I was listening to a discussion on NPR about the economics of climate change. At one point the guest said they believe that carbon fuels such as oil and coal are in a market bubble.
The reasoning was that the current value of oil companies is partly based on their reserves, as they are part of the assets, and that these will be bought and burned. However the full use of these reserves would push the predicted temperature change into catastrophic levels and burning only half would result in the bad but still manageable 2 degree mark.
Thus he argues that half the assets expected to generate future revenue won't be burned and so current stock prices are overvalued.
Does this seem plausible? If this is a bubble and it bursts will we see another huge economic crash as most retirement savings plans invest in carbon emitting fuel companies?
The reasoning was that the current value of oil companies is partly based on their reserves, as they are part of the assets, and that these will be bought and burned. However the full use of these reserves would push the predicted temperature change into catastrophic levels and burning only half would result in the bad but still manageable 2 degree mark.
Thus he argues that half the assets expected to generate future revenue won't be burned and so current stock prices are overvalued.
Does this seem plausible? If this is a bubble and it bursts will we see another huge economic crash as most retirement savings plans invest in carbon emitting fuel companies?
via JREF Forum http://ift.tt/1oH0Jp4
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