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There’s an elephant loose on wall street.
It isn’t just bulls and bears.
Whenever he speaks, nobody peeks,
Because nobody dares.
He tiptoes around commodities,
Sleeping in the stocks and bonds.
He asks the elite he happens to meet,
“What planet are you on?”
There’s a bubble made of carbon.
It’s really gonna blow your mind.
This great big world just cannot burn
Everything you find.
It’s a hundred trillion dollars,
A-gonna come tumbling down,
In coal and gas and oil
That’s staying in the ground.
And in the ground means off the books,
And no more revenues.
It comes right off of the balance sheet,
And Wall Street gonna be singing the blues:
“Waa – waa”
If you ever should wish to retire,
Or have a retirement plan,
Don’t be a fool for fossil fuel.
Better get out while you can,
‘Cause there’s an elephant loose on Wall Street,
And there’s just one thing you can do:
Better lock that door before he steps on you!
Music & lyrics ©Doug Hendren 2015.
What’s it about?
This song grew out of a recent Huffington Post piece by neighbor Dave Pruett, Taming the Elephant on Wall Street. It’s about what has already started happening to fossil fuel investments as the world gradually wakes up to the realities of climate change and the need to stop burning carbon-based fuels. The “elephant on Wall Street” is the huge “carbon bubble” represented by overvalued fossil fuel companies.
Stranded assets: Known coal, gas and oil reserves make up a large amount of the total asset value of the world’s financial markets. The value of a company like Exxon or BP or Archway Coal is based largely on the fossil fuel assets which they control, and expect to sell. This expectation, however, is now in doubt. Climate science has firmly established that 80% of known reserves are now “unburnable” (see below). This means that many of the most profitable companies in the world are only worth around 20% of their current stock prices.
How much money are we talking about? An estimated $5 trillion dollars in potentially stranded assets is currently on the balance sheets of Wall Street corporations. The total value of fossil assets at risk is much higher than this, however – estimated as high as $25 trillion. — even higher than the total cost of the 2008 global financial crisis ($22 trillion).
Fossil fuels have been reliable investments for the past century, but the party’s over. With competition from renewables and regulatory adjustments to offset associated pollution, health and climate risks (just like taxes on cigarettes), fossil fuels are no longer the cheapest sources of energy.
As fossil fuel and utility profit margins have dwindled, their investor dividends have shrunk and their stock prices have plummeted. Fossil fuel stocks are now volatile investments, no longer dependable for stable value and dividends.
The fossil fuel divestment movement advanced by 350.org less than three years ago is now a force to be reckoned with. Universities, churches, cities and states have jumped on board. Such diverse entities as the World Council of Churches, Vatican, and the State of California have now joined in as well. Even Islam has recently weighed in on the necessity of responding to the climate crisis.
The world is moving away fossil fuels and into an economy based on renewable energy. The only question is whether we will do it quickly enough for our children to avoid the worst consequences of climate change.
Divesting from fossil stocks is good stewardship and good business sense. Some fossil-free investment options are listed below. Tell your friends about the elephant!
The Economist: Unburnable Carbon.
Carbon Tracker:Unburnable Carbon: Are the world’s financial markets carrying a carbon bubble?
The Guardian: Most fossil fuel reserves can’t be burned. Governor of the Bank of England says fossil fuel investments are at risk.
Climate Policy Initiative: Moving to a low carbon economy: The impact of policy pathways on fossil fuel asset values.