A study from accounting firm KPMG urges a close look at fossil fuel risks.

Jeremy Hobson: Well one place investors have turned to for safety is fossil fuels. They’ve been pumping their money into things like oil, natural gas, and coal. But a study out today says there may be a fossil fuel bubble.

Eve Troeh: Fossil fuels are a huge part of the financial markets. Pensions, mutual funds, governments — most big investors hold major stock in oil, coal and gas. The Carbon Tracker Initiative, along with accounting firm KPMG, says those investments may not be worth what we think.
(From the Marketplace Sustainability Desk, Eve Troeh reports.)

Olga Chistyakova: Because the risks of emissions from fossil fuel burnings are not taken into account when the valuation of the companies is performed.
(Analyst at Point Carbon)
She says investors won’t factor in the risk of greenhouse gas emissions on their own. Only tougher regulations would push them.

Cary Krosinsky: Bubbles tend to form when people ignore risks that could otherwise have been anticipated.
(Follows environmental risk at TruCost)
He says ignoring emissions could mean there’s a bubble in fossil fuels. Companies and investors that measure the risk now — and adjust accordingly — could be ahead of the curve.

Source:
Marketplace, The Unaccounted Risk Of Fossil Fuel Investments
July 11, 2011

Category: Commodities, Economy, Think Tank

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2 Responses to “The Unaccounted Risk Of Fossil Fuel Investments”

  1. romerjt says:

    The bubble will burst after a series of extreme weather events makes climate change obvious and undeniable, even to the skeptics. I wonder if any minds have been changed in Dallas – 34 consecutive days over 100 – or 113 in Memphis. A Google search of weather reports for the EVER, like coldest, cloudiest, driest EVER would be interesting.

  2. theexpertisin says:

    Fossil fuels, vital to our present and future growth, will be a catalyst for economic prosperity for a long time to come. I find it amusing that the ROW cajoles Europe and the United States to switch to alternative energy while almost everyone else keeps drilling and mining fossil fuels at a frenzied pace as a cheap energy source for their use. China is commissioning scores of new coal-fired plants, Cuba is beginning to deep-water drill (with little safety) at 13,200 feet fifty miles south of Key West to begin extracting the 5 billion barrels of proved oil reserves discovered around 2004, Brazil has billions of barrels, China is threatening military consequences in the South China Sea to secure billions of barrels of the black gold, Russia has it’s eyes set upon the Arctic for fossil fuel extraction. The roster on this score is endless.In short, we (and Euroland) are being played for fools in the energy game.

    I am a proud skeptic of any false prophet of doom, and I believe that there is no energy bubble, looking at The Big Picture over time. I also believe that after seeing pics of Al Gore’s seaside mansion in coastal California, climate change hubris may be manipulated by charlatans that make our banking CEO’s look angelic in comparison.