidly increasing investment in low-carbon technologies could leave fossil fuel companies with trillions in stranded assets and spark a global financial crisis, a new study has found. A sudden drop in demand for fossil fuels before 2035 is likely, according to the study, given the current global investments and economic advantages in a low-carbon transition.

The existence of a “carbon bubble” – assets in fossil fuels that are currently overvalued because, in the medium and long-term, the world will have to drastically reduce greenhouse gas emissions – has long been proposed by academics, activists and investors. The new study, published on Monday in the journal Nature Climate Change, shows that a sharp slump in the value of fossil fuels would cause this bubble to burst, and posits that such a slump is likely before 2035 based on current patterns of energy use.

Crucially, the findings suggest that a rapid decline in fossil fuel demand is no longer dependent on stronger policies and actions from governments around the world. Instead, the authors’ detailed simulations found the demand drop would take place even if major nations undertake no new climate policies, or reverse some previous commitments. That is because advances in technologies for energy efficiency and renewable power, and the accompanying drop in their price, have made low-carbon energy much more economically and technically attractive.
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By moving to a lower-carbon footing, companies and investors could take advantage of the transition that is occurring, rather than trying to fight the growing trend. Mercure said fossil fuel companies were likely to fight among each other for the remaining market, rather than have a strong impact on renewable energy businesses.
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However, Mercure also warned that the transition was happening too slowly to stave off the worst effects of climate change. Although the trajectory towards a low-carbon economy would continue, to keep within 2C above pre-industrial levels – the limit set under the Paris agreement – would require much stronger government action and new policies.
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[nitpicker]

1. Link to the nature.com PDF

http://www.nature.com/articles/s41558-018-0182-1.epdf?referrer_access_token=SpGMte2QaPljGX8xuxnHF9RgN0jAjWel9jnR3ZoTv0NBDAdbQ1RWHSa6L720gc7lUR_z1wTnjPIOyV5lXvFMVIyNMlKx4fgOStd2gybbUXpfV764_dz205QjpB4tBquTRXKIQ8mR_xyGe95EM1tNvSwwTOUkuXRQw4zO84NVQliyxvu7bPSvZvOOIlC3TLMlbupeWtl_D9HrZzGiwB84g-a8rSjWL67Ek5WPcG1FtU-cGxW8zL320pSUemzutUmgsUHywEUYacSivXDbZ-Rwip4UgMR5vtdaokAwe-Ll5CaWE_GLFAXNP6AvBzDwOiGU&tracking_referrer=www.theguardian.com

[Sherman A1]

2. I believe it to be more of when

Rather than could. We will at some point have to deal with this issue, hopefully that will happen before it is too late to do so.

[DetlefK]

3. If that happens, expect the Middle-East to explode.

Saudi-Arabia is already fighting off a long-term bankruptcy, desperately modernizing and diversifying their economy to prevent a collapse that was projected to be two or three decades away.
What happens if the saudi-arabian economy gets hit before they are ready?
What happens when social troubles get so big in autocratic Saudi-Arabia that ISIS makes a comeback?

[progressoid]

6. It's a good think we've been selling them weapons for decades.

[Duppers]

4. fossil fuel companies ...

I always wonder how long we have before the planet cannot support the virus known as humans. 40yrs?
Although it's come up before, I'd like knowledgeable folks to voice their opinions again.

Thanks for posting this.

[NNadir]

5. Actually there's a "renewable energy" bubble.

Vast sums of money are thrown at "renewable energy" despite the fact it hasn't worked, isn't working and won't work.

Worrying about so called "renewable energy" eliminating dangerous fossil fuels is rather like worrying that a rain storm will wash away Mount Everest.

So called "renewable energy" is trivial and in fact, is nothing more than a marketing tool for the dangerous fossil fuel industry.