Batteries May Trip 'Death Spiral' in $3.4 Trillion Credit Market

Fitch, the ratings agency, posits that improvements in battery technology may significantly disrupt the electricity and automotive industries to such an extent that it presents a trillion dollar level threat to the world credit markets.

A quarter of global corporate debt, approximately $3.4 trillion, is related to utility and automotive industry bonds. These industries heavily rely on fossil fuels and batteries threaten to tip the balance of the oil markets into contraction.

Fitch advises utilities and automobile industries to diversify their risk profiles by investing in clean energy technologies.

The broad idea is interesting - the pace of change has the potential to undermine the viability of established industries which the world relies on, not just in their own right, but in all sorts of less immediately obvious ways.

Most of the trillions invested around the world are from institutional sources like pension fund, sovereign wealth funds, insurance and endowments and they rely on broadly predictable, reliable, less risky investments to deliver returns.

Energy provision is absolutely fundamental to the worlds economy and the consumption of fossil fuels has been the norm since the Industrial Revolution.

Change in this area presents serious risk - Fitch is right about that much - so their research isn't entirely sensational, but what is the risk?

The obvious questions investors should be asking are about what alternatives exist, how fast they will become viable, and what are the options out there for investment and risk diversification.

The obvious question those in the alternative energy industry should be asking is about how they engage with the finance industry.

The risks posed by climate change haven't worked - is that because they're too vague or unspecific for the way that investment works? Separately, if you don't have enough expertise, it can be hard to tell whether a new technology you're presented with is genuinely interesting.

Perhaps risk profiles, portfolio diversification, etc. are better understood.

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.