Fossil Fuel Assets In Danger Of Being Stranded

Last week in New York, the information provider Bloomberg unveiled a new product – a tool to allow investors to calculate how much of their money is tied up in assets that are “stranded” because they are carbon-intensive and therefore likely to be hit by tighter regulations, carbon prices or other constraints.

The move reflects the increasing concern of investors that climate change, and in particular the measures that governments will take to tackle it, could create a whole new class of stranded assets. The danger is that the coal, oil or gas reserves that make up the bulk of some companies’ valuations are not as valuable as companies or investors think because they will not be allowed to exploit them.

At the macro level, the International Energy Agency’s World Energy Outlook 2013 highlighted the danger – current energy consumption puts the world on course for an increase in average temperatures of 3.6°C, far in excess of the 2°C the international community is aiming for. To have any hope of meeting the 2°C, we need to leave two thirds of current fossil FOSL -1.22% fuel reserves underground, the IEA says.


More: http://www.forbes.com/sites/mikescott/2013/12/11/fossil-fuel-assets-in-danger-of-being-stranded/