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'Carbon Bubble' Could Spark Global Financial Crisis, Study Warns (theguardian.com)
An anonymous reader quotes a report from The Guardian: The existence of a "carbon bubble" -- assets in fossil fuels that are currently overvalued because, in the medium and long-term, the world will have to drastically reduce greenhouse gas emissions -- has long been proposed by academics, activists and investors. The new study, published on Monday in the journal Nature Climate Change, shows that a sharp slump in the value of fossil fuels would cause this bubble to burst, and posits that such a slump is likely before 2035 based on current patterns of energy use. Crucially, the findings suggest that a rapid decline in fossil fuel demand is no longer dependent on stronger policies and actions from governments around the world. Instead, the authors' detailed simulations found the demand drop would take place even if major nations undertake no new climate policies, or reverse some previous commitments. That is because advances in technologies for energy efficiency and renewable power, and the accompanying drop in their price, have made low-carbon energy much more economically and technically attractive.
Crucially, the findings suggest that a rapid decline in fossil fuel demand is no longer dependent on stronger policies and actions from governments around the world.
This dangerous trend can and will be stopped: We will use a combination of tariffs, executive orders and obscure WWII-era federal statutes to nationalize the energy sector and stamp out this "change" nonsense, ensuring that fossil fuel jobs in key voting districts will endure for decades to come!
Fear is still a major motivator of the news. The slide will be a slow one, as it has been for many years, and unlikely to be a bubble that bursts quickly, by itself, as we transition away from fossil fuel. We're not all moving to electric cards until they are cheaper and can easily and quickly recharge when traveling, and not until our old gas burners die on us. Power companies have been moving to wind power for years. Coal burning power generation is the only real loser here.
If those financial indicators are predicated on the stability and reliability of the US dollar,
The petrodollar system elevated the U.S. dollar to the world's reserve currency and through this status, the U.S. is able to enjoy persistent trade deficits, and become a global economic hegemony. The petrodollar system also provides the United States’ financial markets with a source of liquidity and foreign capital inflows through petrodollar "recycling."
-- How Petrodollars Affect The U.S. Dollar.
it could be more than a trifle off. How much, though, I don't know enough to say.
The problem is volatility. These things don't happen in nice, smooth supply/demand curves. Even a 2% drop in demand would wreak havoc on the market... as some suppliers go offline (or bankrupt) the price spikes again, and you get a yoyo effect that could spiral out of control. The "light tight" oil coming out of these fracking plays is not a drop-in replacement for West Texas crude, it's a different product with very different economics -- with EROEI in the single digits, and most producers leveraged to the gills, not covering much more than their operating costs, even at $60/bbl. The whole business is a house of cards.
XML is like violence. If it doesn't solve your problem, you're not using enough of it. --AC
It's not the cost of the primary energy that will upset the economy. It is the cost of the disposal of assets, the sunk investments, the many jobs supported, etc. It isn't about newer and cheaper, it's about too big to fail actually failing and also being too big to prop up.
Iran TRIED to get some nuclear power plants built to reduce their reliance on oil for their power. The US and others all screamed murder and had sanctions put on them after the US, France and Russia had all cancelled contracts to build nuclear plants in Iran and the Iranians decided to just build their own, including processing their own nuclear fuel !
And yet, a brutal regime like Saudi is apparently "ok" to have nuclear power ?
Can I have some of what you are smoking? There is no way fossil fuel cars are going away by 2035. Even if the necessary energy storage and packaging issues are solved and electric cars become entirely feasible to replace gasoline and diesel, the electric grid cannot handle that hand off and it will take more than 17 years to add the infrastructure necessary to deliver that amount of energy much less produce it.
Yes it's an anecdote! Were you expecting original research in a Slashdot comment?
Saudi Arabia jumped the gun on nuclear and it doesn't look like a good investment any more. When they selected it there wasn't much of a grid scale battery storage market and it seemed like it might be a long way off. Now solar+battery costs about half as much per megawatt as nuclear does, and works much better in terms of reacting to demand.
Even worse, they are buying in the nuclear tech (some from France, some from Japan and some from South Korea) and don't have any capability to produce fuel themselves. They missed an opportunity to become leaders in solar+battery tech and export it, rather than being reliant on technology and fuel imports.
To be fair it was harder to see back when they made the decision to build $80bn of nuclear generation, but it's also not too late to pivot away from it.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC