Unburnable Carbon - the impact of climate change on energy company values

Club Member Dave Carson gave a talk on the links between the growing concerns about climate change, the fossil fuel industry and the potential risk to pensions and investments.  

Dave used the four way test to review climate change

• Is it the truth? - yes - climate change is happening and it is caused in large part by human activity in burning coal, oil and gas.
• Is it fair to all concerned? No - we are already seeing the harm from extreme weather - floods, droughts, storms; the poor and the least developed countries have the fewest resources to deal with it
• Will it build goodwill and better friendships? No - there are already warnings conflict will arise from mass migrations as populations respond to droughts, floods, with more potential from sea-level rise
• Will it be beneficial to all concerned? No - mining for fossil fuels benefits many of us, while harming local populations and destroying the environment

The harm from climate change leads to the conclusion we need to de-carbonize our economies. Many organizations like the IMF, the World Bank, the International Energy Agency have identified that if we are to keep global warming below 2 degrees  (and all governments have signed up to this need) then we need to leave the majority of fossil fuel reserves in the ground. The problem is that all the large scale energy companies stock prices are based on full valuation of all their reserves. Is there a "carbon bubble" that might burst, stranding the assets and causing a collapse of the stock value?

Dave proposed some policies that we should all support to help mitigate the impact on us

• Support conservation policies and investments – the cheapest energy is the energy we save
• Support a carbon tax; only by providing people with financial incentives to reduce carbon emissions will we finally take action
• Support renewable energy in the form of wind, solar, geothermal, tidal and appropriate biomass

Dave also suggested reading some more and forming one's own opinion on this important subject, and provided links to a number of sources.