Ed Davey seems to be a little confused as to his correct role in the matters of the world:

Investing in fossil fuels is becoming increasingly risky because global action to tackle climate change will curb demand, forcing companies to leave unprofitable reserves in the ground, Ed Davey, the energy secretary, has warned.

Financial authorities must examine the risks posed by coal, oil and gas companies to prevent pension funds investing in what could become “the sub-prime assets of the future”, Mr Davey said.

The comments are Mr Davey’s first intervention into the debate over the “carbon bubble”, the theory that the world’s existing fossil fuel reserves are overvalued because the majority must be left unburned in the ground if extremes of global warming are to be avoided.

Mr Davey told the Telegraph: “One has got to worry about the investments for pensioners.

"If pension funds are investing in companies or banks have on their balance sheets huge amounts of assets in fossil fuels, and those assets don’t give the return that people expect – because of changes in technology where low-carbon becomes cheaper or because of the world having to take action against carbon emissions – one has got to protect those pensioners and those investments.”

It's obviously entirely correct that the minister in charge of worrying about climate change should worry about climate change. Even, where and if action is necessary on the subject, suggest what action is necessary. However, in a market society that's as far as it goes. How people react to those plans and suggestions is entirely up to them and that includes where and how they invest their money.

Go away Mr. Davey, it's just none of your damn business.

As to the basic notion that fossil fuel reserves are going to be worth nothing in 50 years' time that's not particularly a problem. Anyone familiar with any part of the climate change debate should know about the controversy over discount rates: what interest rate should we use to consider the value of things that happen in the far future? Similarly, all should know that Stern and others have had to use a very much lower than market interest rate to reach the conclusions that they do. But note that these assets, the future values of fossil fuel reserves, are discounted at a market interest rate. Meaning that the value of reserves in 50 years' time is, in net present value encapsulated in share price4s, pretty much nothing. For that's exactly what discounting over long periods of time does: thus the problem that Stern had and the need to *not* use market rates in order to bolster the case to do something. This works both ways, of course it does. Just as the use of market rates would lead to future damage from climate change being so trivial in present values that we'd do nothing about it, the use of market rates to value reserves in the far future means that value is so trivial we do not much about them.

And yes, amazingly, markets do value reserves using market interest and discount rates.

Oh: and there's another thing. The big oil companies already include in their evaluations of those future values the effects of a substantial carbon price. They're already valuing everything after the effects of the policies that you're pursuing Mr. Davey.