1 October 2013 – There is a risk blindness being run by Big Energy that, unless action is taken, will lead to an inevitable global crash according to Jeremy Leggett in his book, The Energy of Nations, published 26th of September 2013. On the eve of the long-awaited Intergovernmental Panel on Climate Change (IPCC) scientific assessment of climate-change risk, Leggett wrote of wider risk-taking in energy- and financial markets, as he has seen it play out – often behind closed doors – since the oil price began its inexorable rise in 2004. He concludes that too many people across the top levels of government and business have closed their eyes and ears to systemic risk taking.
Leggett bases his conclusions in a study of human behaviour as well as an understanding of the gas and oil markets. "Brain scientists tell us we have a very worrying collective tendency for blindness to the kind of risks that can crash economies, and imperil civilisations. The financial crisis suggests they are right. Now we need to worry that the energy industries are about to repeat the behaviour traits of the financial sector, and on multiple fronts."
Leggett describes four systemic risks being run by big energy. "The first and biggest is climate change. We have way more conventional fossil fuel than we need to wreck the climate. Yet the energy incumbency wants us to pile so-called unconventional deposits on the fire.
"Second, we risk creating a carbon bubble in the capital markets; puffing up assumed value in fossil fuels that can never be realised." Leggett is chairman of Carbon Tracker, a financial think tank that aims to align the capital markets with international climate policymaking. Some financial institutions have already begun withdrawing investment in fossil fuels on reading Carbon Tracker’s warnings.
"Third, we risk surprising ourselves with the so-called shale boom in gas and oil production. That too may prove to be a bubble, maybe even a Ponzi scheme.
"Fourth we court disaster with our assumptions about oil depletion. Most of us believe the incumbency narrative that there will be adequate supplies of affordable oil for decades to come. I am in a minority who don’t.
"Given all this risk blindness, I conclude in my book that system collapse is probably inevitable. Better news is that there will be a road to renaissance, in the rebuilding, if we make the right decisions in the wake of the IPCC’s latest warnings. We have to nurture clean energy industries, and strategies, and accelerate them as though mobilising for war. I do believe that is possible. If we were to do it, we could abate much of the horror that the IPCC warns of."