Personal Finance

Tom Hudson: Energy investors need not worry about climate-change summit

A global climate summit with 120 heads of state attending and a particular focus on finance could pose a long-term threat to fossil-fuel energy investors. But when that summit promises no global bargaining over greenhouse-gas emissions, it likely won’t hold much risk for energy shareholders.

The United Nations Climate Change Summit on Tuesday will be the first worldwide climate-change gathering of presidents and prime ministers in five years. However, it is not designed for world economic leaders to hammer out hard-fought agreements slowing the world’s appetite for carbon energy. If it had, it would show a myopic view of previous efforts to have a global grand bargain on greenhouse emissions. Kyoto, Cancún, Doha — previous failed carbon-reduction deals sound like the itinerary for a globetrotting financier.

Instead of pressing emerging nations like China, India and Indonesia to live by different rules than when the U.S. and Europe were developing their industrial economies, the talks on Tuesday aim to “galvanize and catalyze climate action.” U.N. Secretary-General Ban Ki-moon wants political leaders to bring “bold announcements and actions” as the group aims for a “meaningful legal agreement in 2015.”

Energy investors need not worry about such expectant language leading to a tax on carbon or fewer subsidies, given the current political climate in America.

The fracking revolution in the United States has led to lower energy prices for consumers. China is not about to risk its shaky and still growing middle class despite choking its air with coal dust. And energy users and investors have been trained to accept the long-term climate risk in exchange for the powerful benefit and profit potential now of carbon.

Financial journalist Tom Hudson hosts The Sunshine Economy on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.