The Energy and Climate Change Committee is holding a hearing to examine some of the innovative technologies that could revolutionise the energy sector, and probe the Government’s role in supporting the development of the future energy market.
Parliament 7th Oct 2016 read more »
Molly Scott Cato- Two events this week show a world in a tug-of-war. First, the Government overturned Lancashire County Council’s rejection of a fracking site, paving the way for shale company Cuadrilla to drill in the county. Second, the European Parliament ratified the Paris Agreement, committing nations to limit global temperature rise to 2°C. Two apparently contradictory events, pulling in opposite directions. As an economist, I see how finance plays a crucial role in this contradiction. The fossil-fuel industry needs to undermine action on climate change. It is currently sitting on a very large “carbon bubble”, a vast overvaluation of fossil-related assets. This is because the ratification of the Paris Agreement means that75 per cent of known fossil fuel reserves have to be kept in the ground if we are to stay within the 2C global warming limit. Banks, pension funds and insurance companies have big fossil-fuel assets on their books and McKinsey and others have estimated that 30 to 40 per cent of fossil-fuel companies’ value could be threatened by this carbon bubble. Even Mark Carney, Governor of the Bank of England, has got in on the act, issuing warnings to the financial sector about the “stranded assets” they face from a shift to a low-carbon economy. No surprise, then, that fossil-fuel companies are seeking to undermine decarbonisation and want us to keep our foot on the gas. Financing our decarbonisation is a chance to create not just a new green economy but also to revolutionise the way we use finance. If we fund the transition through public banking and through community ownership we can enable the value of money-creation to be reinvested for the public good and the value of renewable energy to accrue for local communities. A big public bank would allow borrowing for public investment at cheap rates with interest payments going back into the public sector, preventing leakage to private investors.
Independent 8th Oct 2016 read more »