Friday 20 Jan 2012 @ 15:20
WiredGov Newswire (news from other organisations)
WiredGov Newswire (news from other organisations)
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Carbon Tracker & WWF: Coal occupying the London Stock Exchange
A new report revealing the massive amounts of global coal reserves listed on the London Stock Exchange has been described as the next subprime crisis facing the City.
The report, by Carbon Tracker supported by WWF-UK, shows that the London Stock Exchange has accumulated the equivalent of 400 times the UK’s total annual CO2 emissions from coal, or 44.56 GtCO2. It argues that through pension plans and savings, UK investors are exposed to significant risk as coal, the most carbon-intensive of all fossil fuels, faces tightening emissions regulations around the world.
As the recent International Energy Agency (IEA) World Energy Outlook highlighted, only a fraction of currently-listed fossil fuel assets can be exploited if climate change is to be successfully kept within safe limits. The sub-prime mortgage crisis caught investors out because the assumption that house prices would keep going up proved to be false. The report says that, if the market continues to believe there are no limits to coal-based emissions and brings more coal to London, both investors and the planet will suffer.
James Leaton, project director of the Carbon Tracker Initiative, said: “Judging by its short-termist approach to backing high-carbon fossil fuel investments around the world, the City seems to be in complete denial about climate change. The capital markets need to recognise the paradox of continuing to back fossil fuels whilst also continuing to invest in sectors and economies vulnerable to climate change.”
Half of the huge coal reserves owned by companies listed in London are supplying developing economies in China, Russia, India and South Africa. London is the financial centre of choice for coal mining companies, with new companies such as Bumi, Glencore, and Evraz coming to raise capital in the City. With natural resources companies now making up a third of the value of the FTSE 100, London has a high concentration in this sector. There is currently no limit to how much coal can be owned by UK listed companies, so investors have no protection from coal reserves becoming stranded assets.
Keith Allott, head of climate change at WWF-UK, said: “This report is particularly timely right now, as the recent UN climate talks in Durban were looking at issues such as finance and ways to increase the ambition of emission reduction efforts. If just a fraction of the money that continues to be pumped into fossil fuels was redirected into clean renewable energy investments the world would start to make significant progress in tackling climate change.”
Investment banks are currently preparing to offer a significant stake in 5 billion tonnes of Mongolian coal to be listed in London. State company ETT aims to raise £3billion by offering 30% of its equity overseas. Most investors follow the market, either through passively tracking it or benchmarking against it. Currently they will have more carbon added to their portfolio when this company lists, without anyone questioning their exposure to systemic risk.
Notes to editors
1. This research follows Carbon Tracker’s global analysis of the carbon bubble in July 2011, which demonstrated that only 20% of the world’s proven fossil fuel reserves can be burnt by 2050 if we are to have an 80% chance of staying below 2 degrees of global warming. Available at http://www.carbontracker.org/carbonbubble
2. The IEA confirmed that reserves exceed the global carbon budget in its World Energy Outlook 2011. Extract available at: http://www.carbontracker.org/news/iea-recognises-the-carbon-bubble. Full report available at: http://www.worldenergyoutlook.org/
3. Erdenes Tavan Tolgoi, (ETT), the Mongolian state-owned natural resources company has been in talks to raise £3billion by offering 30% of its equity overseas. The four investment banks currently selected to lead and arrange the share offering are Deutsche Bank, BNP Paribas, Goldman Sachs and Macquarie Group. The Tavan Tolgoi mine is estimated to have at least 5 billion tonnes of coal reserves. More information available at: http://online.wsj.com/article/SB10001424052748703842004576163412167115364.html
4. The Carbon Tracker Initiative and WWF-UK were signatories to an open letter to the Bank of England today, as part of a coalition of leading businesses, NGOs and universities urging the Bank to investigate how the UK's exposure to polluting and environmentally damaging investments might pose a systemic risk to the UK financial system and prospects for long term economic growth: http://www.carbontracker.org/boeletter
For further information, please contact:
James Leaton, project director, Carbon Tracker Initiative, Tel: +44 (0)7841 570657, email: jleaton@carbontracker.org
George Smeeton, senior press officer, WWF-UK, Tel: +44 (0)1483 412 388, Mob: 07917 052 948, email: GSmeeton@wwf.org.uk
As the recent International Energy Agency (IEA) World Energy Outlook highlighted, only a fraction of currently-listed fossil fuel assets can be exploited if climate change is to be successfully kept within safe limits. The sub-prime mortgage crisis caught investors out because the assumption that house prices would keep going up proved to be false. The report says that, if the market continues to believe there are no limits to coal-based emissions and brings more coal to London, both investors and the planet will suffer.
James Leaton, project director of the Carbon Tracker Initiative, said: “Judging by its short-termist approach to backing high-carbon fossil fuel investments around the world, the City seems to be in complete denial about climate change. The capital markets need to recognise the paradox of continuing to back fossil fuels whilst also continuing to invest in sectors and economies vulnerable to climate change.”
Half of the huge coal reserves owned by companies listed in London are supplying developing economies in China, Russia, India and South Africa. London is the financial centre of choice for coal mining companies, with new companies such as Bumi, Glencore, and Evraz coming to raise capital in the City. With natural resources companies now making up a third of the value of the FTSE 100, London has a high concentration in this sector. There is currently no limit to how much coal can be owned by UK listed companies, so investors have no protection from coal reserves becoming stranded assets.
Keith Allott, head of climate change at WWF-UK, said: “This report is particularly timely right now, as the recent UN climate talks in Durban were looking at issues such as finance and ways to increase the ambition of emission reduction efforts. If just a fraction of the money that continues to be pumped into fossil fuels was redirected into clean renewable energy investments the world would start to make significant progress in tackling climate change.”
Investment banks are currently preparing to offer a significant stake in 5 billion tonnes of Mongolian coal to be listed in London. State company ETT aims to raise £3billion by offering 30% of its equity overseas. Most investors follow the market, either through passively tracking it or benchmarking against it. Currently they will have more carbon added to their portfolio when this company lists, without anyone questioning their exposure to systemic risk.
Notes to editors
1. This research follows Carbon Tracker’s global analysis of the carbon bubble in July 2011, which demonstrated that only 20% of the world’s proven fossil fuel reserves can be burnt by 2050 if we are to have an 80% chance of staying below 2 degrees of global warming. Available at http://www.carbontracker.org/carbonbubble
2. The IEA confirmed that reserves exceed the global carbon budget in its World Energy Outlook 2011. Extract available at: http://www.carbontracker.org/news/iea-recognises-the-carbon-bubble. Full report available at: http://www.worldenergyoutlook.org/
3. Erdenes Tavan Tolgoi, (ETT), the Mongolian state-owned natural resources company has been in talks to raise £3billion by offering 30% of its equity overseas. The four investment banks currently selected to lead and arrange the share offering are Deutsche Bank, BNP Paribas, Goldman Sachs and Macquarie Group. The Tavan Tolgoi mine is estimated to have at least 5 billion tonnes of coal reserves. More information available at: http://online.wsj.com/article/SB10001424052748703842004576163412167115364.html
4. The Carbon Tracker Initiative and WWF-UK were signatories to an open letter to the Bank of England today, as part of a coalition of leading businesses, NGOs and universities urging the Bank to investigate how the UK's exposure to polluting and environmentally damaging investments might pose a systemic risk to the UK financial system and prospects for long term economic growth: http://www.carbontracker.org/boeletter
For further information, please contact:
James Leaton, project director, Carbon Tracker Initiative, Tel: +44 (0)7841 570657, email: jleaton@carbontracker.org
George Smeeton, senior press officer, WWF-UK, Tel: +44 (0)1483 412 388, Mob: 07917 052 948, email: GSmeeton@wwf.org.uk
