This is really interesting. Even in the absence of sufficiently strong GHG policy, markets increasingly prefer the risk profile of clean cheap energy that doesn't have the price volatility of fossil fuel. bloomberg.com/news/articles/…
To be clear, this has been coming for a long time. I've long maintained that it's easy to predict what's going to happen in energy markets - it's just hard to predict the timing.
(Because capex cycles are so long and market fundamentals are, well, fundamental. But dumb money and/or bad contracts make the timing of liquidity moves hard to predict)
That wonkiness aside, it's why I've been so focused on making sure these shifts don't destabilize our financial markets. A lot of capital is shifting all at once in response to market forces, towards cleaner energy sources. That's good for the environment and your wallet.
But does run the risk of destabilizing corners of our financial markets, and we need to make sure our regulators are vigilant against broader fin market contagion.
This "transition risk" is in addition to the physical risks created by property loss (fires, floods, etc) that climate change poses to our financial system.
And it's why @brianschatz and I have been pushing for our regulators to model, anticipate and protect now, before its too late. casten.house.gov/media/press-re…
Worth noting that the Biden White House has been leaning into this issue as well: whitehouse.gov/briefing-room/…
But we really need the full force of the legislature behind this. Especially as long as the @GOP remains committed to subsidizing losers rather than embracing markets, and pretending that the laws of physics can be denied. Executive orders aren't enough.
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