Fossil Fuel Industry Risks Losing $33 Trillion to Climate Change

Fossil Fuel Industry Risks Losing $33 Trillion to Climate Change
The fossil fuel industry risks losing $33 trillion in revenue over the next 25 years as global warming may drive companies to leave oil, natural gas and coal in the ground, a Barclays energy analyst says.

(Bloomberg) - The fossil fuel industry risks losing $33 trillion in revenue over the next 25 years as global warming may drive companies to leave oil, natural gas and coal in the ground, according to a Barclays Plc energy analyst.

Government regulations and other efforts to cut carbon emissions will inevitably slash demand for fossil fuels, jeopardizing traditional energy producers, Mark Lewis, Barclays’s head of European utilities equity research, said Monday during a panel discussion in New York on financial risks from climate change.

His comments are part of a growing chorus calling for more transparency from oil and gas companies about how their balance sheets may be affected by the global shift away from fossil fuels. As governments adopt stricter environmental policies, there’s increasing risk that companies’ untapped deposits of oil, gas and coal may go unused, turning valuable reserves into stranded assets of questionable value.

“There will be lower demand for fossil fuels in the future, and by definition that means lower prices” Lewis said.

Stranded Assets

The meeting Monday was organized by the Task Force on Climate Related Disclosures, a group established last year by Bank of England Governor Mark Carney. It seeks to bring transparency and consistency to how companies warn investors about dangers they face from climate change. The group, led by Bloomberg LP founder and majority owner Michael Bloomberg, is drafting voluntary guidelines for companies to disclose risks related to coastal flooding, carbon-dioxide emissions and shifting global energy policies.

A “child with an abacus” can calculate that there are tremendous amounts of gas and oil that will need to be left in the ground, said Anne Simpson, investment director of global governance at the California Public Employees’ Retirement System, the largest U.S. public pension fund.

“Yet we have boards of directors who will not talk to their shareholders about this issue,” Simpson said.

To contact the reporter on this story: Joe Ryan in New York at jryan173@bloomberg.net To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Will Wade, Stephen Cunningham

Copyright 2016 Bloomberg News.

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RC Williams | Jul. 12, 2016
And if they have it wrong and the earth is in fact moving towards a significant cool down similar to the Dalton Minimum associated with the significant decrease in the sun's activity - how much do they stand to gain?

Don | Jul. 12, 2016
It appears to be wishful thinking on the part of Mr. Lewis that demand will go down anytime soon. The technologies to replace fossil fuels are not developed sufficiently to accomplish the conversion somewhat seamlessly. The world's economies will not allow large disruptions to force it otherwise.

Rick | Jul. 11, 2016
The moment they added a tax to global warming on a global scale and working on the states and federal government to follow these actions clearly paved the road that it is a complete lie. It is all about the money and the generation of yet more taxes ... carbon dioxide is not a pollutant; it is as natural as oxygen ... we have four seasons every year as always. Wake up America!

Randy Verret | Jul. 11, 2016
Seems like lots of folks are ready to tap dance on the grave of the fossil fuel industry. Problem is that energy usage will continue to increase worldwide and renewables will only make up a fraction of needed electrical generation. What scalable alternatives are suggested for transportation fuels? We are many decades away from phasing out oil & gas as it is essential in a myriad of products that support a modern lifestyle. Keep it in the ground? OK, then better keep it in the garage...

David Lammons | Jul. 11, 2016
The suggested loss to the fossil fuel industry will be small potatoes (compared) to the losses that support industries would be losing. This suggestion of losing the fossil fuel industry will be a total meltdown of the manufacturing industry of virtually every product produced, not only in support of the fossil fuel industry, but every product for living life around the world. It's going to be difficult to plant, harvest and sale the vegetables and grains needed to provide food to the world with nuclear energy.

Eric | Jul. 11, 2016
These appear to be self-serving conclusions based on the sources quoted. Demand will inevitably go down? We shall see...


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