co-CEOs of Deutsche Bank sheepishly acknowledging the divestment movement

co-CEOs of Deutsche Bank sheepishly acknowledging the divestment movement


The Deutsche Bank Research House produces an analysis of the market in magazine form, called Konzept. In their latest issue, dated January 19th, Deutsche Bank published an article titled, “Peak Carbon before Peak Oil.” The article is part Do The Math regurgitation (big bank flavored), part dismal, apocalyptic, forecasting for the fossil fuel industry. In short, its surprisingly brilliant.

I’ll try to capture a bit of the brilliance in this blog. But for you divestment campaigners here is the link to the magazine; please add it to your towering pile of credible evidence for divestment. But, before we jump into the article, it’s important to mention that Deutsche Bank is heavily entangled in investment partnerships with destructive (and stock plummeting) coal, oil and gas companies.

The report starts by debunking many of the hypotheses around the 50% drop in oil prices last year – the second largest plummet in over three decades. No, it wasn’t over supply, or weak Chinese economic growth, or US shale boom, and not even the “complexities of Middle East politics.” The reason, Deutsche Bank suggests, is climate change consciousness and political momentum. What!? Did they say political momentum? Yup.

“Peak carbon rather than peak oil becomes the primary driver of oil prices.”

They then get into the Do The Math numbers; walking through the carbon budget and the 2 degrees ceiling. It’s brilliant. The article does take a small misguided detour into crazy town, by saying there is a chance that science was wrong all along, or that carbon capture will save us all, or that political momentum will “wane,” but veers out of the unhinged by qualifying that it is a “small” chance.

Given the scientific evidence and the growing political momentum, the outlook for the coal, oil and gas industries is, well, short. “CO2 emissions have to peak in 2020 and thereafter fall by 2.5 per cent a year through to 2035. The corresponding forecast for oil demand is a decline of 0.5 per cent a year, compared with a 1.5 per cent a year increase over the last two decades.” The article even begins to develop a list of evidence of the growing political momentum; “The recent US-China deal will require new policies that reduce their oil demand by 15bn barrels or around 10 per cent over the next 15 years.”

Deutsche Bank takes it to the next level by asking the very same question the divestment campaign has been throwing at trustees over the last year. If the industry already has more than they can burn, what about the billions of dollars spent on expanding reserves every year? “…the oil industry spent $650bn on exploration and development of new reserves last year.” According to Deutsche Bank, the world is sitting on enough oil and gas to burn at current rates for over 50 years – and “a century’s production worth of coal.” As a reminder, we will burn past the carbon budget at current rates in less than 20 years.

Here’s where things get apocalyptic. They comment on OPEC’s decision (Saudi Arabia’s decision) not to cut production in light of falling oil prices and say, “expect the taps to stay fully turned on as producers rush to monetise their assets.” It is now a race to see who can profit from the largest chunk of the carbon budget.

The picture painted is of an industry shift, where OPEC and large oil firms increase production of existing reserves to compensate for cutting high-cost projects. The carbon budget, much like the atmosphere, is not allocated piecemeal to nation states and large corporations. We may see a dogfight to profit from as much of the carbon budget as each reserve holder can claim! Deutsche Bank looks on the bright side by saying, “…countries might not go to the lengths of planting titanium flags on the seafloor beneath the North Pole.” That would be nice.

The Bank is obviously in the same contradiction as the leading education institutions throughout the world – and it’s high time they put their money where their mouth is. I’ll end with the proclamation from the Bank we’ve all been hoping to hear since oil prices began to fall early last summer. “Perhaps last year’s fall was the first rumbling of this upcoming profound change.”



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