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Climate Change May Curb Profits From Fossil Fuels, Study Says

Fossil-fuel assets such as coal mines and gas wells may lose value if climate change prompts tougher regulations, according to a report from Al Gore and David Blood’s Generation Investment Management.

About two-thirds of the fossil fuels still underground must remain there if the planet is to meet a United Nations target of limiting global warming to 2 degrees Celsius (3.6 degrees Fahrenheit). That means assets such as coal mines and gas wells may have to reduce production, cutting profits, according to the paper.

“It is no longer prudent for investors and asset owners to treat climate change as a peripheral issue,” Blood, co-founder of Generation Investment, said in the statement. “Investors and asset owners should capitalize on the opportunities emerging from the transition to a low-carbon economy. The competitive landscape for fossil fuel-intensive companies is losing its attractiveness at an accelerated rate.”

Social, scientific and political pressure to switch to renewables may be buoyed by efforts to conserve more of the water used in conventional power plants, the paper said.

To contact the reporter on this story: Justin Doom in New York at jdoom1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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