Mark Carney, Governor of the Bank of England (BoE), has once again publicly endorsed Carbon Tracker’s stranded assets thesis, warning that investors face ‘huge’ climate change losses.
In a remarkable speech at Lloyd’s of London on 29 September, he said that a carbon budget consistent with a 2°C target “would render the vast majority of reserves ‘stranded’ — oil, gas and coal that will be literally unburnable without expensive carbon capture technology, which itself alters fossil fuel economics”. Echoing CTI’s warnings about the risks of a disorderly transition to a low-carbon economy, Governor Carney added that ‘a wholesale reassessment of prospects, especially if it were to occur suddenly, could potentially destabilise markets’.
Carbon Tracker believes this is an important milestone for the future of our society, as it confirms the need for financial markets to take climate risk into serious consideration and acknowledge that an abrupt transition to a low-carbon economy is a financial stability risk.
Mr Carney’s speech coincided with BoE’s Prudential Regulation Authority’s publication of a new report identifying potential climate risks for the UK insurance industry it supervises, which manages nearly £2tn in assets.