Are the gyrations in the oil price the first sign of the climate change “Minsky moment” foreseen by Mark Carney and others? Vibeka Mair takes a look.
When the oil price shock hit on Monday, the Centre for Climate Finance and Investment at Imperial College London analysed the performance of renewables versus fossil fuels in listed equity markets and found some interesting results.
Charles Donovan, Executive Director at the Centre, explains: “We’ve been doing work to look at the underlying risk factors that are driving returns in renewables versus fossil fuels in listed markets.
“On Monday, we saw how a portfolio of renewable energy shares performed relative to fossil fuel stocks under high stress. When you have a big sell-off, that should be very bad for high beta stocks. In particular, small cap stocks usually get hammered.”
The analysis in fact found that the renewable energy portfolio – which excluded utilities – dropped by only half as m…