Fossil Industry’s ‘Risk Blindness’ Should Trigger Bank of Canada Review
It’s time for Bank of Canada Governor Stephen Poloz to follow the United Kingdom’s example and assess the risks that over-valued fossil fuel companies pose for the Canadian economy, UK legal researcher and urbanist Hamish Stewart argued last week in the Vancouver Observer.
Late last year, Poloz’s predecessor, Bank of England Governor Mark Carney, advised members of the British Parliament that his officials had discussed the prospect that most known fossil fuel reserves may be unburnable in any realistic climate scenario. “In light of these discussions, we will be deepening and widening our inquiry into the topic,” he told the Environmental Audit Committee October 30.
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Stewart suggests some issues Poloz could consider exploring, including the stability of Canadian chartered banks’ loans to fossil fuel extraction projects, the amount of “embedded carbon” in the largest publicly-traded fossil fuel companies on the Toronto Stock Exchange, whether extracting that carbon would “break the national carbon budget,” what national and global carbon reduction targets would mean for the companies’ stock prices, and whether there is “a risk of carbon‐intensive asset devaluations being transferred to Canadian pensions via their shareholdings in fossil fuel companies.”
The analysis is needed, Stewart writes, “because it looks like the fossil fuel industry is suffering from acute risk blindness with regards to carbon pricing, the risks associated with regional and international climate policy, and advances in renewable energy technology.”