two existential problems, in other words,
will define humankind’s future. And it has
become increasingly clear that while govern-
ment plays a key role in the race to solve
these problems, so too do banks, insurance
companies, and asset managers: Wall Street
as well as Washington, if you like shorthand.
There’s an emerging agreement among all
parties, activists and financiers alike, that
if the transition to clean energy goes at the
pace that the oil and coal lobbyists would
like, the planet will break.
If that transition instead goes unnaturally
fast—well, we can’t stop global warming.
Not anymore. But we might limit it to the
point at which civilizations endure. I wrote
the first book for a general audience on this
topic back in 1989, and I can tell you we are
at a point we have never seen before. The
demand for urgent action is today crashing
up against a climate denial script that has
been carefully nurtured by the oil industry
since the 1990s and is now the reigning wis-
dom at the White House. Which narrative
emerges victorious will not only determine
the financial landscape of the planet, but it
will also determine the literal landscape—
how high the seas rise, how many forests
burn, how many people must leave their
homes. Changing the climate is the biggest
thing humans have ever done, and now we’ll
see how effectively we can respond to a mess
of our own making. One thing is for certain:
The chances of success are very low unless
the business world embraces the challenge.ABOUT A DECADE AGO,
analysts at a small London
think tank, the Carbon
Tracker Initiative, published
a report laying out the es-
sential underlying facts of the climate crisis.
The fossil fuel industry had in its inventory of
reserves a vast quantity of carbon: that is, the
coal and gas and oil deposits it had identi-
fied and told shareholders and regulators
it would burn—enough to produce almost
3,000 gigatons of carbon in the form of car-
bon dioxide. The world’s scientists, however,
had concluded that we could really only
burn about 600 gigatons more and have any
hope of meeting the climate targets that the
world’s governments had set. The numbers
have fluctuated some over the decade asthose targets have shifted, but the ratios
remain unchanged: In essence, the industry
has far, far more supply than the atmosphere
can deal with.
And that’s a problem not just for life on
earth but also for balance sheets. You could
call that excess supply a carbon bubble if
you’d like—at current prices it may represent
something like $20 trillion worth of fossil fuel
that is already reflected in the value of these
firms but that scientists say we must keep in
the ground. (The dramatic decline in crude
prices that has helped rock the stock market
of late, meanwhile, has put a profit squeeze
on Big Oil.) Mark Carney, who just stepped
down as governor of the Bank of England in
March to become the UN’s climate finance
envoy, was far ahead of other regulators in
recognizing the danger, telling the world’s
insurers at Lloyds of London in 2014 that
they were dangerously overexposed to the risk
of these potentially stranded assets.COALOILNATURAL GASBIOFUEL/WASTENUCLEARHYDROOTHER
RENEWABLEGLOBAL ELECTRICITY
GENERATION
SOURCES0510152025 MILLION GWH1990 2000 2010 2017
SOURCE: IEAA PLANET IN CRISIS : COMMENTARYERIK MCGREGOR—LIGHTROCKET/GETTY IMAGESTotal value of
asset managers and
endowments that
had divested from
fossil fuels as of
December 2019
SOURCE:
GOFOSSILFUELFREE.ORGEstimated market
value of fossil fuels
reflected in energy
companies that
scientists say we
can’t afford to burn
SOURCE: CARBON TRACKER
INSTITUTE$12
TRILLION$20
TRILLIONESS.W.04.20.XMIT.indd 55 FINAL 3/10/2020 5:16:09 PM