Coronavirus crisis could cause $25tn fossil fuel industry collapse

Value of reserves could fall by two-thirds as Covid-19 hastens peak in demand, study shows

The coronavirus outbreak could trigger a $25tn (£20tn) collapse in the fossil fuel industry by accelerating a terminal decline for the world’s most polluting companies.

A study has found that the value of the world’s fossil fuel reserves could fall by two-thirds, sooner than the industry expects, because the Covid-19 crisis has hastened the peak for oil, gas and coal demand.

The looming fossil fuel collapse could pose “a significant threat to global financial stability” by wiping out the market value of fossil fuel companies, according to financial thinktank Carbon Tracker.

The report predicts a 2% decline in demand for fossil fuels every year could cause the future profits of oil, gas and coal companies to collapse from an estimated $39tn to just $14tn.

It warns that a blow to fossil fuel companies could send shockwaves through the global economy because their market value makes up a quarter of the world’s equity markets and they owe trillions of dollars to the world’s banks.

Kingsmill Bond, the author of the report, said:

“Now is the time to plan an orderly wind-down of fossil fuel assets and manage the impact on the global economy rather than try to sustain the unsustainable.”

Read more: The Guardian

By |2020-06-16T15:36:51+01:00June 16th, 2020|Coronavirus, Energy and Climate Change, News, Pollution|
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