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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.
That's just a guess.
For many of you, this slump will happen right before you retire, crushing your savings and forcing you to stay in the working world, with now-shittier pay and even fewer job prospects.
But you are the lucky ones.
For me, it will happen just a few years after I have already retired, let my skills rust and myself age to the point of being unemployable....now with no passive income to speak of and no job prospects at all. And the costly medical issues that come with age.
The world is an unkind place.
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!
Dont worry, peak oil should cancel it out nicely ;)
(for the idiots, yes, joking, get a sense of humor.....)
It seems as though our vaunted financial indicators must be...a trifle off...in some way if a combination of cheaper energy efficiency measures and increase in availability of energy sources cheaper than the current low cost options would have negative effects on the economy.
How do you do that? The cost of a fair amount of energy(and often a lot of petrochemicals that will presumably be cheaper if less demand for using them as fuel means lower cost for purchasing them as feedstocks) is baked into pretty much every good and service imaginable. What sort of ghastly mistake does it take to turn "basically everything has become cheaper to produce" into a financial crisis?
I've read that a mix of lower Energy Reruns On Investment (EROI) I.E higher energy inputs to extract carbon fuels (one barrel of light crude equivalent) and lower ore grades for mining raw materials (more energy to move more rock for less ore) will cause the bubble to burst eventually.
But the true wildcard is the adoption or non carbon energy sources and how much of a market share it will take from carbon fuel sources.
Worse case scenario, carbon fuel EROI will be very low I.E high extraction costs. In a market where carbon fuel prices are trending lower due to drop in market share to green energy!
In a situation like this investors won't put money into oil/gas or mining companies!
if you want to see the effects of dropping oil prices look at Venezuela. Yeah, some of those wounds were self inflicted, but the big issue was the sudden drop in oil prices pulling the rug out from under them (plus a drought shutting down their hydro electric dam, folks forget how small they are, that was a big deal).
Now, imagine what's gonna happen when the price of oil gets low enough that the middle eastern countries can't afford to keep up their militaries and their social welfare programs. Don't forget that most of these countries are crazy religious and several of them have big arms and nukes.
The sane thing to do is to provide aid to modernize these countries. Instead we've been putting sanctions on a lot of these countries. We're doing the exact opposite of what we should be doing, and it's exactly what we've always done as a species. I don't have an answer because it comes down to conniving assholes taking advantage of large groups of people who aren't very bright, and I don't have an answer for that.
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You expect a collapse in energy prices and the massive availability of cheap energy to negatively effect industrial economies ?
So that would be like the economic disasters that came about when people started burning coal for steam power or oil for the internal combustion engine, And electrification destroyed the worlds economy ?
Saudi Arabia has been investing in nuclear power as well. Electric vehicles are only useful in reducing domestic use of oil if they have sources of electricity that do not depend on burning oil to produce. I know that people will claim that electric cars will use less oil per mile even if the oil is burned to produce electricity, because a central power plant is more efficient in converting oil burned to miles traveled. You know what burns even less oil per mile than an electric vehicle charged from an oil fired power plant? One charged from nuclear power.
I know that Saudi Arabia has lots of sun, and is building solar collectors to produce electricity. They did the math just like anyone else can do, solar power will not provide the electricity they need. The only solution they have is to build nuclear power or face an impending energy crisis.
Right now Saudi Arabia burns 1/3rd of the oil they produce to meet domestic energy needs. Whatever they don't burn domestically they can sell to foreign markets. While electric cars are great in reducing oil burned for transportation there is no alternative right now for making planes fly. When it comes to shipping there have been three modes of power that have been shown successful at some point in the past, wind, oil, and nuclear fission. Wind powered shipping hasn't been profitable for about a century now. Oil fired shipping is the norm, and will likely remain so for some time. There's been experimentation in civilian ships powered by nuclear fission in the past and the results were mixed. Military ships powered by a nuclear reactor are obviously a thing but the cost/benefit calculation on that is very different.
Electric cars and solar panels will get us only so far. Barring some leap in technology the future looks bright for nuclear power to take over for when oil gets too expensive. This switch to nuclear power will happen at some point. It will be because oil prices get high enough to exceed the cost of producing energy from nuclear reactors, or because we've advanced nuclear fission technology to the point its price fell to below that from oil. I expect both will be a factor in the switch over.
Oh, and as best I can tell many energy companies have been focusing on one kind of energy to produce. The big oil companies did at one time invest a lot into solar power but that had problems. One problem is that making solar collectors and drilling for oil called for very different skill sets and markets. This meant solar power tended to distract from oil production or oil production distracted from making solar collectors, its difficult for any one company to be good at both. Another problem was more political. Governments did not like the idea of companies getting a monopoly on energy, so companies that in the past only focused on drilling for oil would have to defend their practice of buying up the competition. This was also a political problem for investors and customers. Customers would accuse oil companies of holding up the competition by holding patents and other intellectual property for making solar collectors. Investors also saw a company that was developing solar power and oil as a bad investment because their investments would be devalued if either oil or solar power took a dive, they preferred holding stock in one or the other.
We'll see BP advertise itself as being "Beyond Petroleum", as one example, but they are still focusing on liquid fuels, like ethanol and bio-diesel. Even so the haters will simply claim such investments by BP and other companies that deal in petroleum is just "greenwashing". Well, haters are going to hate. Such investments don't gain them any favors from the anti-oil crowd and bring scrutiny from government regulators.
I am armed because I am free. I am free because I am armed.
Speaking of bubbles that are going to burst...
You expect a collapse in energy prices and the massive availability of cheap energy to negatively effect industrial economies ?
No. He expects it to negatively effect the financial world which has a lot riding on the traditional energy users. Too big to fail is such due to the impact the failure itself has on the economy. Industry itself will be doing just fine as will the general economy. The fewer job prospects isn't really anything to do with the number of jobs as much as the competition.
Also your comparisons to the switch to coal and oil isn't quite fair. The coal and oil for its most part provided new opportunities rather than replacing existing ones. Buggy whip manufacturers aside the world economy wasn't propped up by people selling horses and hay. The same can not be said for the trillions of of dollars sitting in the oil industry. We are talking about active replacement / destruction of industries as the end goal now. Expect it to be quite different from the steam age.
>when oil gets too expensive ...
Solar and wind are already the cheapest, and are STILL falling in price. Nuclear, however
The authors are a condensed matter physicist and a lawyer. No economists there. So the "global financial crisis" they refer to could be that some countries benefit, others lose, that some companies make higher profits and others go bankrupt. How is that different from today's "crises"? An economist could help.
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.
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SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Who remembers being told we are heading into a new ice age?
Sigh. In the 1970s, some people in the media claimed that there would be an ice age; scientists were in fact already talking about global warming https://skepticalscience.com/ice-age-predictions-in-1970s-intermediate.htm.
Why do we pay attention to this crap. It's just like a new fad diet.
Because this "crap" happens to be pretty accurate and pretty concerning. See e.g. https://xkcd.com/1732/, and look at changing sea ice levels http://nsidc.org/sites/nsidc.org/files/images/cryosphere/sotc/arctic-antarctic-anomaly-trend-1978-2017.png http://nsidc.org/cryosphere/sotc/sea_ice.html.
"The kingdom has proven reserves of 266 billion barrels according to government estimates submitted to the Organization of the Petroleum Exporting Countries (“Annual Statistical Bulletin”, OPEC, 2015). If these numbers are correct, Saudi Arabia’s reserves will last for another 70 years at the average production rate of 10.2 million barrels per day reported for 2015." https://www.reuters.com/articl... That's JUST Saudi Arabia. We are not even close to peak oil.
I find this truly interesting and I have noted it as well. It speaks to the hypocrisy of most of the people in the world I guess. All the blustering aside, the ACTUAL policies of the two main parties in the US political system are quite similar. It was Mrs. Clinton who called the TPP the "Gold Standard" for trade treaties even though it would decimate the environment throughout a good chunk of the world and many, many more US jobs. Mr. Obama pushed for expansion of that abomination, The Patriot Act. Mr. GW Bush pushed and got the patriot act. Mr. Clinton got the first anti-terrorism laws in the 90s, which were Patriot lite. Unfortunately, because the peons believe the politicians that they support are on their side, when really they aren't as the little people are merely proles, they support them.
Man, here in Norway electric cars are almost 2/3 of all new vehicles already (half battery, the other half hybrids, mostly plug-in). Range is already more than enough for anyone who is not a taxi driver or otherwise drives all day long. Calculations by DNV GL indicate that EVs will be overall cheaper than fossil-fuelled card by 2022, that's before you factor in extra taxes on pollution or subsidies on zero emissions. It's true that their up-front cost is higher, but maintenance and energy are way cheaper, so that the TCO is still better.
2035 is a perfectly reasonable date to expect ICE cars to be off the market: It took only 10 years for the car to displace the horse. Some ICE cars will still be around, but mostly as a curiosity (we did not exterminate horses either). Also, as demand for gas plummets, gas stations will close, oil companies will not invest in new fields, the oil value chain will lose its economies of scale, and gas prices will go a long way up.
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If you're getting close to retirement and still have the majority of your retirement funds in the stock market you need to get a new financial adviser.