Battery technologies starting to disrupt the electricity and automobile industries may also emerge as a trillion-dollar threat to credit markets, according to Fitch Ratings.
A quarter of outstanding global corporate debt, or as much as $3.4 trillion, is linked to the utility- and auto-industry bonds that rely on fossil fuel activities, the ratings agency wrote in a report published Tuesday.
Batteries have the potential to “tip the oil market from growth to contraction earlier than anticipated,” according to Fitch. “The narrative of oil’s decline is well rehearsed — and if it starts to play out there is a risk that capital will act long before” and in the worst case result in an “investor death spiral.”
While hybrid and battery-only cars are making slow progress in denting sales of gasoline and diesel-driven vehicles, their growth trajectory may be grossly underestimated, said the authors of the study. The clean-energy research unit of Bloomberg LP estimates that battery-electric vehicles, which only run on power from a plug, will displace 13 million barrels of oil a day by 2040.