Why high-carbon investment could be the next sub-prime crisis

Article by Ben Caldecott

The global financial system faces a deep, opaque and systemic risk that threatens to destroy our economic well-being, including our pensions. But forget collateralised debt obligations and subprime mortgages, the implications of an economy-wide over-exposure to fossil fuel investments could be even more severe and wide ranging than those of the recent financial crisis.

More money is flowing into clean technologies than ever before - a record £150bn of investment last year - but money is also still pouring into coal, oil, gas, mining and other high-carbon sectors at a pace that severely undermines our efforts to tackle climate change and other environmental challenges. Take last month's listing of mining and commodities giant Glencore, for example, which valued the company at £37bn, the largest ever capital raising by an international company in London. Or Shell's £62bn investment drive over the next four years, which is focused on increasing oil and gas production to 3.7m barrels of oil equivalent per day by 2014, an increase of 12% from 2010.

Read the full article on the Guardian website here.

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Why high-carbon investment could be the next sub-prime crisis