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A $6 Trillion Bubble

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Carbon-Intensive Investors Risk $6 Trillion 'Bubble,' Study Says ... Investors in carbon-intensive business could see $6 trillion wasted as policies limiting global warming stop them from exploiting their coal, oil and gas reserves, according to research by the Carbon Tracker Initiative and a climate-change research unit at the London School of Economics. If this rate continues for the next decade some $6 trillion risks being wasted on "unburnable" or stranded assets, according to the report, released today ... – Bloomberg

Dominant Social Theme: Carbon is a plague and we need to wipe it out.

Free-Market Analysis: Suddenly, the reality of carbon investing is sinking in. According to this Bloomberg article, "banks, funds and institutional investors are seeking clarity from government and central banks about how greenhouse- gas emissions may affect the value of their investments."

Of course, The Bank of England is involved in damage control. According to Bloomberg, the BOE will "evaluate whether the U.K.'s exposure to investments in polluting industries poses a risk to financial stability" – but only after investors began to demand such a clarification.

The real point of this exercise seems to be to warn Western corporations that they will have to perform a kind of self-limiting exercise to make sure that resources available to them conform to the letter of the law. This is typical of the way Western markets operate now – with government setting the pace and then focusing on ways to bring corporations in line so that the private sector effectively enforces unpopular mandates.

Here's more from the article:

"If the markets carry on regardless, with the regulators looking the other away, they're just asleep on their watch," James Leaton, research director at Carbon Tracker, a project by non-profit Investor Watch, said in an interview in London. "The longer it goes on, the bigger the bubble will get."

Bonds of fossil fuel companies could be vulnerable to ratings downgrades, pushing up their financing costs while equity valuations could plummet as much as 60 percent if industries become less carbon-intensive, the study showed, citing HSBC Holdings Plc analysis.

The analysis shows that 60 to 80 percent of coal, oil and gas reserves of the 200 public companies studied could be unburnable if the world is to curb emissions to limit global warming to 2 degrees Celsius, a United Nations target.

Even without UN targets, the focus on air quality in nations including China and the U.S., and the falling costs of wind and solar technologies should drive investors to seek low- carbon opportunities, Leaton said.

The report calls on finance ministers to incorporate climate change into assessment of risk in the capital markets and urges financial regulators to require companies to report CO2 emissions embedded in their fossil fuel reserves. Ratings agencies should address climate change as part of efforts to tackle risk, it said.

Again, what is going on here is a way of ensuring that the private sector falls in line with the goal of eliminating carbon from their processes. Yet the science itself is not settled; there is no sure way of telling whether man-made carbon is heating up the environment, nor whether the environment itself is getting hotter.

In fact, the carbon trading apparatus that was supposed to self-regulate the larger entities has languished. The US shut down carbon trading. Europe's carbon trading marts are gradually fizzling.

This would seem to be a preferred stratagem of those who want to use global warming as a way to enhance globalism itself and to further control corporations large and small.

"I hope this report will mean that regulators also take note, because much of the embedded risk from these potentially toxic carbon assets is not openly recognized through current reporting requirements," Nicholas Stern, who chairs the LSE's Grantham Research Institute on Climate Change and the Environment, said in the statement accompanying the report.

One can see the wheels turning here. Because carbon trading has not proven to be commercially successful and because the whole idea of global warming is extremely controversial, those behind the program will do their best to implement carbon goals using the power of the regulatory state.

Conclusion: This may "work" better than previous strategies but the result will surely be a further impoverishment of Western middle classes. At least now we have a number: Six trillion dollars.

It's all about control and profit.

From the way things are going, this whole ridiculous scheme will fall apart as more people punch big holes into theories based on immature 'science', and, as more light is shed on whom the real profiteers are.

The game only works when all players work rationally and seek profit; this market doesn't.

Carbon is toxic and harmful to human life....when it has been monetised.

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Thermodynamics is hardly an immature science. Otherwise please explain why the effective black-body temperature of the Earth isn't 255K.

EDIT: 255K, not 225K - fat thumb.

Edited by sossij

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Thermodynamics is hardly an immature science. Otherwise please explain why the effective black-body temperature of the Earth isn't 255K.

EDIT: 255K, not 225K - fat thumb.

Climate 'science', not thermodynamics.

And by black bodies I gather you refer to heat transfer... which is not actually thermodynamics. It is physics.

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Climate science is largely the application of thermodynamics to the Earth-Sun-Atmosphere system. Thermodynamics is part of physics.

Edit to add: have a read of Thermal-Fluid Engineering: The Engine and the Atmosphere by Z. Warhaft (CUP). Despite the title it's a good first year introduction to the application of thermodynamics to the climate.

Edited by sossij

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Climate 'science', not thermodynamics.

And by black bodies I gather you refer to heat transfer... which is not actually thermodynamics. It is physics.

So why is the average temperature of the earth not 255K, as standard black body calculations would have it? Or is it just that physics is wrong.

Interestingly, this applies in spades to Venus, which thanks to a lot of white clouds actually receives about the same incoming radiation as earth at ground level, yet is 600 degrees or so warmer.

EDIT:

As to the OP.. this is a significant issue. Even with low estimates of climate sensitivity and impacts, burning everything - all the coal, tar sands, and shale gas as well as the more conventional stuff - would cause serious problems. Booking this stuff as assets would therefore seem foolhardy.

Edited by fluffy666

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So why is the average temperature of the earth not 255K, as standard black body calculations would have it? Or is it just that physics is wrong.

Interestingly, this applies in spades to Venus, which thanks to a lot of white clouds actually receives about the same incoming radiation as earth at ground level, yet is 600 degrees or so warmer.

And also Mars, with no significant atmosphere, is closer to what a black-body calculation would suggest its mean surface temperature to be :) Hmmmm, must be something to do with this pesky atmosphere stuff...

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Climate science is largely the application of thermodynamics to the Earth-Sun-Atmosphere system. Thermodynamics is part of physics.

Whatever. Did you bother to read the article before you whipped out your sossij?

Its about a market failing due to profit driven exploitation of something based on various hypothesis.

And climate science is an immature science. Physics is not.

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Whatever. Did you bother to read the article before you whipped out your sossij?

Its about a market failing due to profit driven exploitation of something based on various hypothesis.

And climate science is an immature science. Physics is not.

Yes, and similar recent articles.

If you apply basic physics to our understanding of the atmosphere you pretty soon realise the requirement for a greenhouse effect. Further experiment indicates that infra red radiation trapped by greenhouse gases are the reason why the mean global temperature of the Earth's surface is closer to 288K (measured) and not 255K (as expected by a b-b calculation). Just physics, nothing else.

Now what do you think will happen if more greenhouse gasses are added to the atmosphere at an unprecedented rate? The global mean surface temperature will...

1) go down?

2) go up?

Edited by sossij

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Yes, and similar recent articles.

If you apply basic physics to our understanding of the atmosphere you pretty soon realise the requirement for a greenhouse effect. Further experiment indicates that infra red radiation trapped by greenhouse gases are the reason why the mean global temperature of the Earth's surface is closer to 288K (measured) and not 255K (as expected by a b-b calculation). Just physics, nothing else.

Now what do you think will happen if more greenhouse gasses are added to the atmosphere at an unprecedented rate? The global mean surface temperature will...

1) go down?

2) go up?

I'm sure we'll find out given we are supposed to have exceed the 400ppm last year was it?

Think anything is going to change? Global depression is probably the best thing that could have happened no?

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I'm sure we'll find out given we are supposed to have exceed the 400ppm last year was it?

Think anything is going to change? Global depression is probably the best thing that could have happened no?

Heh, not quite the 'best thing' I'd have hoped for. I have a slim hope - a transition of our economy to nukes, solar and wind on a WW2 level may solve the problem of global depression and slow climate change. But as the LSE report quoted in the OP suggests if we burn the reserves we tank the planet, leave them in the ground we tank our (current) economy. Unfortunately sentiments in the OP at worst advocate doing nothing, at best peddle continued disinformation that climate science is immature, unproven etc.

For example, this is classic disinformation:

"Yet the science itself is not settled; there is no sure way of telling whether man-made carbon is heating up the environment, nor whether the environment itself is getting hotter."

Same 'arguments' used by the tobacco industry wrt lung cancer.

Edited by sossij

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Can someone please explain to a non criminal that beleives in reality exactly what Carbon trading is, who is doing it, who is not, and what it is SUPPOSED to acheive please.

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I'm sure we'll find out given we are supposed to have exceed the 400ppm last year was it?

Think anything is going to change? Global depression is probably the best thing that could have happened no?

Global depression 'our last best hope'? :huh:

I suppose it's one-up on a nuclear winter...

.

Edited by zugzwang

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Its about a market failing due to profit driven exploitation of something based on various hypothesis.

And climate science is an immature science. Physics is not.

Carbon trading is a terrible idea, irrespective of whether man-made climate change is occurring or not. Likewise, research into renewables is a good idea, irrespective of whether man-made climate change is occurring or not.

There. Not that hard.

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Can someone please explain to a non criminal that beleives in reality exactly what Carbon trading is, who is doing it, who is not, and what it is SUPPOSED to acheive please.

Simply put, each country gets an allowance as to how much carbon they can produce. If they produce less, they get credited with the difference which they can then sell to a country that wants to exceed its allowance.

One wonders why the same mechanism cannot be applied to other problems, such as murder, rape and paedophilia. Oh, wait - that would be because it's really stupid.

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Simply put, each country gets an allowance as to how much carbon they can produce. If they produce less, they get credited with the difference which they can then sell to a country that wants to exceed its allowance.

One wonders why the same mechanism cannot be applied to other problems, such as murder, rape and paedophilia. Oh, wait - that would be because it's really stupid.

OK, so Q1:

Who allocates the allowances?

And Q2:

who is taking part....is the biggest polluter, China I believe, taking part?

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Yes, and similar recent articles.

If you apply basic physics to our understanding of the atmosphere you pretty soon realise the requirement for a greenhouse effect. Further experiment indicates that infra red radiation trapped by greenhouse gases are the reason why the mean global temperature of the Earth's surface is closer to 288K (measured) and not 255K (as expected by a b-b calculation). Just physics, nothing else.

Now what do you think will happen if more greenhouse gasses are added to the atmosphere at an unprecedented rate? The global mean surface temperature will...

1) go down?

2) go up?

Could be 1, 2 or neither. The greenhouse effect isn't just physics, it's also biology. The Earth's surface is cooler than it would be without the presence of life. It's entirely possible that the living planet can process the additional 'man-made' carbon without the atmosphere getting warmer.

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OK, so Q1:

Who allocates the allowances?

I believe there is a formula that's applied (afaik the credits don't really apply to the country so much as individual firms, but don't quote me).

And Q2:

who is taking part....is the biggest polluter, China I believe, taking part?

afaik China is still in it, but the US is out (since Bush).

Bottom line, is that it's open to abuse at every level. Firm builds a deliberately polluting factory in the third/second world, then shuts it down, thus reducing carbon emissions and getting some carbon credit, which it can then sell to the first world.

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I believe there is a formula that's applied (afaik the credits don't really apply to the country so much as individual firms, but don't quote me).

afaik China is still in it, but the US is out (since Bush).

Bottom line, is that it's open to abuse at every level. Firm builds a deliberately polluting factory in the third/second world, then shuts it down, thus reducing carbon emissions and getting some carbon credit, which it can then sell to the first world.

IC...in other words, its as well thought through as the Dangerous dogs act....A couple of breeds disappear, so the breeders move to other similar breeds and make them popular, and not one child is saved.

Still, what else was I to expect?

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IC...in other words, its as well thought through as the Dangerous dogs act....A couple of breeds disappear, so the breeders move to other similar breeds and make them popular, and not one child is saved.

Still, what else was I to expect?

Funny thing is this: If you replace your coal plants with nuclear ones, then very few consumers actually notice much But carbon emissions take a huge hit - bigger than any currently proposed scheme.

Somehow, all policy from all sides seems bent on obscuring this reality or making it impossible.

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Funny thing is this: If you replace your coal plants with nuclear ones, then very few consumers actually notice much But carbon emissions take a huge hit - bigger than any currently proposed scheme.

Somehow, all policy from all sides seems bent on obscuring this reality or making it impossible.

Nuclear is unpopular with the same groups who support reducing carbon emissions by and large (although, e.g., Monbiot, to his credit, has u-turned).

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IC...in other words, its as well thought through as the Dangerous dogs act....A couple of breeds disappear, so the breeders move to other similar breeds and make them popular, and not one child is saved.

Still, what else was I to expect?

Worse - it incentivises having a dangerous dog, since you get paid to put it down... the more dangerous, the more money.

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Could be 1, 2 or neither. The greenhouse effect isn't just physics, it's also biology. The Earth's surface is cooler than it would be without the presence of life. It's entirely possible that the living planet can process the additional 'man-made' carbon without the atmosphere getting warmer.

Yes, I agree that within limits, life tends to regulate the biosphere.

It's a good job that, in addition to pumping unprecedented levels of greenhouse gasses into the atmosphere, we're not also embarking on a planet-wide program of deforestation, soil erosion, species loss, desertification and ocean acidification too... oh wait. We are.

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Worse - it incentivises having a dangerous dog, since you get paid to put it down... the more dangerous, the more money.

like cash for clunkers...suddenly your wreck is worth £2K.

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Three Numbers:

The First Number: 2° Celsius

The Second Number: 565 Gigatons

The Third Number: 2,795 Gigatons

http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719

McKibben is a career journalist, and not in any way a scientist. He make a lot of money creating his brand of doom for the masses.

one word on your numbers...

pish

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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