With the energy sector showing signs of profound, disruptive change, and with the former chairman of Duke Energy arguing that a price on carbon is inevitable, investors are rightly spooked by the prospect of a carbon bubble — whereby fossil
fuel assets become stranded because they either can't be exploited due to climate concerns, or clean energy alternatives simply squeeze them out of the marketplace.
Not exact matches
The results add weight to warnings from analysts that fossil
fuel assets are at risk of losing their value and
becoming «stranded» as the world transitions to cleaner energy sources.
Moreover, Exxon Mobil expressed confidence that its oil and gas
assets were unlikely to
become stranded even under much tighter regulation of carbon emissions because the fossil
fuels would be needed to grow the world's economies.
So, two things happen (1) you need an easier source of
fuel (dietary sugars and more generally dietary nutrients), and (2) the generalized resource mismanagement that led to your fat
assets becoming stranded also contributes to mismanaging the resources in your dietary intake.
Others have been scattered: The fossil -
fuel divestment campaign we launched in 2012 has been active on every continent, incorporated a wide variety of tactics, and has
become the largest anticorporate campaign of its kind in history, triggering the full or partial divestment of endowments and portfolios with nearly $ 5 trillion in
assets.
When it does, more than $ 20 trillion worth of fossil
fuel reserves will
become stranded
assets and the companies» value will plummet.
So the darker hopes arise — maybe a particularly furious El Niño or a «carbon bubble» where the financial markets realize that renewables have
become more scalable and economical, leading to a run on fossil -
fuel assets and a «generational crash» of the global economy that, through great suffering, buys us more time and forces change.
Fossil
fuel investments could
become the «sub-prime
assets of the future,» warned British energy secretary Ed Davey.
In a world where carbon emissions will increasingly have to be constrained, coal, as the dirtiest of the fossil
fuels, is the energy
asset most vulnerable to
becoming «stranded» — the most vulnerable, in other words, to seeing its market value collapse well ahead of its previously anticipated useful life.
If we truly begin taking action on climate change when it's needed (or rather ten years ago when it was needed) then all fossil
fuels and much industrial plant
become stranded
assets.
The financial think - tank says the fate of US coal should serve as a warning to investors in other fossil
fuel markets worldwide who fail to prudently read a structural shift away from hydrocarbons and blindly continue to invest in
assets that are in increasingly in danger of
becoming stranded.
«Efforts to stay within a carbon budget, increase
fuel efficiency, reduce costs and improve air quality mean that if capital continues to flow into oil sands, the projects risk
becoming stranded
assets», says Carbon Tracker's research director, James Leaton.
The US has the greatest financial exposure, with $ 412 billion of unneeded fossil
fuel projects to 2025 at risk of
becoming stranded
assets.
Shell has previously dismissed those, such as Bank of England governor Mark Carney, who have warned that fossil
fuel assets could
become stranded and worthless in the face of climate action.
Further analysis has identified the fossil
fuel reserves and resources at risk of
becoming economically «stranded
assets» due to a low - carbon energy transition.
In light of Carbon Tracker's «Wasted capital and stranded
assets» analysis and the scale of unburnable fossil
fuel assets it revealed, there is a clear need for markets to
become more «climate literate».
One of those potential risks with severe financial consequences is the concept of stranded
assets, which has
become particularly intertwined with yet - unused carbon
assets and fossil
fuels.
The analysis finds that expanding fossil
fuel reserves does even more damage than putting the global climate in danger; exploration financing by the World Bank risks locking developing countries into loan commitments for resources that will likely
become stranded
assets if policies are implemented to meet agreed climate goals.
«Some of our stakeholders are concerned about the future of our fossil
fuel reserves; in particular that they may
become stranded
assets,» Glasenberg wrote.
While stranded
assets can apply to anything at risk for premature write - downs, this concept has
become particularly intertwined with the «stranding» of fossil
fuels reserves.
More broadly, companies across the energy industry that are heavily invested in fossil
fuels increasingly have
become a target for shareholder proposals, largely due to the potential emerging risk of fossil
fuel's stranded
assets.
The US has the greatest financial exposure with $ 412 billion of unneeded fossil
fuel projects to 2025 at risk of
becoming stranded
assets, followed by Canada ($ 220bln), China ($ 179bln), Russia ($ 147bln) and Australia ($ 103bln).
But as leaders are
becoming increasingly wary of their carbon output, how much attention will be paid to the emerging risk of fossil
fuel's stranded
assets?
In the fossil
fuel industry, for example, the term increasingly used to signify the long - term risk associated with oil and gas that may
become much more expensive to exploit is «stranded
assets.»
Still, with an increasing number of economists warning of fossil
fuel investments
becoming «stranded
assets», there's a sound economic case to be made for divestment.
«Efforts to stay within a carbon budget, increase
fuel efficiency, reduce costs and improve air quality mean that if capital continues to flow into oil sands, the projects risk
becoming stranded
assets.»