Fossil fuel investors will lose money and wreck the market, Mark Carney warns

Carbon emitting companies need to make some big changes now to avoid destabilising the market, he said

Investors’ money could be at risk due to climate change, the governor of the Bank of England has warned.

In a speech at the Lloyd’s of London dinner, Mark Carney said those who invest in fossil fuels could lose out because of action taken to prevent climate change in the future.

In the blunt warning, he said oil, coal and gas would be “literally unburnable” and the assets of fossil fuel companies left “stranded” by strict rules brought in by governments to halt climate change.

“The exposure of UK investors, including insurance companies, to these shifts is potentially huge,” he said.

“The challenges currently posed by climate change pale in significance compared with what might come. Once climate change becomes a defining issue for financial stability, it may already be too late.”

Companies involved in fossil fuels currently make up 19 of the FTSE 100 and this is likely to be unwelcome news for oil and gas company bosses.

Scientists have calculated fossil fuel production needs to be reduced to between a fifth and a third of current global levels in order to prevent further climate change. A rise of 2C on pre-industrial times could be potentially catastrophic, scientists have calculated.

“If that estimate is even approximately correct it 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,” Carney said.

Destabilise markets

He warned that investors ditching fossil fuels in one go, as a result of this, could completely destabilise markets.

He called for companies to be more visible about how much carbon they emit or produce, giving investors an idea of their carbon footprint.

He added: “Climate change will threaten financial resilience and longer term prosperity.

“While there is still time to act, the window of opportunity is finite and shrinking.”

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