Green MEP and economist Molly Scott Cato today sounded a warning over the so called ‘carbon bubble’ at a conference in Frankfurt on consumer protection, financial stability and crisis prevention. The warning comes at a time when carbon divestment is gaining momentum and European institutions are beginning to heed advise from Greens in Europe on the threats of over-valued fossil fuel assets.
Last year Greens in Europe produced a detailed study into the money trail behind the carbon bubble. The report concluded that with carbon assets in Europe valued at over €1 trillion, a number of financial institutions and EU Member States are at risk, including a number of sizeable pension funds in the UK. Following correspondence with Green MEPs, European Central Bank President, Mario Draghi, has requested The European Systemic Risk Board discuss issues raised by the report. Molly Scott Cato told the conference today in Frankfurt:
“The response to climate change and shift towards renewables is powering divestment from fossil fuels and the downgrading of fossil-related assets. This means that many companies in whom investments are made are considerably over-valued because they hold stranded assets. Although the movement for carbon divestment is only just gaining momentum we can certainly expect to see it expand over the next decades. We need to find ways to set these assets on a gentle downward trajectory while boosting investments in cleaner technology and energy saving so as to avoid systemic instability.”