Friday, 23 June 2017

BANK OF ENGLAND BIASED RESPONSE TO CLIMATE CHANGE POLICIES

This article explains that by focusing only on risks to carbon intensive assets, whilst ignoring the possibility that current climate policies may be causing poor investment opportunities in renewable energy technologies, the Bank of England is failing in its statutory duty to identify and address risks to the resilience of the UK financial system.  Nowhere in the Bank's document looking at risks tot the UK economy is there any evidence that they recognises that the very large investments in renewables, the Bank itself mentions “tens of trillions of dollars”, are themselves risky. Like the rest of the debate on climate change there can be no room for doubt.

The Bank of England writes that: "The allocation of capital and labour to projects not aligned with climate policies and technological changes could be a drag on productivity and economic growth. Conversely, allocating capital and labour to green technologies can be growth-enhancing".

Then again it might, and not at all improbably, be quite the other way around. Failing to allocate resources to projects not aligned with climate policies may destroy wealth, and directing them instead to green technologies could well reduce productivity and suppress growth. There is, no doubt, a real possibility that the policy driven commitment of capital resources to renewable energy generation is malinvestment that will have to be written off within a decade or two. This especially true if new technology emerges such as nuclear fusion, or other yet unknown methods of energy production.

Much will depend on what the rest of the world does (not what it says it will do).  

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