Last weekend, Governor of the Bank of England, Mark Carney made the most important political statement of the year. Speaking at a World Bank seminar in New York, Carney said: the “vast majority of reserves are un-burnable”. He was referring to fossil fuels, he was speaking to financiers and industrialists.
Carney is no liberal Green giant, he is a very conservative minded Canadian who encouraged the exploitation of his country’s tar sands, about the dirtiest fuel in the world. Yet he has had to swallow a dose of reality and accept the warnings of Nicolas Stern about the full impact of climate change on global finance. He has at last accepted the dangers of putting too many of our economic eggs into the oil basket.
In the spring of 2012, I wrote an article called ‘The Carbon Bubble’, published on the DGP website. [ https://derbyshiregreenparty.org.uk/2012/03/17/the-carbon-bubble/ ] That article showed that a huge amount of global wealth is invested in oil and gas reserves. If these reserves are burned, as they have to be to give a return on the investment, then global temperatures will rise to between 3.5 & 5.0 degrees C. If the wealth invested in coal is added in, then the planet becomes uninhabitable.
At that time investors continued to pour their wealth in to fossil reserves. We are still seeing that in the UK over fracking. The rich and powerful individuals and organisations making these investments fully expect a return. For them to stay rich, the world must fry.
This is the problem that financiers and politicians of all shades except Green have allowed to happen. If the carbon reserves are not burned, to keep temperature rise to below 2C, colossal amounts of private and corporate wealth will be lost, markets will crash, the Carbon Bubble bursts, unleashing a financial crisis that would dwarf that of 2008. If the reserves are burned to return the expected profit and wealth, then the cost of the resulting climate chaos will be far greater than the value of the reserves, the economy will be bankrupt.
Carney’s predecessor at the BoE, the ever cautious Mervyn King, recognised that the warnings about over investment in carbon assets by the Stock Exchange needed due consideration. The new Governor has indeed considered the matter and is issuing his quiet warnings to the market. Is it a coincidence that the markets have dipped this week? Is the move to divestment in coal, gas and oil really so altruistic? Are we seeing a steady retreat from carbon assets as the reality of climate change begins to penetrate the minds of corporate investors? If so this will create its own problems.
Where will the wealth go? If it is pulled out of oil and gas, it will be looking for a home. Is this the real reason for the drive for privatisation of public service. Not an ideologically driven policy at all, but a pragmatic response to the need to find a safe haven for private and corporate wealth. What could be a better long term investment than the supply of food, water and health? These are what everyone in the world needs on a daily basis, just like energy but on a far bigger scale. Hand all of this supply to the private sector and the potential market is huge and growing.
Greens oppose this commercialisation of the basic needs of people. For us, the supply of the essentials of life, food, water, energy, health and education, should be under public democratic control so access is not determined by personal wealth, but by need. Hand this supply over to the private sector then it will be driven by profit, not the needs of the consumers. Many will be priced out of the market in these services so that the rich and powerful can maintain their privileged positions.