The Death Of Fossil Fuels

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EACLucifer
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Re: The Death Of Fossil Fuels

Post by EACLucifer » Tue Apr 21, 2020 6:19 am

bjn wrote:
Tue Apr 21, 2020 6:16 am
Bird on a Fire wrote:
Tue Apr 21, 2020 1:47 am
More good news

Oil crashes 305% to -$36.73 a barrel
U.S. oil prices plummeted in historic fashion Monday, crashing below zero as traders unloaded positions ahead of the May contract's Tuesday expiration.

West Texas Intermediate crude oil futures for May delivery cratered by 305 percent to -$36.73 a barrel. At a price below zero, buyers would be paid to take delivery as there are costs associated with transportation and storage. The selling had WTI on track to close at its lowest level since recordkeeping began in March 1983, according to Dow Jones Market Data
Having oil is now worse than not having oil for US investors as well as for the world.
That’s the frackers f.cked.
Until, you know, the end of the pandemic.

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Re: The Death Of Fossil Fuels

Post by bjn » Tue Apr 21, 2020 8:18 am

EACLucifer wrote:
Tue Apr 21, 2020 6:19 am
bjn wrote:
Tue Apr 21, 2020 6:16 am
Bird on a Fire wrote:
Tue Apr 21, 2020 1:47 am
More good news

Oil crashes 305% to -$36.73 a barrel



Having oil is now worse than not having oil for US investors as well as for the world.
That’s the frackers f.cked.
Until, you know, the end of the pandemic.
Which may be many many months away. Given that they were already debt laden and struggling with low oil prices below their break even point even before the Saudi/Russian price war, they are f.cked.

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Re: The Death Of Fossil Fuels

Post by EACLucifer » Tue Apr 21, 2020 8:54 am

bjn wrote:
Tue Apr 21, 2020 8:18 am
EACLucifer wrote:
Tue Apr 21, 2020 6:19 am
bjn wrote:
Tue Apr 21, 2020 6:16 am

That’s the frackers f.cked.
Until, you know, the end of the pandemic.
Which may be many many months away. Given that they were already debt laden and struggling with low oil prices below their break even point even before the Saudi/Russian price war, they are f.cked.
If it becomes economic, again, though, new firms will step in.

This is no help to decarbonising - to do that, we need massive investment in the lowest carbon energy sources - and I fear that may be difficult in a post-pandemic recession

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Re: The Death Of Fossil Fuels

Post by bjn » Tue Apr 21, 2020 9:14 am

EACLucifer wrote:
Tue Apr 21, 2020 8:54 am
bjn wrote:
Tue Apr 21, 2020 8:18 am
EACLucifer wrote:
Tue Apr 21, 2020 6:19 am


Until, you know, the end of the pandemic.
Which may be many many months away. Given that they were already debt laden and struggling with low oil prices below their break even point even before the Saudi/Russian price war, they are f.cked.
If it becomes economic, again, though, new firms will step in.

This is no help to decarbonising - to do that, we need massive investment in the lowest carbon energy sources - and I fear that may be difficult in a post-pandemic recession
The assets will still be there, even if the companies go pop. But who would be willing to risk their capital on acquiring on such a risky investment? Maybe at a massively discounted price for bankrupt assets, but you aren't necessarily going to be sinking money into new wells.

But probably yes to the second point. Though given relative prices of various generation sources, the higher cost ones (ie: coal) are going to be last in the pecking order.

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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Tue Apr 21, 2020 11:37 am

Each short-term shock demonstrates that oil is a risky investment, subject to changes to lifestyles (which may well continue after the pandemic) as well as political interference (which may well continue after the pandemic).

Those are amongst the reasons that many large firms are now choosing to dump fossil stocks, rather than engaging in political "lobbying" and buying candidates in order to protect them.

Every time investors in fossil fuels lose money it's a good thing. The sector will resist reform for as long as it's wealthy, so it needs to lose money, for whatever reason. If some individual investors go broke in the process, good, because f.ck those c.nts with a nodding donkey anyway.

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Re: The Death Of Fossil Fuels

Post by bjn » Tue Apr 21, 2020 11:41 am

Bird on a Fire wrote:
Tue Apr 21, 2020 11:37 am
Each short-term shock demonstrates that oil is a risky investment, subject to changes to lifestyles (which may well continue after the pandemic) as well as political interference (which may well continue after the pandemic).

Those are amongst the reasons that many large firms are now choosing to dump fossil stocks, rather than engaging in political "lobbying" and buying candidates in order to protect them.

Every time investors in fossil fuels lose money it's a good thing. The sector will resist reform for as long as it's wealthy, so it needs to lose money, for whatever reason. If some individual investors go broke in the process, good, because f.ck those c.nts with a nodding donkey anyway.
Yep.

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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Tue Apr 21, 2020 11:42 am

EACLucifer wrote:
Tue Apr 21, 2020 8:54 am
This is no help to decarbonising - to do that, we need massive investment in the lowest carbon energy sources - and I fear that may be difficult in a post-pandemic recession
If investors no longer find oil attractive, it becomes more likely that they'll invest in the alternatives. Renewables are already more economically viable for a lot of use cases. The riskier investments in fossil fuels become, the more likely the necessary investment in safer alternatives becomes.

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Re: The Death Of Fossil Fuels

Post by Martin_B » Tue Apr 21, 2020 1:11 pm

bjn wrote:
Tue Apr 21, 2020 8:18 am
Which may be many many months away. Given that they were already debt laden and struggling with low oil prices below their break even point even before the Saudi/Russian price war, they are f.cked.
The companies can generally tolerate a lower oil price than countries. Chevron, Shell, etc can make profit on some quite low oil prices during low demand times, just by producing from the lower operating cost facilities. The Russian economy requires an oil price of ~$40/barrel to bring in enough revenue to balance the country's books at the rates they could produce.

The Saudi economy needs closer to $100/barrel at the December 2019 production rates, but they do have massive cash reserves so can withstand low oil prices for a few years.

Other countries are in far worse positions - places like Venezuela and Nigeria probably needs more like $120/barrel and don't have deep pockets.
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Re: The Death Of Fossil Fuels

Post by EACLucifer » Tue Apr 21, 2020 2:06 pm

Bird on a Fire wrote:
Tue Apr 21, 2020 11:42 am
EACLucifer wrote:
Tue Apr 21, 2020 8:54 am
This is no help to decarbonising - to do that, we need massive investment in the lowest carbon energy sources - and I fear that may be difficult in a post-pandemic recession
If investors no longer find oil attractive, it becomes more likely that they'll invest in the alternatives. Renewables are already more economically viable for a lot of use cases. The riskier investments in fossil fuels become, the more likely the necessary investment in safer alternatives becomes.
Yeah, they are a bad investment in the worst pandemic in a century, unlike...oh wait. Almost everything is a bad investment during the worst pandemic in a century.

And yes, the prices for, say, new build coal do make renewables look very attractive by comparison, my fear isn't that we'll get a bunch of new build fossil fuel power generation. My fear is that there won't be enough investment in any power generation, and existing fossil fuel use will be eked out as much as possible. Consider Germany; their brown coal use won't be phased out until 2038, and they'll be expanding natural gas capacity to make up some of the shortfall

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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Tue Apr 21, 2020 2:29 pm

EACLucifer wrote:
Tue Apr 21, 2020 2:06 pm
Bird on a Fire wrote:
Tue Apr 21, 2020 11:42 am
EACLucifer wrote:
Tue Apr 21, 2020 8:54 am
This is no help to decarbonising - to do that, we need massive investment in the lowest carbon energy sources - and I fear that may be difficult in a post-pandemic recession
If investors no longer find oil attractive, it becomes more likely that they'll invest in the alternatives. Renewables are already more economically viable for a lot of use cases. The riskier investments in fossil fuels become, the more likely the necessary investment in safer alternatives becomes.
Yeah, they are a bad investment in the worst pandemic in a century, unlike...oh wait. Almost everything is a bad investment during the worst pandemic in a century.

And yes, the prices for, say, new build coal do make renewables look very attractive by comparison, my fear isn't that we'll get a bunch of new build fossil fuel power generation. My fear is that there won't be enough investment in any power generation, and existing fossil fuel use will be eked out as much as possible. Consider Germany; their brown coal use won't be phased out until 2038, and they'll be expanding natural gas capacity to make up some of the shortfall
I share your fears about investment in renewables. The EU is currently being almost as useless as the USA, despite the environment supposedly being the Commission's priority for the next 5 years.

Economic damage to investors in fossil fuels is still helpful, though, as it weakens the sector's enormous lobbying/bribery power and makes it more likely that investments will happen elsewhere.

And note that a lot of people are hoping/expecting that things like working from home will be more normal post-covid than under the previous status quo. What we are seeing currently may be indicative of long-term changes to society's demand for oil - and note that a lot of staying at home has been citizen-led and voluntary, so even if governments in corrupt oil economies like the USA try to encourage everybody to get out driving several hours a day every day again, a lot of people simply don't want to and will be pushing for the ability to work from home more often.

If there is a recession, demand will decline from things like fewer holidays, and the fact that the unemployed tend not to commute anywhere. So this is potentially a hint of future damage to the fossil fuel sector, on top of a small but significant amount of damage happening now. I hope there isn't one, of course.

But I'll put it this way - if oil were currently as good an investment as it would have been without the pandemic, would that make investment in renewables any more likely? If not, negative oil prices good news.

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Re: The Death Of Fossil Fuels

Post by Grumble » Tue Apr 21, 2020 4:34 pm

On a positive note the national grid broke the record for the amount of solar power yesterday. Nearly 9.7 GW! In April!
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Re: The Death Of Fossil Fuels

Post by bjn » Tue Apr 21, 2020 4:38 pm

Martin_B wrote:
Tue Apr 21, 2020 1:11 pm
bjn wrote:
Tue Apr 21, 2020 8:18 am
Which may be many many months away. Given that they were already debt laden and struggling with low oil prices below their break even point even before the Saudi/Russian price war, they are f.cked.
The companies can generally tolerate a lower oil price than countries. Chevron, Shell, etc can make profit on some quite low oil prices during low demand times, just by producing from the lower operating cost facilities. The Russian economy requires an oil price of ~$40/barrel to bring in enough revenue to balance the country's books at the rates they could produce.

The Saudi economy needs closer to $100/barrel at the December 2019 production rates, but they do have massive cash reserves so can withstand low oil prices for a few years.

Other countries are in far worse positions - places like Venezuela and Nigeria probably needs more like $120/barrel and don't have deep pockets.
Break even for US shale oil producers is estimated to be $50/barrel. A big chunk of that cost will be capex as opposed to opex, usually in the way of debt. That needs paying even if you aren't making money and have stopped pumping oil to reduce your opex. If it is a minor undiversified producer that holds that debt, they've got absolutely nothing to fall back on. If a major, they'll still be bleeding, but losing proportionately less money, and reconsidering the wisdom of investing in that class of assets. Yes oil prices will recover, FSM know to where.

And yes, a few companies going pop due to negative oil prices is going to be less painful for a county than the whole economy collapsing.

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Re: The Death Of Fossil Fuels

Post by Millennie Al » Fri Apr 24, 2020 1:03 am

Bird on a Fire wrote:
Tue Apr 21, 2020 2:29 pm
But I'll put it this way - if oil were currently as good an investment as it would have been without the pandemic, would that make investment in renewables any more likely? If not, negative oil prices good news.
Negative oil prices are a disaster for renewables. If you can get energy so cheap that they'll pay you to take it away, then investment in any form of new energy supply is totally uneconomic. Of course, oil prices in general are not negative - only a few very specific prices are, but if there is a reduced demand for energy (as there is currrently) then also investment in any new supply is uneconomic except as planning to handle expected increased demand.

If you like renewables you should be hoping for hugely increasing oil prices as that is what stimulates people to find alternatives. This nowadays is facilitated by the anti-competitive practices of OPEC when they keep the price of oil artificially high. In times past, Standard Oil dominated the US oil business and might have stimulated alternative energy sources had it not been broken up as anti-competitive.
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Re: The Death Of Fossil Fuels

Post by lpm » Fri Apr 24, 2020 6:57 am

No. That is not how the economics works.
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Re: The Death Of Fossil Fuels

Post by dyqik » Fri Apr 24, 2020 1:20 pm

lpm wrote:
Fri Apr 24, 2020 6:57 am
No. That is not how the economics works.
It's certainly not how futures work, or how post-refinery storage capacity for multiple different oil products work.

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Re: The Death Of Fossil Fuels

Post by lpm » Fri Apr 24, 2020 3:19 pm

Renewable contracts are a good illustration of how investment works in the real world.

For example, the most recent auctions for UK electricity supply were all 15 years - but not starting till 2023-25. Some people here will remember a discussion on another forum about it, with offshore wind farms bidding at amazingly low prices.

Investment being made now - the building of new turbines or solar panels - are based on this sort of time horizon. Nobody in the real world looks at the current cheap oil, and decides to build oil-fired power stations to deliver electricity from 2024 to 2039. Nobody sane says: renewables on Friday 24 April 2020 are more expensive than oil, so I'll abandon my project to build 550 new turbines in the North Sea.
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Re: The Death Of Fossil Fuels

Post by Grumble » Fri Apr 24, 2020 4:21 pm

According to Baroness Worthington, who knows her stuff, lobbying by the nuclear industry has had a direct beneficial impact on renewables bidding for contracts because of how the contracts are structured.

https://overcast.fm/+QQ4oUl4So
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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Fri Apr 24, 2020 6:44 pm

Plus, economics is only part of the story.

The fossil fuel market is a spectacular example of market failure, in that there are enormous externalities that are pretty much ignored by the marketplace. Indeed, in the fifty-ish years we've known about those externalities, nobody has even come up with a widely-agreed-upon method to price in those externalities, let alone got it implemented.

A large part of the problem isn't purely economic in nature, though: it's political. Most people are in favour of stronger action against climate change, but governments are oddly reluctant to implement anything particularly effective such as a carbon tax. Moreover, most governments are still actively subsidising fossil fuel projects, despite also spending money to recover from natural disasters, pollution incidents (both acute and chronic, e.g. the cost of London's air pollution to the NHS).

This is because fossil fuel companies, and the investors who invest in them (which is most of them, including jdc), also invest a lot of money in political lobbying at various levels to try to water down any action to the point of ineffectiveness. In the US, for example, they have donated not just to the GOP but also to the Biden campaign in the Democratic primaries, such was their fear of a Sanders presidency's promises of drastic action.

As far as I can tell, significant progress on combating climate change can't come until the entire fossil fuel industry is so economically damaged that they can no longer afford to engage in large-scale political and propaganda projects. We're a long way off that, unfortunately, with little on the horizon suggesting a change to the status quo in the next half-decade (the EU is maybe getting there, slowly).

So we're left hoping for death by a thousand cuts. I for one will be celebrating every one of those cuts, and if that makes me a "blithering idiot" then so be it.

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Re: The Death Of Fossil Fuels

Post by Woodchopper » Sat Apr 25, 2020 10:27 am

Bird on a Fire wrote:
Fri Apr 24, 2020 6:44 pm
Plus, economics is only part of the story.

The fossil fuel market is a spectacular example of market failure, in that there are enormous externalities that are pretty much ignored by the marketplace. Indeed, in the fifty-ish years we've known about those externalities, nobody has even come up with a widely-agreed-upon method to price in those externalities, let alone got it implemented.

A large part of the problem isn't purely economic in nature, though: it's political. Most people are in favour of stronger action against climate change, but governments are oddly reluctant to implement anything particularly effective such as a carbon tax. Moreover, most governments are still actively subsidising fossil fuel projects, despite also spending money to recover from natural disasters, pollution incidents (both acute and chronic, e.g. the cost of London's air pollution to the NHS).

This is because fossil fuel companies, and the investors who invest in them (which is most of them, including jdc), also invest a lot of money in political lobbying at various levels to try to water down any action to the point of ineffectiveness. In the US, for example, they have donated not just to the GOP but also to the Biden campaign in the Democratic primaries, such was their fear of a Sanders presidency's promises of drastic action.

As far as I can tell, significant progress on combating climate change can't come until the entire fossil fuel industry is so economically damaged that they can no longer afford to engage in large-scale political and propaganda projects. We're a long way off that, unfortunately, with little on the horizon suggesting a change to the status quo in the next half-decade (the EU is maybe getting there, slowly).

So we're left hoping for death by a thousand cuts. I for one will be celebrating every one of those cuts, and if that makes me a "blithering idiot" then so be it.
Industry lobbying is of course important. But I suspect that "Most people are in favour of stronger action against climate change," is very optimistic. A majority will of course say yes if asked. But they also oppose attempts to reduce their own consumption (either through tax increases, price rises or cuts in production), see protests against fuel price rises for an example. So they'll support stronger action so long as their lifestyles aren't affected.

People will accept reductions in consumption if they face a dire emergency (eg Covid shutdowns, and even then its not hard to find examples of 'let the pensioners die'). The problem with climate change is that in terms of current voters in developed countries, the dire emergency will be experienced by people in other countries, and by future generations.

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Re: The Death Of Fossil Fuels

Post by jdc » Sat Apr 25, 2020 3:00 pm

Bird on a Fire wrote:
Fri Apr 24, 2020 6:44 pm
Plus, economics is only part of the story.

The fossil fuel market is a spectacular example of market failure, in that there are enormous externalities that are pretty much ignored by the marketplace. Indeed, in the fifty-ish years we've known about those externalities, nobody has even come up with a widely-agreed-upon method to price in those externalities, let alone got it implemented.

A large part of the problem isn't purely economic in nature, though: it's political. Most people are in favour of stronger action against climate change, but governments are oddly reluctant to implement anything particularly effective such as a carbon tax. Moreover, most governments are still actively subsidising fossil fuel projects, despite also spending money to recover from natural disasters, pollution incidents (both acute and chronic, e.g. the cost of London's air pollution to the NHS).

This is because fossil fuel companies, and the investors who invest in them (which is most of them, including jdc), also invest a lot of money in political lobbying at various levels to try to water down any action to the point of ineffectiveness. In the US, for example, they have donated not just to the GOP but also to the Biden campaign in the Democratic primaries, such was their fear of a Sanders presidency's promises of drastic action.

As far as I can tell, significant progress on combating climate change can't come until the entire fossil fuel industry is so economically damaged that they can no longer afford to engage in large-scale political and propaganda projects. We're a long way off that, unfortunately, with little on the horizon suggesting a change to the status quo in the next half-decade (the EU is maybe getting there, slowly).

So we're left hoping for death by a thousand cuts. I for one will be celebrating every one of those cuts, and if that makes me a "blithering idiot" then so be it.
I dunno. One minute you're telling people off for ripping into the man in the street and the next you're ripping into the man in the street. Hard to know where we stand with you Boaf.

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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Sat Apr 25, 2020 9:54 pm

Most men in the street don't manage investment portfolios, or even have them really..

The economic and social damage from the loss of a single sector is nothing compared with what will come from climate change.

Obviously the workers in the sector need retraining and new jobs, which is why all the big political plans (the USA Green New Deal and the European Green Deal, for instance) include just transition funds.

But the sector's gotta go asap.

Or have I misunderstood you?

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Re: The Death Of Fossil Fuels

Post by bjn » Sun Apr 26, 2020 7:59 pm

Good news, coal in the USA is having lots of problems because of the reduced electricity demand and being the most expensive generator. It generated 16% of the US's electricity in March 2020, as compared to 22% in March 2019. Also, renewables were generating more eletricity than coal for the first time in history. Only 3 days, but it's a start.

With any luck, a few bankruptcies and permanent shutting down of plants and mines.

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Re: The Death Of Fossil Fuels

Post by jdc » Tue Apr 28, 2020 9:43 pm

Bird on a Fire wrote:
Sat Apr 25, 2020 9:54 pm
Most men in the street don't manage investment portfolios, or even have them really..

The economic and social damage from the loss of a single sector is nothing compared with what will come from climate change.

Obviously the workers in the sector need retraining and new jobs, which is why all the big political plans (the USA Green New Deal and the European Green Deal, for instance) include just transition funds.

But the sector's gotta go asap.

Or have I misunderstood you?
It was your celebration of people losing money that bothered me a little; I suspect the number of ordinary men and women with investments is higher than you think. Rather than cheering when they lose out, I'd prefer to see something more dull-and-worthy like raising people's awareness of where money may be invested, maybe encouraging people to ask questions of the folk managing their money. (It's probably all being put into companies like Google, Facebook, Amazon but if you don't ask then you don't know for sure that none of it's ending up in, say, arms manufacturing or big tobacco or whatever.)

Re most normal people not managing investment portfolios - obv this is true and maybe I was thinking of 'investors' as the people with savings while you were using the term to refer to the people who were deciding where that money should go.

Re most people not having investment portfolios - aiui it's not just hedge funds and unit trusts that need to be considered it's also pensions, stocks & shares ISAs and probably umpteen other things. I might be underestimating how unusual I am here but I earn £750 a month and live in a shoebox and even I have a pension, a S&S ISA, and a few quid in a unit trust or summat. With things like people being auto-enrolled on workplace pensions now, and various investment products like unit trusts/oeic being advertised directly to people by those reassuring and cuddly types at building societies (that's how I ended up with mine) I'd be surprised if people with spare cash didn't tend to invest at least some of it rather than splashing it all on trinkets and baubles from Amazon. I'm not even sure whether the money in my basic savings account is guilt-free, come to that - f.ck knows who the bank's lending that to behind my back.

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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Tue Apr 28, 2020 9:54 pm

People have been touting individualistic solutions like choosing ethical investments for decades, yet here we are. I think that shifting the burden of responsibility onto the man in the street while expecting them to accept lower returns is worse option here.

Most funds that normal people depend on will be diversified across various sectors, including fossil fuels but also other mining, weapons, technology, etcetera. So I tend to assume that the fossil fuel sector isn't large enough that its demise will affect the man in the street more than pollution, flooding, agricultural instability and civil unrest will.

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Re: The Death Of Fossil Fuels

Post by jdc » Wed Apr 29, 2020 1:07 am

Bird on a Fire wrote:
Tue Apr 28, 2020 9:54 pm
People have been touting individualistic solutions like choosing ethical investments for decades, yet here we are. I think that shifting the burden of responsibility onto the man in the street while expecting them to accept lower returns is worse option here.

Most funds that normal people depend on will be diversified across various sectors, including fossil fuels but also other mining, weapons, technology, etcetera. So I tend to assume that the fossil fuel sector isn't large enough that its demise will affect the man in the street more than pollution, flooding, agricultural instability and civil unrest will.
I'd forgotten they were even a thing. I think the last time I saw something about ethical investments was about 10 yrs ago when someone was pointing out that a church had invested in something they considered unethical. It's not exactly constantly in your face, is it? (Well it might be constantly in some people's faces but not mine.)

If you don't see what you'll be investing in, you tend not to think about it. E.g. using p2p lending sites, you can stick some cash in an account that will automatically allocate your money to people and it won't occur to you to think about who they are. Using a manual investment account means you get to see who's asking for money and what they want it for and it does make a difference - you get to feel all smug and self-righteous when you put £2.50 towards a wind farm.

I've looked at loads of investments and (except manual investments which are not the norm for me) I've never noticed anything about where your money's going to end up or whether the investment company has any kind of policy on what they're willing to throw your cash at. If nobody's shouting about it, then I ain't thinking about it.

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