According to a recent study from the University of Cambridge, we should prepare for a much worse financial crisis than the 2008 crisis.
- Economists warn that the last recession was spurred by $250 billion losses.
- The incoming crisis will be sparked by losses in fossil fuel investments of $1-3 trillion.
Analysts believe that the trillion-dollar carbon bubble we have all been living in could soon burst.
The next financial crisis is expected to be caused by technological advancements that will make fossil fuel outdated. The University of Cambridge team conducted macroeconomic simulations to reach the conclusion.
Study authors found that the technological progress around green energy will drive the next crisis. The team recommends governments to gradually shrink the carbon bubble to avert a catastrophe. If states fail to address the issue, the next financial crisis will be much worse than the Great Recession.
Carbon Bubble Could Burst by 2035
In the study, researchers ran several simulations and found that the worst-case scenario for the global economy would be high fossil-fuel output despite lower demand.
If OPEC nations maintain production levels as prices drop, they will crowd out the market,
researcher Hector Pollitt said.
Pollitt, who works at Cambridge Centre for Environment, Energy and Natural Resource Governance warns that this is just the beginning. The simulations show that, by 2035, fossil fuel prices will sink so low that producers will not be able to make profits.
As a result, the job losses could lead to an increased social tumult. Also, governments’ stricter climate change policies would only make the situation worse, researchers claim. The best course of action for the fossil fuel industry is to lower investments and production.
Cambridge researchers’ findings are at odds with OPEC’s prediction that oil prices could hit the ceiling if the industry does not invest more to ramp up production.
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