Debate Heats Up on Risk of Frozen Fossil Fuel Assets

In a move that’s likely to cause consternation in some of the world’s most powerful corporate boardrooms, the Bank of England has disclosed that it is launching an inquiry into the risks fossil fuel companies pose to overall financial stability.

Mark Carney, governor of the UK’s central bank, has written to British Members of Parliament telling them that his officials have been discussing whether or not coal, oil and gas reserves held by the fossil fuel industry are, in fact, unburnable.

“In light of these discussions, we will be deepening and widening our inquiry into the topic,” Carney says.

The burning of fossil fuels releases hundreds of thousands of tonnes of climate-changing greenhouse gases into the atmosphere.

Catastrophic change
The idea is that if global warming is to be tackled and catastrophic climate change averted, such energy resources will have to be left where they are − under the ground. They will, in effect, become frozen or stranded financial assets.
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Carbon Tracker, a not-for-profit thinktank based in London, has been warning of what it sees as the dangers to investors and to the entire financial system of continued investment in the fossil fuel industry.

Vulnerability of assets
“The Bank of England has set a new standard for all central banks and financial regulators on climate risks by agreeing to examine, for the first time, the vulnerability that fossil fuel assets could pose to the stability of the financial system in a carbon constrained world,” Carbon Tracker says.

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