A recent report describes Canada's tar sands, and other extraordinarily carbon intensive energy sources, as "stranded assets" that will likely be worthless in the long term as the world shifts to renewable and carbon-free sources. According to the report, titled Unburnable carbon 2013: Wasted capital and stranded assets, last year alone $674 billion was invested in finding and developing new potentially stranded assets like coal and oil sands. Lead author of the report, Sir Nicholas Stern stated that:
“[As] the stated climate goals become reality, these resources are worthless financially, but it is also true that they do not contribute to sustainable development in the extent and the pace we want. Exposure to fossil fuels is one of the industry’s main challenges, and for us it is essential to work purposefully to take our share of responsibility.”
"Smart investors can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision. The report raises serious questions as to the ability of the financial system to act on industry-wide long term risk, since currently the only measure of risk is performance against industry benchmarks.”
As the financial community begins to wake up to this idea of stranded assets and the citizenry continues to press for reform to the Canadian tar sands industry, we might be in for a very long hot summer.