Why high-carbon investment could be the next sub-prime crisis
This article by Ben Caldecott analyses a report publish on Monday that reveals this risk.
More money is flowing into clean technologies than ever before – a record £150bn of investment last year – but money is also still pouring into coal, oil, gas, mining and other high-carbon sectors at a pace that severely undermines our efforts to tackle climate change and other environmental challenges.
Judging from many recent high-carbon endorsements, “let the good times roll” appears to be the tune to which the high-carbon incumbents across the world are dancing. The implications of locking in high-carbon investments are huge and long term.
I share Ben’s view that the future does not belong to the old high-carbon economy – whether that’s because of climate change, energy security or progress – and that policy and technology will over time significantly reduce the returns from high-carbon sectors while increasing returns from low-carbon ones, then long-term bets on high carbon sectors seem irrational. They are made even more irrational by the fact that these bets will in themselves feed a vicious circle that increases the odds of entire investment portfolios being hit negatively by greater climate and environmental risks.
There’s a contraddiction here, isn’t there?