ocean oil rig collaged with downward stock chart arrow (Photo: Shutterstock)

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With fires raging in Australia and floods ravaging Indonesia,Mark Carney, outgoing governor of the Bank of England, warned thatpension funds too could be in a world of hurtif they end up holding the bag on fossil fuel assets.

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Related: Fed researcher warns climate change couldspur financial crisis

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The Guardian reports that Carney warned pension funds, alongwith other investors, that they could be on the hook for massivelosses as fossil fuel investments become "worthless," with globalemissions reduction targets biting into the worth of fossil fuelcompanies and their assets—particularly as renewables eat intofossil fuels' market share.

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He's quoted saying, "Up to 80 percent of coal assets will bestranded, up to half of developed oil reserves. A question forevery company, every financial institution, every asset manager,pension fund, or insurer: What's your plan?"

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He pointed out that pension funds "could make [the] argument" toclients that, despite the fact that returns are still tempting atpresent, it's better to abandon fossil fuel investments now beforethey sink in value. He says in the report that pension funds "needto make the argument, to be clear about why is that going to be thecase if a substantial proportion of those assets are going to beworthless."

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He also warned that the financial sector isn't tackling theproblem quickly enough and said that climate deniers need to droptheir opposition to coping with the climate emergency, saying, "Wecan't afford on this one to have selective information, spin,misdirection."

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Aside from the climate issue itself and its potential effects,it's a huge chunk of money that will be at risk, according to theGuardian, which wrote: "The Bank of England has said assets worthup to $20tn (£16tn) could become worthless very quickly if thefinancial sector and business do not make a smooth transitiontowards a zero-carbon economy."

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Retirees already facing crises of inadequate savings andincreasing market volatility will not be happy if what they havemanaged to save turns out to be sunk into worthless fossil-fuelassets and vanishes, as it were, in a puff of smoke.

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A Yahoo Finance report points out that Carney isn't the onlyone sounding the alarm, reminding that in November, Marisa Drew,head of Credit Suisse's impact advisory and finance division, wasquoted saying that investments could "go tozero quickly" if firms ignore the risks.

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