Former US Vice President Al Gore attends the opening day of the World Climate Change Conference 2015... [+] (COP21) at Le Bourget, near Paris, on November 30, 2015. (Photo by STEPHANE MAHE/AFP/Getty Images) Updated PARIS—Investors should move their assets from fossil fuels to renewable energy not just for social or moral reasons, former Vice President Al Gore said here moments ago, but for their own financial health. “Investors need to look at the pattern that is unfolding lest they be trapped holding stranded assets," Gore told about a thousand reporters and diplomats gathered at COP 21, the Paris Climate Conference. Smart investors already know, Gore said, there are many pathways to stranding. The UN climate effort is one, the effort by provinces that have launched carbon markets is another, and economic inevitability is the third: "Another pathway to stranding is precisely this dramatic cost down-curve for renewable energy that is competing directly with carbon sources." Gore mentioned Warren Buffet's purchase this summer of solar energy at 3.87 cents per kilowatt hour, the cheapest energy price in the U.S. In energy markets, it matters a lot which form of energy is cheaper, even a tiny bit cheaper. And soon, he argued, renewables will be cheaper than fossil fuels. "The explosive growth in demand once that threshold of cheaper-than is crossed is remarkable," Gore said, it's already here in some regions, and it's coming soon in others. Goldman Sachs released a report this week that predicted "Those of you who pay attention to the energy markets and the energy economy know what an incredibly powerful development for energy markets was caused by that sudden addition of fractured gas," Gore said. But the switch to renewables will be greater because they do not incur the extraction cost of fossil fuels. Once capital costs are recovered, the energy they generate is free. "When you have a choice between paid and free," he said, "the choice is usually free." There are already trillions of dollars of stranded carbon assets, there are illusions that make their value appear higher, and there are active efforts to fool investors, Gore said, citing the New York Attorney General's investigation of Exxon. "So a lot of investors are now saying what you have to do: diversify your investments in the low carbon economy, divest first from the riskiest carbon assets and over time from all that look as if they are in danger of being stranded, and then invest in the fantastic new opportunities that are emerging in the low-carbon economy." In addition to being a former vice president, a winner of the popular vote in a presidential election, and a Nobel Prize-winning climate activist, Gore has styled himself over the last decade as a green technology investor. He co-founded a London investment firm, Generation Investment Management, to demonstrate that green investing makes financial sense. In the October issue of Atlantic Monthly, James Fallows describes the fund's great achievement—both high returns and low risk: During that tumultuous time, from the summer of 2005 through this past June, the MSCI World Index, a widely accepted measure of global stock-market performance, showed an overall average growth rate of 7 percent a year.... But through that same period, according to Mercer (a London analysis firm), the average return for Generation’s global-equity fund, in which nearly all its assets are invested, was 12.1 percent a year, or more than 500 basis points above the MSCI index’s growth rate. Of the more than 200 global-equity managers in the survey, Generation’s 10-year average ranked as No. 2. In addition to being nearly the highest-returning fund, Generation’s global-equity fund was among the least volatile. Generation's message to capitalists, according to Gore, is that they can make more money if they invest in ways that avoid environmental and social harm.
Investors should move their assets from fossil fuels to renewable energy sources, not just for social or moral reasons, but also for their financial health in the form of stranded carbon assets, warned former US Vice President (and now green technology investor) Al Gore, speaking at the Paris Climate Conference (COP 21). Gore pointed out the many pathways to stranding including the UN climate effort, economic inevitability and the dramatic cost down-curve for renewable energy which will soon make them cheaper than fossil fuels. He advised investors to "divest first from the riskiest carbon assets and over time from all that look as if they are in danger of being stranded, and then invest in the fantastic new opportunities that are emerging in the low-carbon economy".