Carbon prices will be much higher than current prices, and fossil fuel assets will come down, imposing enormous amounts of transition risks, says Stiglitz He warns of more severe version of 2008 global financial crisis by pointing out that carbon accounts for bigger piece of global economy than subprime mortgages.
Nobel laureate economist Joseph Stiglitz warned of a more severe version of the 2008 global financial crisis by pointing out that carbon, which is priced “nowhere near” where it must be to achieve the world’s climate goals, accounts for a much bigger piece of the global economy than subprime mortgages.
“Remember that the 2008 crisis originated in one part of the economy, in the real estate sector, and one part of the real estate sector, the subprime, and there was a problem of mispricing of the risks, mispricing of the mortgages in that small part of the global financial system,” Stiglitz said at a three-day virtual conference co-sponsored by the Bank for International Settlements and International Monetary Fund.
“Reasonable carbon prices are going to be much higher than current prices, and that means … fossil fuel assets will come down, and [fossil fuel] projects will come down very dramatically, very quickly, and that in turn … imposes enormous amounts of transition risks,” he said in a keynote address at the Green Swan Conference.
“Those risks are systemic,” Stiglitz added. “They lie not only in the fossil fuel companies, but in the companies that lend to the fossil fuels, companies that own shares in the fossil fuels, companies that trade with the fossil fuel companies.

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