Hounding the Credit Rating Agencies on Climate Change

Well, a concerted campaign for divestment of South African company shares may have contributed to the end of the Apartheid regime there. Now some are trying to push a similar strategy for divestment in fossil fuel companies.

As a political choice I think it’s certainly legitimate, if not likely to prove as effective as it was in South Africa. If you don’t want to own Exxon, sell your shares. Someone will be happy to buy them at the right price.

What’s coming up on the horizon is more hard ball, however. A report from The Center for International Environmental Law basically accuses the credit rating agencies (Standard & Poors, Moody’s and others) of ignoring the impact of attempts to curb climate change on the value of fossil fuel companies. They think that fossil fuel companies are riskier than they appear.

They appear to want to drive down the share prices of fossil fuel companies. I wonder if they’ve thought this through. If they want people to divest their shares in oil companies, do they want to drive the price down first? Hmmm.

Certainly, if we stopped burning fossil fuels their producers would be in a bit of a quandary.

But we already know that is not going to happen. As I wrote on 3000Quads, the companion blog to my efforts here, “The five top fuel consuming (and CO2 emitting, for those keeping score) countries are China, the U.S., India, Russia and China will consume about 60% of the world’s energy in 2040 (and account for a similar percentage of emissions. The second five countries account for about 10%, so it really is the top 5 countries that matter.

“And each of these five countries has been pursuing (and promoting their pursuit) of green energy sources to the rest of the world. To hear them all talk, green energy is going to take over the world.
“However, their planned expansion programs for nuclear, hydroelectric, solar and wind,biofuels and natural gas are not going to do the job.
“In fact, if everything that is on the planning boards gets built in those five countries, the percentages of renewable and nuclear energy used will climb from 17% today to 20% in 2040. And that’s if the DOE estimates of fuel consumption (819.6 quads projected for 2040) are correct. If my more pessimistic projections are more accurate our world will be burning about 965 quads by then. And if that energy isn’t coming from nuclear, hydroelectric, renewables”, it will come from fossil fuels.
We will be using twice as much fossil fuels in 2040 as we did in 2010. I don’t think that sector is as risky as environmentalist wish to persuade us it is. I wish it were otherwise.
Expect more of this:

6 responses to “Hounding the Credit Rating Agencies on Climate Change

  1. They seem to ignore the forthcoming end of the fossil fuel era will be caused by their exhaustion. I think we’ll have peak oil by 2035. Hell, we may have hit the peak this year.

  2. With Brazil’s presal deposits untouched? With the Arctic still unscathed? With continents left unfracked? With coal still lying on top of the ground in China?

    • Yes. As you know, I’ve been in the oil industry for 40 years. And I’m familiar with most of these plays. It’s simply a question of geology, the surface conditions, and costs.

      For example, take the tight reservoirs (what you call continents left untracked). The technical designation used by some is “source play”. This means the oil and gas are found very close to the source rocks, in extremely poor quality rocks. There is a unique set of conditions required to make this into a producible deal. The reservoir rock has to be brittle, which leads to natural fractures. It has to be at the right depths, and it gas to have some over pressure. The fluids have to be extremely low viscosity. And the surface has to be such that huge numbers of horizontal wells can be drilled and fractured without undue costs.

      As it turns out the USA has two monster reservoirs (Bakken and Eagle Ford) which produce light oils, and about six smaller ones. Canada has one medium size light oil. There’s a large one in Argentina. A very large one in Western Siberia, and that’s about it.

      Gas reservoirs in these source plays are more numerous, but thus far the USA has the big ones, the Barnett, the Marcellus, and the Utica come to mind.

      Think of it as the way coal is found in huge quantities in Colombia, USA, China, India and Russia. But there’s a lot less coal in Ecuador, Canada, Kazakhstan, and Indonesia.

      I spend a lot of time looking over this issue, and I think world production of oil and condensate will never reach 100 million barrels of oil per day. But the IPCC Rcp.8.5 assumes a peak at over 160 million BOPD.

      If you have further questions feel free to ask. By the way, did you read my Burn Baby Burn?


  3. Tom,
    You are almost there. The final step is to think of how the missionaries would convert a whole society to their way:
    Go for the leadership while going for the grassroots; rewrite the rules of engagement/communication; reach critical mass and outlaw the pagans.
    The climate kooks, I am afraid, have already won. We have allowed apocalyptic fools to hijack policy, communications, education and now the capital markets and courts.
    The environment will be wrecked by bullshit wind scams, phony solar solutions, etc. The iron law only works until the law books are rewritten.
    I see skeptical blogs being excised from the internet in the next year or so. I see successful lawsuits against groups, individuals and companies that do not toe the line on “climate change”. we on the skeptical / lukewarm side have been seeking a rational discourse and evidence based policy. The kooks and fanatics have been seeking power to impose their faith.
    Forcing credit agencies to use climate fanatic assumptions in their credit risk assessments is a way to change the ground rules:
    Failed predictions? They *do not care*.
    The utter uselessness and environmental damage of large scale wind?
    They *do not care*.
    The human suffering caused by high priced undependable electricity?
    They *do not care*.
    They have rewritten the playing field into faith based, and they have decided the rules of their faith.
    You point out that when a rational analysis of the studies of CO2 sensitivity show that it is much less than the popular consensus, the climate faithful only get mean and angry. Sadly you are correct.
    When the climate consensus believer’s specific predictions of doom fail (and they all have) it only pisses off the faithful more and they blame those who predicted the failure, not those who made the incorrect predictions for the problem.
    The capital markets are going to be ‘corrected” to show the cliamte obsessed view of the world. Communications, taxes, laws, and more will soon follow.
    This is going to be Allinsky on steroids.
    As Harlan Ellison explored, the new gods tend to be angry and harsh.

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