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April 19 News: When Will The Carbon Bubble Pop, Costing Fossil Fuel Investors $6 Trillion?

By Ryan Koronowski

"April 19 News: When Will The Carbon Bubble Pop, Costing Fossil Fuel Investors $6 Trillion?"

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Our thoughts and prayers remain with the public safety officers and citizens of Boston.

A new study said fossil fuel investors could face a $6 trillion “bubble” as nations begin to regulate carbon pollution. [Bloomberg]

Investors in carbon-intensive business could see $6 trillion wasted as policies limiting global warming stop them from exploiting their coal, oil and gas reserves, according to a report.

The top 200 oil, gas and mining companies spent $674 billion last year finding and developing fossil fuel resources, according to research by the Carbon Tracker Initiative and a climate-change research unit at the London School of Economics. If this rate continues for the next decade some $6 trillion risks being wasted on “unburnable” or stranded assets, according to the report, released today.

Banks, funds and institutional investors are seeking clarity from government and central banks about how greenhouse — gas emissions may affect the value of their investments. The Bank of England said last year it will evaluate whether the U.K.’s exposure to investments in polluting industries poses a risk to financial stability after a group of more than 20 investors called for a such a probe.

If the markets carry on regardless, with the regulators looking the other away, they’re just asleep on their watch,” James Leaton, research director at Carbon Tracker, a project by non-profit Investor Watch, said in an interview in London. “The longer it goes on, the bigger the bubble will get.”

Chevron is lobbying to undercut California’s groundbreaking fuel efficiency rule that it helped to write in 2007. [Bloomberg]

At the only federal public hearing on the Keystone pipeline before President Obama decides whether to allow it, almost a thousand people showed up to argue for and against the project. [Washington Post]

The Global Adaptation Index, a tool showing which countries are best prepared to deal with extreme weather caused by climate change, will now be housed at the University of Notre Dame. [South Bend Tribune]

Western Spain plans to build the third-largest solar power plant in the world. [CleanTechnica]

Senator Tim Scott was the only member of the Senate Energy and Natural Resources Committee to vote against approving Energy Secretary nominee Ernest Moniz. [New York Times]

Expect the Energy Department to make decisions on natural gas export applications “soon.” [The Hill]

How solar power can be used to make natural gas power plants more efficient — and if it should be used to do so. [EarthTechling]

World Bank President Jim Yong Kim: “If we have any hope of keeping climate change below two degrees celsius, the peak year of carbon emission has to be 2016. So the challenge is right in front of us.” [PBS Newshour]

Among other things, Bitcoins may have an environmental impact. [CleanTechnica]

‹ Governor LePage: Maine Wind Turbine Runs On ‘A Little Electric Motor That Turns The Blades’

Fast-Growing U.S. Solar Industry Now Employs Over 119,000 Led By California, Arizona And New Jersey ›

44 Responses to April 19 News: When Will The Carbon Bubble Pop, Costing Fossil Fuel Investors $6 Trillion?

  1. Leif says:

    There is no such thing as clean coal. Ship it over to China “WE the People” still get the pollution and the climatic disruption, the ecocide fossil barons still get the profits.
    Hell, I have a $120/T charge for home garbage, $50 for compost makings! Waste water fees, even “rain run off” is not free to this person. (Guide lines here?) Corpro/People deserve a bulk rate of free? They piddle all over themselves at the thought of $25/ton for toxins! In fact they get billion $$$ tax subsidy support in the process! Get real… Try throwing 19 pounds of paper cups out the car window for each gallon of gas you consume and report! Corporations are people now yet don’t respect the fiduciary common law of not polluting your neighbors land. For profit or otherwise!
    The GOP do not fund abortion. Fine. A precedent. Why must I fund, with my TAX DOLLARS, the ecocide of the PLANET!
    What is a fair price to dump tons of toxins in the pristine waters and air of the commons? I seldom see that question asked, much less answered. Ain’t we talking real money here?
    Corporations are “People” now. Does not “WE the PEOPLE” mean ALL of us?
    Stop profits from the pollution of the commons.
    Humanity deserves nothing less! I demand NOTHING LESS!
    Both power and money have been conscripted by the ecocide fossil Barons… Distributed Green Energy gives both power and money back to “We the People!”

    • Barry says:

      Please sober up before commenting :)

    • kermit says:

      If we tallied up the cost of environmental damage globally per year, I wonder what the share would be for each fossil fuel baron? If I were king, I would send them the bills and include the cost of proper clean up. Freeze their assets until all accounts were paid up.

      Sigh. I know that they will simply retire, all the richer, when they have to, with no other responsibility, let alone punishment.

  2. Bill says:

    It is really worth reading the linked article on Bloomberg on Chevron. It speaks volumes on how enhancement of capital is the deciding factor on what projects to fund. Chevron participated with the California state government to write the low-emissions law and now they are undercutting it because the biofuels program does not generate the profitability desired. This is when their profits are up. Groups like Chevron do have the expertise, equipment and capital to push biofuels – we sorely need a replacement for gasoline – but part of their function in society is to enhance capital (profit) – which does not bode well for long term and low profit research.

    • Mulga Mumblebrain says:

      Capitalism requires profit maximisation, and to Hell with ‘externalities’ like other people, their lives and the habitability of this planet for our species. It is one of the primary reasons that capitalism is utterly antithetical to life.

  3. Mike Roddy says:

    Not only should we not care what happens to fossil fuel executives and investors, we should hope that they experience a little hardship for a change. They are already wealthy, and their current fight is over whether they’ll be able to redecorate their third homes in the Hamptons, or take Scotland golf junkets and add to their art collections.

    When the full horror of what their products have wrought becomes even more evident, they should count themselves fortunate to avoid confiscation and imprisonment. Their actions in the next decade will determine that.

    • Joan Savage says:

      Who owns Big Oil?
      Here’s a breakdown:
      http://www.whoownsbigoil.org/

      I’m getting tired of having to bring this up over and over again, but toppling Big Oil is like toppling Enron, it would take a lot of small investors’ hopes for a secure retirement down with it. The public education has to be towards the pension funds, mutual funds and IRAs holders to urge them to move out of the oil investments.

      • Mark E says:

        If pensions dump carbon stocks without shaming the consumers I plan to pick up those stocks as their price drops but product demand stays high.

        I’ll send the dividend checks to 350 and American Progress, of course.

      • prokaryotes says:

        Interesting, and that irony that people invest into their future by pushing fuel burning in one way or another. Thanks for sharing the link!

      • catman306 says:

        “The public education has to be towards the pension funds, mutual funds and IRAs holders to urge them to move out of the oil investments.”

        How can this be done?

        Do they want higher quarterly dividends or a future for their kids?

      • Mulga Mumblebrain says:

        Joan, no-one under fifty or so is going to see more than about a dime in the dollar of their pensions because, when the latest bubble bursts, or the next one (although I think the current one is big enough to finish the system off) pensions are going to be gutted by falling stockmarkets, State pension reductions as in Greece and Ireland, repudiation of obligations by business and straight confiscation, as in Cyprus, only on a larger scale. That’s without taking the consequences of ecological collapse into account, or general social breakdown, waves of desperate refugees etc.

  4. fj says:

    Yep,

    The fossil fuel industry is seriously exposed to climate change and should smarten up to help instead of hinder the transition.

    Rapid climate change build out will surely benefit from everyone on board.

    • MarkF says:

      this makes sense to me:

      Maria Gunnoe:

      “”Companies are going for the jugular now. They know they are running out of time and will be replaced – eventually – with renewable energy. It’s time to go get ‘em. We need to show the world we are serious about this.”

      Read more: http://www.rollingstone.com/politics/lists/the-fossil-fuel-resistance-meet-the-new-green-heroes-20130411/maria-gunnoe-the-mountaintop-warrior-19691231#ixzz2QvIdG8aN
      Follow us: @rollingstone on Twitter | RollingStone on Facebook

      • fj says:

        The fossil fuel industry has always been like this.

        Not sure what you are proposing to do to show them that you are serious.

        What this post indicates is that there is a fossil fuel bubble just like the internet and housing bubbles and pretty soon the value of fossil fuels will drop precipitously because they will be replaced by high efficiency and clean energy with better benefits at lower costs.

        The financial collapse based on the heavy devaluation of fossil fuels will be very difficult to stop; which will be a good thing except that it will not be a good thing for the economy to tank because a lot of people will lose money; and there must be strategies for softening the blow to the general population; yet retain the very good outcome that civilzation is rapidly being weened of fossil fuels.

        • Mulga Mumblebrain says:

          fj, in fact, going on all recent evidence, when the blow falls as the share-market implodes, it will not be ‘softened’ as it falls on the plebs. It will be hardened in fact, as neo-liberal capitalism follows its habitual path of protecting the rich and immiserating the many to pay for the damage that the rich’s greed and speculations have caused.

        • fj says:

          Society has to advance suppression of our inner demons and further empower our better angels.

          This might be simpler than now seems possible.

        • MarkF says:

          Being serious….

          Maria Gunnoe, Goldman environmental prize winner:

          “In 2004, Gunnoe, a medical technician by training and former waitress, began volunteering with many local advocacy organizations and then working for the Ohio Valley Environmental Coalition (OVEC) to educate her neighbors about the environmental dangers of mountaintop removal. She organized monthly Boone County meetings, and soon provided community trainings on how to read mining permits, write letters to the editor, interface with the media, and protest using nonviolent methods. Gunnoe also created neighborhood groups to monitor coal companies for illegal behavior and to report toxic spills. She has encouraged other residents to speak at hearings about their concerns over mountaintop removal.

          In March 2007, OVEC and partner groups won a federal lawsuit against the Army Corps of Engineers that repealed mountaintop removal valley fill permits in southern West Virginia granted without adequate environmental consideration, and banned issuance of new permits.”

          http://www.goldmanprize.org/2009/northamerica

        • fj says:

          It is still not clear what you are proposing.

          The game plan must be that we go net zero as fast as possible and restore the natural services required to survive.

          More simply, we stop doing awful things to ourselves and repair the damage we have done.

  5. Jason Miller says:

    Climate change is warming the Chesapeake Bay killing the bay grasses that keep the water clear, absorb pollution as well as shelter fish and crabs.

    http://www.timesdispatch.com/news/state-regional/chesapeake-bay-grasses-decline-for-third-year-in-a-row/article_0d53e18b-337d-5b75-958d-cda0959b7548.html

  6. Carol says:

    RE: link above—”The Global Adaptation Index, a tool showing which countries are best prepared to deal with extreme weather caused by climate change, will now be housed at the University of Notre Dame. [South Bend Tribune]”

    This is an interesting link . . would like to hear what others think of this.

    One example from this index: the US ranks 60th out of 189 countries for current and future ability to provide clean water.

  7. BillD says:

    Good to see a major financial publication talking about the regulation and demise of fossil fuels. Just about everyone is an investor; for example, by investing in the S& P 500 index in a retirment account. Still it would be great if oil execs started factoring in the risk of a significant carbon tax and planning for such a future.

    • Leif says:

      Every one is an investor and most small investors lose the fastest. It is easy to make pipelines safe. Pump water not poison. The only thing that makes fossil products less expensive than even high end bottled water today, and the ecocide fossil industry rich, is because the fossil industry is blessed with a system of “socially enabled capitalism” that is holding the bag for the copious costs of health and environmental degradation.

      Stop profits from the pollution of the commons and the madness will end. Many hands make light work. Please help. Future generation of all life will thank you.

    • Lou Grinzo says:

      Perhaps I’m being too optimistic here (hey, it had to happen once), but I’m increasingly of the opinion that there might actually be a silver lining to the recent mortgage/financial meltdown: It happened recently enough that financial writers and analysts are looking for other bubbles, so the immense carbon bubble has got their attention.

      This feels like an opportunity for activists to push a very mainstream-friendly message: Look, we know climate change is Really Bad, which means we have to avoid burning a lot of coal, oil, and natural gas, and that means a LOT of little investors and their millions of 401K accounts, are suddenly exposed to big losses. The message should be: We can make this transition somewhat orderly and without imploding those investments, or we can let the market drive right off a cliff in a way that will make the mortgage meltdown look like a 0.1% DOW correction.

      • Mulga Mumblebrain says:

        Lou, the Central Banks of the West are confecting money out of thin air like there is no tomorrow (perhaps they know something)and it ain’t being wasted on productive investment (too low a rate of return) but is going straight into multiple speculative bubbles, as if the kleptocrats have learned nothing. The new bubbles are pretty big already, but the trillions keep on flowing, interest rates are near zero, inequality grows daily, wages stagnate, consumers are more mired in debt than ever, and we are all going to live happily ever after-not!

        • Solar Jim says:

          Its even more perverse than “central banks” printing money for the one percent, who then place tens of trillions in non-tax jurisdictions. The $700 billion or so annually spent for “fossil fuel development” is the same as annual global public subsidies for the same. This would seem to indicate a problem of nation-state policy corruption, effected via an ideology of globalized corporatism serving those policy agendas.

          The economics, in addition to the “fuel” substances themselves, seem rather explosive to me.

  8. prokaryotes says:

    Floodwaters rise towns rush to stack sand bags after spring storms deluge nation’s midsection

    ST. LOUIS — The Mississippi River quickened its ominous rise on Friday after parts of the Midwest were soaked by heavy rains this week, with some towns hurriedly building sandbag levees to protect homes and businesses.

    Several communities in Iowa, Illinois and Missouri could see near-record flooding this weekend — a sharp contrast to just two months ago when the river was at near-record lows. In central Illinois, a flood-swollen river topped a levee and prompted authorities to evacuate about half of a small town. http://www.washingtonpost.com/national/floodwaters-rise-towns-rush-to-stack-sand-bags-after-spring-storms-deluge-nations-midsection/2013/04/19/58ebb278-a8c2-11e2-9e1c-bb0fb0c2edd9_story.html

    These extremes and how fast they flip fop is just stunning.

    • Solar Jim says:

      Agreed. And Mother Nature is only warming up (as if we’re yet on the horizontal part of an exponential curve).

      All Of The Above full speed ahead. We’re going “Unconventional” (deep water drilling, hydraulic fracturing, tar sands mining, mountain top “removal,” etc.). It’s a great country with a great gov’mint.

  9. Mike Roddy says:

    IRA and pension fund managers will have time to wake up and divest. They can get out of a stock position in a matter of seconds.

    The “harming the little people” card has been played by the oil companies, and is dishonest and cynical, especially since they care for the public not at all. It’s hardly a reason to continue to burn fossil fuels.

    • Solar Jim says:

      It’s hardly a reason to identify them as “fuels.” Fuels for Fools, I say. What’s a little fossil carbonic acid gas among friendly nations? Mother Nature says just the opposite, after a billion years of sequestration in order to create our livable climate.

      Squandered.

    • Mulga Mumblebrain says:

      Another unbelievably cynical trope now doing the rounds of News Corpse rags and repeated at News Corpse’s unofficial radio arm, the Australian Broadcasting Corporation, is that talking of how climate destabilisation will affect the children of today as adults and their children, is a form of abuse of children. Using them for evil ‘watermelon”warmist’ attacks on our beloved capitalist economic system, that has created all that is wonderful on earth. The denialists start from a position of some advantage, having no moral qualms over how they go about their sordid business.

    • Paul Klinkman says:

      A fertilizer plant is a climate change issue. That’s a petroleum product exploding!

      Our Congress pays big subsidies for alkafuel, so farmers buy up megatons of petroleum-based fertilizers to put on their crops. In the end we would have been just as well off burning the original petroleum as the end-product corn alkafuel, but then huge absentee farmers wouldn’t have gotten their crop subsidy.

  10. Merrelyn Emery says:

    Finance and insurance have become steadily more difficult for carbon-risky projects and this international awareness of the carbon bubble is likely to be the straw that broke…This is social change in action, has been slow for a long time and then, suddenly, we reach that point of discontinuity. Once big money is involved, it’s all over bar the shouting, ME

  11. Paul Klinkman says:

    What is the greatest danger to their six trillion? Politics, followed by moral condemnation.

    If the pro-megadeath fossil fuel faction spends a mere 1% of their $6 trillion investment in political lobbying to make absolutely sure that they get the right political result, that’s $60 billion in political money. Are we ready for an extremely large fight, orders of magnitude larger than the tobacco battle?

    • Brian R Smith says:

      We don’t have a choice, so we had better have more effective organizations & and irrefutable arguments than they have money.

    • Mulga Mumblebrain says:

      As the steady erosion of civil and legal rights, and the huge growth in policing and surveillance powers and the personnel and equipment needed to enforce them, all in the name of the latest ‘War on X, Y, and Z’, shows, the authorities are ready for any resistance to elite rule. It will only take a convenient ‘outrage’ by some well-groomed ‘Green terrorist’ group, for the crackdown to begin. To survive the multiple ecological and economic/social crises bearing down on us requires that the system that caused them, neo-liberal ‘Free Market’ plutocratic, neo-feudal, capitalism must be replaced. The tiny and intensely class conscious elite who are the prime, if not sole, beneficiaries of our group suicide pact, will resist any change to their privileges and attack on their power, with any degree of force required. So this fight will not, as Mao observed, be a dinner-party.

  12. fj says:

    To repeat: The fossil fuel industry is very highly exposed to climate change. It is absurd that they have been denying it.

    Like that margarine commercial of old:

    “It’s not nice to fool mother nature.”

    Butter

  13. Joan Savage says:

    More on the carbon bubble, the Guardian’s article on the subject closes by quoting Jeremy Grantham:

    Jeremy Grantham, a billionaire fund manager who oversees $106bn of assets, said his company was on the verge of pulling out of all coal and unconventional fossil fuels, such as oil from tar sands. “The probability of them running into trouble is too high for me to take that risk as an investor.” He said: “If we mean to burn all the coal and any appreciable percentage of the tar sands, or other unconventional oil and gas then we’re cooked. [There are] terrible consequences that we will lay at the door of our grandchildren.”

    http://www.guardian.co.uk/environment/2013/apr/19/carbon-bubble-financial-crash-crisis

  14. fj says:

    I believe there is a law on the books that publically traded companies have to declare their exposure to climate change.

    Of course the analysis has to be better than for Keystone XL.

  15. fj says:

    And official analysis must jibe with public company analysis of climate change exposure.

    Also with major flood insurance changes to take effect in the next two years.

  16. fj says:

    Is it possible that a financial framework may be evolving to assist the transition; no matter how meager it may be at this time?