(Photo courtesy of FT)
How much of the world’s fossil fuel reserves will eventually be burnt? That is the critical question that Martin Wolf asks in his insightful article in today’s Financial Times. His view is that, on current assumptions, ExxonMobil probably has it right in arguing that the oil industry won’t suffer from stranded assets, because the world won’t act on climate change in time. But one of the most interesting voices in this space is the Carbon Tracker Initiative.
My own bet in the climate casino is that Carbon Tracker are right to argue that investors will be hit – and that means our pensions will be hit – in a shorter timescale than many imagine. As for ExxonMobil, they may be perfectly within their rights to argue as they do. But it is very likely that future generations will treat companies that did the heavy duty anti-climate-change lobbying in recent years in the same way that they have treated the tobacco industry. Anyone investing for the long term should therefore be wary of backing those who produce coal, oil and tracked gas.
A decade or so ago, I had a very energetic exchange on this subject with ExxonMobil CEO Rex Tillerson, over the heads of 300 or so oil industry executives gathered in Stavanger, Norway. He denied his company was lobbying to stall climate change initiatives. I think the record shows different – and the picture will look grimmer still when the deep historical analysis is done.