World-leading energy economist says fossil fuels may be risky investment
A few months ago I argued that for sustainable lifestyles to succeed, we must talk about money. Specifically, we need to think not just about how we spend our money—but also how we save and invest it.
I'm not the only one making this case. The Governor of the Bank of England argued that many fossil fuel investments will become worthless if we start taking the climate fight seriously. And even Bank of America has pledged to stop funding coal mining because it sees it as increasingly risky.
Now one of the world's top energy economists says that fossil fuel investments may fail to perform if they don't take into account future climate policy. As reported over at The Guardian, Fatih Birol—chief economist at the International Energy Agency—made the case that no company is immune from the growing trend toward robust climate action:
“Any energy company in the world, whatever they do - oil, gas, renewables, efficiency, coal - climate policies will impact their business. So in order not to make the wrong investment decisions, in terms of making the investment decisions which may not bring the right returns, or in terms of missing investment opportunities, businesses may need to take climate policies and the impact for their businesses more seriously."
The concept of a carbon bubble, meaning that as climate action takes hold and fossil fuels become unburnable, investments in those fuels become stranded assets, has been gaining credence of late. Maybe Jeremy Leggett isn't being naive when he suggests that one or more of the oil majors may soon commit to complete decarbonization. Indeed, Australia's largest coal-burning utility has already made that leap.
So keep an eye on your 401k folks. And don't let the carbon bubble bring it down.