International Conference on Divestment 01/09/2015 Pascal Canfin Senior Advisor on International Climate Affairs at WRI (World Resources Institute)
2 emblematic examples of the dramatic fall in coal value Australia - crumbling value The capitalization of the Australian coal companies has dramatically plunged over the past two years. Investing in Australian coal is not at all a good deal !
China - 3 facts Chinese coal price has constantly been falling since January 2013 and droped of 21% over the last 6 months. And coal consumption has dropped of 8% in the first quarter of 2015. On 39 Chine coal companies, 31 have suffered net profit loss between 2014-2015. Chinese commercial banks are increasingly reluctant to grant credits to coal companies.
The dramatic fall of solar panels cost According to Deutsche Bank, solar is now at cost parity with non-renewable energy sources that produce electricity (coal, gas, nuclear …) in almost half of the global market and this percentage will reach nearly 80% in 2017. In South Africa, for example, wind energy is 30% cheaper than new coal plants. This is due in particular to the dramatic decline in the price of solar generated electricity. USD/MWh
Sources: Citi Research 2012; G. F Nemet, “Beyond the learning curve”, Energy Policy 34, 3218-3232 (2006)
Conclusion In order to understand the future, sometimes we have to go back in time. Let's go back in 1890. That year, the first index of the New York Stock Exchange, the famous Dow Jones, was born. These were its components: Central Pacific Railroad
Louisville & Nashville Railroad
Delaware & Western Railroad
Union Pacific Railroad
Northern Pacific Railway
Chicago & North Western Railway
Central Railroad of New Jersey
Missouri Pacific Railroad
Lake Shore Railway
Western Union
Pacific Mail Steamship
Delaware & Hudson Canal
Chicago & St. Paul Railroad
New York Central Railroad
The common point between these companies: they are all railway companies.
Conclusion What about 25 years later? Let’s take a look at the index in 1914, only one century ago. No railway company is no longer present. American Car and Foundry
American Smelting and Refining
Amalgamated Copper
General Motors Corporation
Central Leather
US Steel
Peoples Gas
American Sugar
General Electric Company
National Lead
US Rubber
US Steel (Preferred)
In 1890 no one imagined that in a few years, private cars and the development of oil extraction would revolutionise our mobility and that the shares of railway companies would lose such a huge value that they disappeared from the stock exchange index.