Energy secretary Ed Davey has recently gone on the record to state that the world’s current actions to focus on renewable and other energy sources may put pension funds tied up in fossil fuel investment at great risk.
Ed Davey stated that in the near future, fossil fuel may become a sub-prime asset instead of the primary fuel for the masses. He stated that global actions in light of climate change are altering the demand for fossil fuel, thereby threatening the reliability of the future in fossil fuel investments.
This goes in line as his first comment regarding the “carbon bubble” that states fossil fuel investment is currently overvalued as many are no longer used due to climate change reformations.
Fossil fuel investment not as secure as it was previously
In his statement to Telegraph, Mr. Davey stated that it is now a concern for pensioners investing in banks or companies that rely on fossil fuel assets. Within the next few decades it seems quite likely that the value of coal and oil will drop as more and more companies and countries are switching to green alternatives.
The world is quickly making changes to reduce carbon emissions and low-carbon technology is quickly becoming a requirement in many places across the globe. Just about every nation is aware that drastic changes need to be made in order to keep the global warming rate limit at 2oC or 3.6oF.
These drastic changes include the reduction of carbon emission therefore reducing the use of coal, coal seam gas, oil, and other heavy pollutant energy sources. Just this week the world’s nations are holding a global energy committee in Lima to agree upon a global carbon emission goal.
Ed Davey confirms fossil fuel investment will continue to drop
Ed Davey noted that for the time being fossil fuel investment is still necessary as the world is still making the transition to green alternatives but as each year passes by, the value of coal and oil are quickly dropping. Companies should start looking into protecting the investments made by their pensioners.
Unfortunately, many energy companies and providers such as Shell are not taking the time to consider the fact they may be creating an unsustainable carbon bubble. These companies are merely shrugging the issue off their shoulders as if the value of coal and oil is only going to go up.
Price parity across the nation in the near future
However, studies are already showing that the value of coal and oil are dropping as the cost for renewable sources such as solar and wind energy is dropping. As a matter of fact, just this 2014 there have been reports of places all over the United States showing price parity.
By 2016 it is very likely that the cost of electricity produced by solar PV installations will become even cheaper than the cost from the grid using coal and coal seam gas. By that time the value of fossil fuel investments will virtually become non-existent.
Ed Davey points these out in his latest statement regarding fossil fuel investment and he encourages energy providers to start working on covering the assets of pension funds invested in their businesses. Otherwise, it is very likely that the world will see another sudden widespread economic crash as pensioners lose out what they have invested.
