On Tuesday, at 2pm EDT, Al Gore’s Climate Reality Project will kick off a live-stream, multimedia event. It will explore how we are all already paying the cost of carbon pollution — and what we can do about it. Details and webcast here.
Our Nobel prize-winning former vice president has been giving interviews in the days leading up to the 24 Hours of Reality event. Here Gore talks about the financial and investment implications of the fact that we must leave most fossil fuels in the ground if we are to preserve a livable climate:
As Gore puts it:
“There are $7 trillion worth carbon assets on the books of multinational energy companies…. The valuation of those companies and their assets is now based on the assumption that all of those carbon assets are going to be sold and burned. And they are not. The global scientific community has just reaffirmed that No more than one-third can ever possibly be burned without destroying the future.”
He likened the “absurd overvaluation” of the stock prices of fossil fuel companies to that of subprime mortgages before the economic crash. He added:
This carbon bubble is going to burst…. People can make short-term profits by playing the psychology of the markets. But if you’re a long-term investor and you do not take into account the stranded-assets potential for carbon-based equities and debt instruments, in my view you’re making a mistake.
On a phone call last week, Gore argued that because the carbon bubble must burst, divesting endowments from fossil fuel companies was not just the morally right thing to do for a university, foundation or pension fund — it was was financially smart move for any such long-term investor. I’ll have more to say about divestment in a subsequent post.