G20 to assess ‘carbon bubble’ threat – media reports

United States, China, India, Russia, Australia, and Saudi Arabia to probe risks of stranded assets ahead of UN climate pact

Investors are putting pressure on oil companies to climate-proof their business plans (Pic: Shell/Flickr)

Investors are putting pressure on oil companies to climate-proof their business plans (Pic: Shell/Flickr)

By Ed King

G20 countries are investigating the financial risks posed by investments in fossil fuels that cannot be burnt if the world is to avoid dangerous levels of warming.

Trillions of dollars are being directed towards oil, gas and coal exploration projects across the world – from the Arctic to Australia.

But scientists say that two-thirds of fossil fuels need to stay under the ground to avoid temperature rises of beyond 2C, which could lead to more floods, droughts and rising sea levels.

According to the Daily Telegraph, the G20 has asked the Basel-based Financial Stability Board to examine how the banking sector will cope if and when climate regulations become tighter.

Nearly 200 countries are working on plans for a global carbon cutting pact, which is due to be finalised in Paris this December.

Leaked: EU confident plans for UN climate deal progressing 

“All member countries have agreed to co-operate or carry out internal probes, including the United States, China, India, Russia, Australia, and Saudi Arabia,” reports the paper.

“Diplomatic sources have told The Telegraph that the investigation is being pushed by France and is modelled on a review launched by the Bank of England last year.”

The UK’s central bank is due to report on its findings in July. The G20 meets in Turkey this coming November, two weeks before the Paris UN summit.

In the past six months Governor Mark Carney has twice warned that many fossil fuels will be “unburnable” if temperature increases are to be limited.

“The fact that this is spreading to the rest of the G20 suggests that early findings may have proved sufficiently serious to warrant broader study,” reasoned the Telegraph’s Ambrose Evans-Pritchard, its international business editor.

Analysis: What has the divestment movement achieved so far?

Earlier this month analysts at HSBC became the latest to warn of the dangers of investing in fossil fuels.

The bank released a research note advising how investors could manage their exposure to fossil fuel risks, which it said were “growing”.

Funds that maintained holdings in fossil fuel companies faced “reputational and economic risks,” it said.

A global campaign to urge leading foundations and high level investors to ditch their oil, gas and coal holdings also appears to be gathering pace, according to the Financial Times.

“Seven foundations, including three of the Sainsbury family’s charitable trusts, say they have decided fossil fuel companies are “no longer sound investments,” the paper reports.

Prince Charles, heir to the British throne, has also offered his support to the divestment movement, with sources telling the FT he has no fossil fuel investments.

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