Stampede from Coal Continues

November 25, 2015



Germany’s Allianz SE, one of the world’s largest financial asset managers, said on Tuesday it would decrease investments in companies using coal and boost funding in those focused on wind power over the next six months.

Chief executive Oliver Baete said Allianz will no longer invest in companies if more than 30% percent of sales come from coal mining or if coal generates more than 30% percent of electricity.

He said Allianz decided ahead of next week’s United Nations climate change conference in France with “an eye on the 2C goal of the Paris climate negotiations as well as the economic risks involved.”

In 2014, Allianz managed about €1.8tn ($1.9tn) assets in US, Germany, France, Italy, Britain and the Asia-Pacific region.

The company plans to release more details later in the week, but experts estimate the decision on coal would affect investments worth €4bn. Some 90% of the investments affected are in bonds that will be allowed to mature while the six-month frame will apply to equities, Allianz said.

In Paris, more than 190 countries are to negotiate a new global pact to fight climate change. Most of them have already presented plans to cut greenhouse gas emissions after 2020, when the deal is supposed to take effect.

Carbon Tracker:

Fossil fuel companies risk wasting up to $2.2 trillion in the next decade, threatening substantially lower investor returns, by pursuing projects that could be uneconomic in the face of a perfect storm of factors including international action to limit climate change to 2˚C and rapid advances in clean technologies, think tank the Carbon Tracker Initiative warns today.

No new coal mines will be needed, oil demand will peak around 2020, and growth in gas will disappoint industry expectations, it finds in a new report highlighting the danger zone between industry business-as-usual strategies and action that would be needed to meet the UN commitment to limit climate change to 2˚C.

The $2 trillion stranded assets danger zone: How fossil fuel firms risk destroying investor returns, maps out coal, oil and gas supply that makes neither financial nor climate sense in a 2˚C world and how this affects both listed and public companies.  The report warns: “If the industry misreads future demand by underestimating technology and policy advances, this can lead to an excess of supply and create stranded assets. This is where shareholders should be concerned – if companies are committing to future production which may never generate the returns expected.” 

James Leaton, head of research and co-author of the report, said: “Too few energy companies recognise that they will need to reduce supply of their carbon-intensive products to avoid pushing us beyond the internationally recognised carbon budget. Clean technology and climate policy are already reducing fossil fuel demand – misreading these trends will destroy shareholder value. Companies need to apply 2˚C stress tests to their business models now.”

The US has the greatest financial exposure with $412 billion of unneeded fossil fuel projects to 2025 at risk of becoming stranded assets, followed by Canada ($220bln), China ($179bln), Russia ($147bln) and Australia ($103bln).



One Response to “Stampede from Coal Continues”

  1. […] Paris, more than 190 countries are to negotiate a new global pact to fight climate change. [31] Japan?s public and private sectors offer of 1.3 trillion in annual financial aid to developing […]

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