Fossil fuel investment the next ‘subprime’ crisis: Gore

Trillions of dollars of investments in oil, coal and gas risked to become stranded assets similar to the real estate investments in the infamous ‘subprime’ investment scam which led to the global financial crisis in 2008, former US Vice President Al Gore warned today at the Paris Climate summit.

The evidence for climate change was “just as clear as it is for gravity” and the increasing incidence of climatic disasters had made the television news “like a nature hike through the Book of Revelations”.

“Many of the carbon companies are in danger of losing their public license to operate as more and more people realise that we simply cannot continue putting 110 million tonnes of global warming pollution into the atmosphere, as if its an open sewer, every single day,” Gore said.

Gore said the explosive growth in the renewable energy industry was one of the ‘multiple pathways’ to stranded carbon assets, where the asset value falls precipitously and becomes impossible to sell.

According to a Goldman Sachs report released Thursday, global investment in solar PV and onshore wind for the coming five years was predicted to exceed investment in the gas boom during the last 5 years to 2015.

Gore highlighted the speed of the renewables expansion by comparing previous forecasts with actual installations.

Forecasts in 2002 for an installation of 30GW of wind power by 2010 were exceeded by a factor of 12. Forecasts for 1GW of solar electricity by 2010 was exceeded by a factor of 17 and then last year by a factor 48.

Gore said there were “active efforts to fool investors,” referring to the criminal investigation by the Attorney General of state of New York into Exxon Mobil over allegations of misleading investors into believing that the climate crisis is not real by paying pseudo scientists to create the illusion that nobody needs to worry about the climate crisis.

He said there were already trillions of dollars of stranded carbon assets.

“Investors need to look at the pattern which is unfolding, less they be trapped holding stranded assets,” Gore said.

Others pathways to stranded carbon assets include action being undertaken by national, regional and local governments around the world and a strong agreement in Paris to cut global carbon emissions.

“Will we change? That’s what Paris is all about. But the answer …will not only come from the final text of an agreement the national governments will sign but from the business community, from the NGO’s and from the investor community,” Gore said.