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Op/Ed by U of CA Professor: Expect financial fallout when the fossil fuel bubble bursts
Posted on 4/16/24 at 12:56 pm
Posted on 4/16/24 at 12:56 pm
quote:
Climate change — and the lack of timely, consistent action to address it — is driving the world toward a new financial crisis. Indeed, senior regulators are increasingly warning that this will cause a collapse similar to the 2008 Great Recession.
The head of the European Environment Agency recently warned that the European Union is at a “higher and higher” risk of systemic financial shock as the planet warms up. This follows similar alerts from U.S. Treasury Secretary Janet Yellen, President of the European Central Bank Christine Lagarde and Mark Carney, former governor of the Bank of England — as well as from financial experts at the London School of Economics’ Grantham Institute.
The danger is of a major “Minsky Moment” — a sudden and catastrophic plunge in asset values following a period of growth and stability. It takes its name from the economist Hyman Minsky, who understood that market optimism with inadequate regulation could push key assets like fossil fuels into a bubble of unjustified valuations. When these are corrected, investors would be stranded with insufficient returns, as we saw in 2008.
The global financial sector will eventually face such a moment as its underlying assets — from all sectors, not just carbon-intensive ones — face both physical risks from climate impacts and transition risks as economies adjust to stronger climate constraints and as governments take more muscular action to speed the transition to clean energy needed to keep the planet safe from the most catastrophic impacts of climate change.
quote:
The danger would arise, he said, unless there is a smooth energy transition, where the reassessment of fossil fuel energy asset values occurs gradually as clean energy replaces fossil fuels.
Yet over the ensuing decade, the fossil fuel industry has continued to delay the necessary energy transition and even convinced many people to falsely believe that climate change is not caused by burning fossil fuels.
Largely as a result, the world is on track for 2.5 to 2.9 degrees Celsius of warming (4.5 to 5.2 degrees Fahrenheit) — well past the 1.5 degrees Celsius (2.7 degrees Fahrenheit) guardrail. That’s the level at which warming will push the planet past self-reinforcing feedback loops and into tipping points with irreversible and catastrophic effects, which are projected to ultimately alter the climate so significantly it may no longer be habitable for life on Earth — including humans. There are signs this is already starting to happen.
The ongoing delay in a necessary transition away from fossil fuels means actions now must be accelerated. If we are to have a chance of staying relatively safe, fossil fuel emissions will have to be slashed by 43 percent by 2030 — threatening to strand significant investments. It also means that, if we are to have a chance of staying within sight of the 1.5 degrees Celsius guardrail, the fossil fuel industry must invest 50 percent of its annual capital expenditure in clean energy. Today, it invests an anemic 2.5 percent, while continuing to fund further exploration.
quote:
Like all economic transformations, this one will produce losers. Even pioneering climate-savvy investors need to watch for mini-Minsky Moments in which assets become uninsurable, then unviable, then crash. Yet addressing the climate crisis is a multi-trillion-dollar investment opportunity, and there will be more winners than losers in the net-zero climate-resilient transition.
Science-informed investors who race for the top should do everything they can to capture these opportunities and create market signals along the way for all industries. This will help protect investors and taxpayers in a time of volatility, accelerate the needed economic and energy transitions, and give us a better chance to restabilize the climate and financial systems before it’s too late.
LINK /
Posted on 4/16/24 at 12:57 pm to ragincajun03
in other words, get out of crypto
Posted on 4/16/24 at 1:01 pm to ragincajun03
These people are straight evil. They are the worst of the worst doomsayers out there that rely on unverifiable info to bring forth their own depopulation agenda. These people want death and destruction on a scale not seen
Posted on 4/16/24 at 1:01 pm to ragincajun03
quote:
restabilize the climate and financial systems before it’s too late.
That's democrat for make every car electric, take away all gas powered appliance, use nothing but wind and solar, and tax everyone into the 3rd world.
Posted on 4/16/24 at 1:02 pm to ragincajun03
Let’s say all of what he said is true (it’s not, but let’s pretend). The easiest solution to the clean energy need is to start approving Small Modular Reactors (SMRs). That’s 100% clean nuclear energy. But it makes too much sense for the government to do that. They want to eat up usable farmland with solar and wind farms.
Posted on 4/16/24 at 1:03 pm to btnetigers
Why does everyone scream electric cars are the answer? Where do we get the electricity to charge these damn cars? Texas can’t keep their AC turned on in a heat wave and are expected to be able to charge all these cars?
Posted on 4/16/24 at 1:07 pm to ragincajun03
These frickers are relentless. Suck my balls.
Posted on 4/16/24 at 1:11 pm to ragincajun03
The point of no return number just seems like bullshite no matter how they try to explain it. It's obvious we will pass it, then im guessing they'll move the goalposts
I guess if the right is pushing that we are gonna have a civil war, and the left is pushing we're all gonna die from climate change, I'll vote for the libertarian party that isn't pushing either
I guess if the right is pushing that we are gonna have a civil war, and the left is pushing we're all gonna die from climate change, I'll vote for the libertarian party that isn't pushing either
This post was edited on 4/16/24 at 1:13 pm
Posted on 4/16/24 at 1:14 pm to jscrims
quote:
Why does everyone scream electric cars are the answer? Where do we get the electricity to charge these damn cars? Texas can’t keep their AC turned on in a heat wave and are expected to be able to charge all these cars?
The narrative that we don’t have enough generating capacity to cover the needs and more isn’t really true. The main problem with electricity is once it is generated, it’s either used by the consumer or lost. This means energy market traders and transmission operators have to forecast the load for the day and dispatch enough generation to cover it. The forecasts leave slim margins for going over and in extreme events like last summer in TX or the winter storm in 2021, you get rolling blackouts as overloading the system results in the Northeast blackout in the 2010s. You lose an entire portion of the country.
If they did not operate with the slim margins they do, and run plants all the time, the cost increase would be astronomical. It’s also not that easy to bring a plant online at the flip of a switch. It takes a lot of time. That’s why the real answer is customer distributed generation like home or community solar, along with battery storage to eliminate the use it or lose it aspect, combined with SMRs across the system. If this were in place, the grid would have zero issues, but the government won’t take off the reins and let what needs to be done be done.
Posted on 4/16/24 at 1:17 pm to ragincajun03
quote:Way worse than that.
this will cause a collapse similar to the 2008 Great Recession.
Posted on 4/16/24 at 1:20 pm to ragincajun03
At this point you are either:
1). A Nationalist
or
2). A Globalist.
Think real hard, and real long about it.
1). A Nationalist
or
2). A Globalist.
Think real hard, and real long about it.
Posted on 4/16/24 at 1:21 pm to ragincajun03
quote:
Professor
this is where i stopped reading
Posted on 4/16/24 at 1:25 pm to ragincajun03
The only bubble we should be worrying about bursting is the consumer debt bubble.
US Consumers - Credit Card debt
US Consumers - Credit Card Interest Rates
US Consumers - Personal Savings
US Consumers - Credit Card Delinquency Rates
US Consumers - Credit Card debt
US Consumers - Credit Card Interest Rates
US Consumers - Personal Savings
US Consumers - Credit Card Delinquency Rates
Posted on 4/16/24 at 1:32 pm to Bard
quote:
The only bubble we should be worrying about bursting is the consumer debt bubble.
What about the next CDS bubble? Commercial real estate bubble?
Those + consumer debt bubble?
What if it all happened around the same time ?
Posted on 4/16/24 at 1:38 pm to ragincajun03
I almost wish a quick mini ice age to end all of this BS but they’d still just blame it on CO2.
Would freezing to death be worth proving these bastards wrong? Hmmm
Would freezing to death be worth proving these bastards wrong? Hmmm
Posted on 4/16/24 at 1:40 pm to 9Fiddy
Pretty obvious you never took (or failed) physics ...
This post was edited on 4/16/24 at 1:44 pm
Posted on 4/16/24 at 1:41 pm to TROLA
The easiest and most efficient and long standing solution is to decrease demand by decreasing population. A nuclear holocaust followed by nuclear winter would be a climatic reset in their eyes. Look how nature rebound almost seamlessly and miraculously after Chernobyl. It’s coming.
Posted on 4/16/24 at 1:42 pm to BeepBopBoop
It's like my profile picture says ...
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