Investment Falters as Fossil Fuels Face ‘Perfect Storm’

The world’s investors – both big and small – think primarily in terms of making good returns on their money.  And, over the years, investing in the fossil fuel industry has been considered a safe bet.

Yet maybe, just maybe, attitudes are changing – and fairly profoundly – as financial analysts warn that the industry faces “a perfect storm” as it enters 2015.

The Carbon Tracker Initiative (CTI), a London-based financial thinktank, analyses the energy industry and lobbies to limit emissions of climate-changing greenhouse gases.

On one side, CTI says, the industry is being buffeted by a crash in oil prices and a drop in demand.  On the other, there’s the threat of increasing regulation aimed at cutting GHG emissions and a worldwide growth in renewable forms of energy.

Cool reception
Anthony Hobley, CTI’s chief executive, says investors are realizing that the energy world is changing.

“At one stage, when we talked to investment firms about the risks of investing in fossil fuels we were given a cool reception,” Hobley told Climate News Network.

“Now we are being invited to brief the big investment funds.  Investors have an enormous amount of power – they are weighing up the risks of investing in fossil fuels and wondering just how safe their money is.”

The CTI has long warned of the dangers of a “carbon bubble”, with investments in fossil fuels becoming ”stranded assets” due to the imposition of stricter regulatory controls on emissions and the widespread adoption of renewable energy.

“The carbon bubble is not going to burst in 2015,” Hobley says.  “The transition from fossil fuels to other forms of energy is going to take place over several decades.

“But a combination of more regulations, new technologies, the falling price of renewable energy, and the need for a more efficient use of resources, is making investors rethink their investment strategies.”

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