Financial Times – Pilita Clark in Lima

Britain’s energy secretary has called for tougher rules to be applied to companies holding “risky” fossil fuel assets that could plunge in value because of global action to tackle climate change.

Ed Davey’s move makes him one of the first senior politicians to weigh into a growing debate on the future of oil, gas and coal companies as governments work on sealing a global climate deal in Paris next year.

“We’re seeing a move from a carbon economy to a climate economy,” Mr Davey told reporters on the sidelines of UN talks in Lima shaping the Paris agreement.

If the pact is strong enough to stop global temperatures rising more than 2C from pre-industrial times — a limit governments have already agreed should not be breached — it could require a huge shift away from fossil fuels to alternative sources of energy.

Mr Davey said some analysts estimate this could lead to as much as $28tn in lost revenues for the global fossil fuel industry over the next two decades.

That has prompted calls from some investors for asset managers, insurers, banks and other financial groups to be more open about the size of their fossil fuel investments, a move Mr Davey said he backed.

“I think there is a case for making it mandatory,” he said. “People need to know the risks.”

The minister’s move follows the Bank of England’s decision to examine the risks fossil fuel companies pose to financial stability, and a call by Lord Browne, former BP chief executive, for such businesses to stop ignoring “the existential threat” of climate change.

To read the full article visit the Financial Times website.