Exxon’s agreement to discuss in their financial filings the risk of their assets being stranded by climate policy is a huge deal, marking a milestone in the climate policy battle, writes climate and energy analyst Jonathan Koomey. “The financial markets are starting to realize that the ‘booked’ reserves of the fossil fuel companies are based on a fallacy… It’s the beginning of the end of the fossil fuel economy, but the big players just don’t realize it yet (or if they realize it, they’re not admitting it).”
Koomey is a Research Fellow at the Steyer-Taylor Center for Energy Policy and Finance at Stanford University and the author of Cold Cash, Cool Climate: Science-based Advice for Ecological Entrepreneurs.
His summary of why Exxon’s action is important is posted on his blog here. Key paragraph:
The reason why this development is so important is because once markets realize there’s an arbitrage opportunity, they relentlessly chip away at it until it is eliminated. And the stranded fossil asset arbitrage opportunity is one that’s worth many trillions of dollars. So the pressure will continue to build, and soon the disclosures will result in attention paid to this asset risk that simply hasn’t been present before. That attention will become a flood very rapidly. It’s the beginning of the end of the fossil fuel economy, but the big players just don’t realize it yet (or if they realize it, they’re not admitting it).
Also see Climate Crocks: Huge: Exxon Will Advise Investors on Carbon Bubble Exposure
Some earlier posts on CSW by Jon Koomey:
Separating fact from fiction: a challenge for the media
Clean energy: Learning by doing only happens if we DO!
Koomey: Moving beyond benefit-cost analysis of climate change