Outlook Palls for Fossil Fuel Investments

Like most central bank governors, Mark Carney, the Governor of the Bank of England, chooses his words carefully.

So the financial community – and government policy makers - sat up and took notice earlier this month when Carney, addressing a World Bank seminar on corporate reporting standards, said he was concerned about investments in fossil fuels.

“The vast majority of reserves are unburnable,” Carney said.

Tragedy of horizons

He warned companies, investors and policy makers that they need to avoid what he described as the “tragedy of horizons”, and to look further ahead to meet challenges such as climate change.

Investors are being repeatedly told that money sunk into fossil fuels is not only bad for the climate, but is also potentially seriously dangerous to financial health.

The fundamental idea espoused by a wide spread of influential voices – ranging from the International Energy Association (IEA) to finance funds that have many billions of dollars worth of investments under their control - is that, in order to combat climate change, a large portion of the world’s remaining fossil fuel reserves must stay in the ground.

“Not more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2°C goal,” the IEA says.


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