Bloomberg New Energy Finance has a must-read piece for investors on how the smart money is beginning to notice the quicksand on which fossil fuel stock prices are built.
We reported back in April that BNEF said 70 percent of new power generation capacity added between 2012 and 2030 will be from renewable technologies (including large hydro).
Indeed, BNEF founder Michael Liebreich posed a good news, bad news story back then:
“By 2030, the growth in fossil fuel use will almost have stopped,” Liebreich told renewable-energy investors…. “We’re told that it needs to happen by 2020” in order to prevent irreversible climate damage. “That won’t happen. But by 2030, it pretty much will.”
Yes, homo “sapiens” will miss by just 10 years or so the window to avert catastrophic climate change — resulting in possibly hundreds of years of misery for billions and billions of people. The tragic irony is the fossil fuel industry is essentially doomed no matter what — but humanity wouldn’t be, if we were just a tad more “sapiens.”
We reported in August that a Goldman Sachs research paper concluded the “window for profitable investment in coal mining is closing” — same for for coal exports.
Now BNEF points out that much the same is true for oil investments:
Last month 70 investors representing $3 trillion of assets under management sent letters to oil-and-gas companies asking them to disclose plans for adapting to a world that may be edging closer to peak fossil fuels. That’s the point when humans stop increasing their annual burn – either because the environmental danger makes it too costly or because buildings and cars run more efficiently. BNEF says peak demand could happen in 2030.
The risk: Oil and coal companies worth more than $7 trillion may be sinking billions of dollars today into projects that will never make sense to finish.
A key point of this article is that it isn’t just enviros saying the days of fossil fuel are numbered. We have institutional investors, Goldman Sachs, Bloomberg New Energy Finance and many, many others in the financial industry:
In 2013, so-called carbon-asset risk “went from a conceptual possibility to a sort of near-and-present reality,” Nick Robins, head of the Climate Change Center at HSBC Holdings Plc in London, said in a phone interview. He wrote a research note in January valuing the risk of “unburnable reserves”: the oil and coal on companies’ balance sheets that will be too expensive to extract. “There is this undertow of demand destruction going on through technological improvement. That’s certainly not fully priced at the moment.”
And that’s without even considering the possibility of the world coming to its senses on the threat posed by unrestricted carbon pollution in time to avert the worst.
“The end is nigh” for global oil-demand growth, proclaimed a Citigroup report in March. Standard & Poor’s cautioned that a patchwork of policies that cut demand for fuels could lead to outlook revisions and downgrades in smaller oil-and-gas companies as early as next year, with a similar shock to the majors in 2016. Goldman Sachs’s advice to oil companies: “invest only in medium-/high-return projects, spend the rest of their cash on buybacks and focus on per share growth.” Translation: prepare to shrink the business.
Divesting from fossil fuels isn’t risky. Not divesting is.
This blog has become a place where I post articles that I find related to global warming - causes and effects, as well as a few other topics - related or not.
Jellyfish are like poster-boys of global warming changes - jellyfish are one species of animal that are doing very well. The increased acidity of the oceans, warmer waters, the decrease in predators as fish and other wildlife decline have all favored jellyfish. They seem to thrive on the fertilizers that people have been washing into the seas. Most animals do not.
I also like to post discoveries - especially discoveries that are being made out in space as people are able to see farther and farther galaxies and nebulas and supernovas. Even though I don't think that people will ever go live any of those places - I just like knowing that they are out there. It's part of keeping in mind that the earth and it's inhabitants are such a small part of what is going on in the universe.
I have another blog with posts on art and artists - it's called M'S IMPRESSIONS.