Glencore (LON:GLEN), the world’s No. 1 exporter of coal used in power stations, believes governments would fail to implement measures to cut carbon emissions, such as forcing miners keep its reserves in the ground.
Speaking at the launch of Glencore’s sustainability report on Tuesday, chief executive Ivan Glasenberg said growing demand for cheap energy would secure demand for fossil fuels. This way, the executive dismissed concerns that any of his company’s 4.3 billion tonnes of coal reserves could be left worthless – or ‘stranded’ – by international action to cut greenhouse gases, Bloomberg reported:
“Some of our stakeholders are concerned about the future of our fossil fuel reserves; in particular that they may become stranded assets. We do not believe that the global energy reality will economically support carbon measures that would prevent us from fully utilizing our fossil fuel reserves,” Glasenberg said.
Critics were quick to react. Anthony Hobley, chief executive of the Carbon Tracker Initiative, told The Guardian that Glasenberg’s statement bluntly challenges reports from international banks, such as HSBC, and ignores the concerns of the Bank of England and the G20.
“It reminds me of similar denials by previous industries in decline from steam locomotion, Kodak film, Blockbuster videos and Olivetti typewriters,” Hobley was quoted as saying.
A recent report from the UN’s Intergovernmental Panel on Climate Change, claims that 80% of the known coal reserves must remain in the ground if ongoing changes in the world’s climate are to be tackled. The document, approved by 195 of the world’s nations, concluded that limiting the impacts of global warming “is necessary to achieve sustainable development and equity, including poverty eradication” and that climate change impacts are projected “to prolong existing and create new poverty traps”.
According to the World Coal Association, coal currently supplies about 30% of the world’s main energy needs and over 40% of its electricity. At the same time, consumption of the fossil fuel in China, the world’s biggest consumer, fell in 2014 for the first time in 14 years. The nation has said it will ban coal use in smog-cloaked Beijing by 2020.