A UK Geological Society reviewer on fossil fuels as potentially toxic assets.

Colin Summerhayes for The Geological Society: Fossil fuels “are potential toxic assets rather like the bundles of dud mortgages recently packaged by the banks and traded as valuable until some infant somewhere realised that the emperor had no clothes.” “This risk goes completely unrecognised by all sectors of the financial chain” (Leggett) says. If that realisation comes suddenly rather than slowly, it could “amount to another bubble bursting and a grave shock to the global financial system”. We are looking at what Leggett calls “unburnable carbon”.
Leggett’s argument also revolves around ‘peak oil’. Production has been running at about 82 million barrels/day, but the rise in demand by 2050 will be such that we will need 110 million Bpd. Yet all that industry has been able to do over the past few years is keep production flat in a time of extended oil prices. Where is all that extra production to come from? So it’s not just a question of whether or not the assets are toxic, but whether we can even get near keeping up with demand. Admittedly, tight oil has proved a boon in the USA. But is that just short term? And can it really be repeated elsewhere over the long term? It has been said that once you start drilling shale wells it takes all the running you can do to stay in the same place, like Alice’s Red Queen.
Leggett’s answer is to call for massive investment in what he calls the cleantech energy sources we shall need in the future. Currently we are saddled with a dysfunctional dinosaur and riddled with short-term thinking. The industry may be right to say there will always be gas, and oil, and coal. But the Stone Age didn’t stop because we ran out of stones. Endless growth is a problem on one planet with finite resources. So what can we do about it? We could all start by reading Leggett for ideas, that’s for sure.”