Oil, coal and gas soon worthless?

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Parent Category: Africa and The World

Category: The World

Created on Monday, 22 December 2014 00:00

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Oil, coal and gas soon worthless?

Bankers and investors are questioning whether it's worthwhile to invest in fossil fuels, especially in light of new climate agreements that could leave the materials in the ground forever.

Governor of the Bank of England Mark Carney's letter to the Environmental Audit Committee of the British parliament in late October 2014 fueled the debate over combustion of fossil fuels. He argued that to manage global warming, and avert climate disaster, such energy reserves should stay in the ground.

Joan Walley, who heads the Environmental Audit Committee, told the Financial Times that investors should closely watch for what effects climate treaties could have on fossil fuel reserves.

"Policymakers and now central banks are waking up to the fact that much of the world's oil, coal and gas reserves will have to remain in the ground unless carbon capture and storage technologies can be developed more rapidly," Walley said.

Increasing momentum to divest

Exactly that seems to be happening, as ever more financial actors contemplate divesting from fossil fuels.

World Bank President Jim Yong Kim earlier this year encouraged governments and business to consider withdrawing funding from oil, gas and coal companies. And the World Bank in November announced it will only fund coal projects in developing countries in extreme cases.

"Climate change is threatening assets," said Georg Kell, director of UN Global Compact in an interview with DW. And investors are beginning to grasp this, he added.

A further example is German energy company E.ON, which recently decided to exclusively develop renewable energy sources.

Date 22.12.2014

Author Hannah Fuchs / sad

Source: Deutsche Welle