Sunday, January 26, 2014

The Fossil Fuel Gamble

$ 800 for each person on the planet is invested into fossil fuel companies through the global capital markets alone. That’s roughly 10% of the total capital invested in listed companies. The amount of money invested into the 200 biggest fossil fuel companies through financial markets is estimated at US$ 5.5 trillion.

By keeping their money in coal and oil companies, investors are betting a vast amount of wealth, including the pensions and savings of millions of people, on high future demand for dirty fuels. The investment has enabled fossil fuel companies to massively raise their spending on expanding extractable reserves, with oil and gas companies alone (state-owned ones included) spending the combined GDP of Netherlands and Belgium a year, in belief that there will be ongoing demand for dirty fuel.

Arctic oil drilling is possibly the ultimate example of fossil companies’ confidence in high future demand. Any significant production and revenue is unlikely until 2030 and in the meantime, Arctic drilling faces high and uncertain costs, extremely demanding and risky operations, as well as the prospect of heavy regulation and liabilities when (not if) the first major blowout happens in the region.

Those investing in coal and oil have felt secure seeing the global climate negotiations proceed at a disappointing pace.

Enough sunlight hits the earth’s surface in one hour to power humanity for one year. Scientists also know that 40% of solar energy lies unused in the near-infrared region of the spectrum, and thus, conventional silicon-based solar cells cannot harness it, thereby missing 40% of the sun’s energy. A number of companies are offering a new generation of storage systems to capture the power generated by home solar systems. Thus, a home with solar turns into an all-in energy source, night and day, rain or shine.
It is highly probable that oil & gas companies will get increasingly involved in ever-bigger ways over the coming years. They have little choice.

From here

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