Environment & Energy
Related: About this forumCarbon bubble will plunge the world into another financial crisis
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 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 the thinktank Carbon Tracker. Their warning is 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.
Stern said that far from reducing efforts to develop fossil fuels, the top 200 companies spent $674bn (£441bn) in 2012 to find and exploit even more new resources, a sum equivalent to 1% of global GDP, which could end up as "stranded" or valueless assets. Stern's landmark 2006 report on the economic impact of climate change commissioned by the then chancellor, Gordon Brown concluded that spending 1% of GDP would pay for a transition to a clean and sustainable economy.
Yet another reason why nobody, anywhere wants to risk leaving any carbon whatsoever in the ground.
quadrature
(2,049 posts)how is the California version doing?
they all seem to fail in
the long run
GliderGuider
(21,088 posts)If we weren't meant to burn fossil fuels, why did God make them so flammable?
quadrature
(2,049 posts)100% pure waste
cprise
(8,445 posts)...the schadenfreude of a self-styled sophisticate.
You actually seem.... er.... attached. I'm happy to see it.
I believe the bubble pop in 2008 was caused by the economy 'bumping its head' on a scarcer oil supply (we had to keep consuming oil faster and faster to keep the whole fiction credible). So I tend to think of these events as 'bumps' or 'knocks' (or maybe pinpricks).
GliderGuider
(21,088 posts)I think...
I still think that the Second Law of Thermodynamics has created a universal reality-structure that prevents us from realizing what we are doing and why, or changing our collective behaviour enough to avoid disaster. That's why we're going to burn all the carbon. I might wish the situation was otherwise, but it's not.