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Wednesday, October 28, 2015

Bursting the Carbon Bubble: Fossil fuel companies risk plague of 'asbestos' lawsuits as tide turns on climate change

Ambrose Evans-Pritchard writes in Fossil fuel companies risk plague of 'asbestos' lawsuits as tide turns on climate change:
Oil, gas and coal companies face the mounting risk of legal damages for alleged climate abuse as global leaders signal an end to business-as-usual and draw up sweeping plans to curb greenhouse gas emissions, Bank of America has warned.
Investors in the City are increasingly concerned that fossil fuel groups and their insurers are on the wrong side of a powerful historical shift and could be swamped with exhorbitant class-action lawsuits along the lines of tobacco and asbestos litigation in the US. "It is setting off alarm bells that there could be these long tail risks," said Abyd Karmali, Bank of America's head of climate finance.

Fossil fuel companies have known for decades of the risk that their underground reserves were being overvalued.

Now, it seems the movement to keep those resources in the ground is unstoppable.

While the exact contours are still unclear, Paris is likely to sketch a way towards zero net emissions later this century. It implies that most fossil fuel reserves booked by major oil, gas and coal companies can never be burned.
A deal would also send a moral signal with legal ramifications. Mark Carney, the Governor of the Bank England, warned last month that by those who had suffered losses from climate change may try to bring claims on third-party liability insurance.
He specifically mentioned the parallel of asbestos claims in US courts, which have mounted over the years to $85bn and devastated some Lloyd's syndicates.
Mr Carney said it would be "premature to draw too close an analogy with climate risks" and acknowledged that previous carbon lawsuits have failed, but he warned that the risk is "significant, uncertain and non-linear". The UN has already floated ideas on compensation.

This is a far bigger problem for the fossil fuel companies than asbestos and tobacco ever were.

It's the bursting of the biggest financial bubble in history, the bursting of the Carbon Bubble.