As if the economic risks of austerity, derivatives trading, and an under-regulated banking industry weren't enough... A new report from Stern and the think-tank Carbon Tracker warns of an over-inflated “carbon bubble” in the stock market. The Guardian explains that the fossil fuel investment bubble is a result of oil, coal, and gas reserves being over-valued by the market, and the impending value correction poses a huge risk to the global financial system.
According to the report, to keep global temperatures from rising more than 2 degrees Celsius, about 60% of the world's fossil fuel reserves must remain unburned. As total reserves are listed as assets in the world markets, the fact that more than half of the financial gain will never be realized means that 60% of those reserves are worthless. And, allowing these fuels to be burned just for the economic gains is simply out of the question.
So, financial analysts and brokers must account for climate change policy now, and begin slowly adjusting the value of fuel reserves. If they act smart, they just may be able to save the plant, and prevent an economic collapse. Let's hope they do.
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