"Prepare now for fossil-free future": Aberdeen Asset Management in FT.

Craig MacKenzie in the FT: “….One of the most striking things about the fossil divestment campaign is that it is not content merely to make a moral case, it also claims that divestment makes sense from a financial perspective: to avoid a growing “carbon bubble” that might pop soon.”
“This argument has proved harder to dismiss than many expected. The share prices of most of the world’s coal-mining companies have fallen steeply in the past two years – by more than 75 per cent in several cases. In the US, new air pollution regulations are making coal an expensive option in power generation and utilities are switching to cheap shale gas instead. Coal demand has fallen by 20 per cent as a result, and 50GW of additional coal closures are expected in the next three years.
True, coal demand has been stronger in Europe, but this is temporary. EU clean-air directives require closure of much coal-generation capacity over the next decade. Even in China, which now accounts for half of global coal demand, analysts are starting to point to the possibility that economic rebalancing, slower growth and air pollution worries may mean demand will start to fall before 2020.
This would mean that coal is not simply facing the downswing of the usual commodity cycle, but the possibility that the sector may be entering permanent decline.
This gloom, coupled by coal’s small total market cap, means that Norway’s expert committee could come to the painless conclusion that the fund need not invest in pure-play coal miners in the future.
But is the same true for oil? All is not well in the oil sector either.
….Divestment campaigners may not be satisfied, but this strategy does address their concerns about “stranded assets” and “carbon bubbles” directly. Lower rates of capital expenditure focused on high-quality projects will reduce the risks of a carbon bubble inflating.”