Citizen Action Monitor

$2.3 trillion in fossil fuel projects incompatible with global carbon reduction commitments

Blockbuster report ranks companies by their exposure relative to meeting 2.0˚C carbon budget.

No 1990 Posted by fw, June 23, 2017

“…about a third of the projects fossils would expect to complete by 2025 under a ‘business as usual’ scenario—are inconsistent with global carbon reduction commitments…’ the UK-based Carbon Tracker Initiative and the UN Principles for Responsible Investment (PRI) initiative conclude in a blockbuster report this week…. The report ‘is the first to rank 69 of the biggest oil and gas industry companies according to the extent of their exposure to the low-carbon transition,’ Carbon Tracker states. ‘It provides a way of understanding whether the supply options of the largest publicly-traded oil and gas producers are aligned with demand levels consistent with a 2.0˚C carbon budget, and will equip investors with the authoritative information they need to challenge companies on their investment strategy and approach to climate risk.’… CBC News points to Imperial Oil and Encana as Canadian fossils with 50 to 60% of their spending at risk, Suncor Energy and Husky Energy as companies falling in the 40 to 50% range.”Carbon Tracker Initiative

In April of this year, in a 6:35-minute video, UK climate scientist Kevin Anderson clearly explained why wealthy countries like Canada must be carbon free by 2035 or many people will die. Anderson clarified the relationship at a global level between carbon budgets and CO2 emission pathways, arriving at the shocking conclusion that our chances of avoiding a climate crisis are slim to none, noting:

“This gives us only then an outside chance of 2°C. So, this is an enormous challenge beyond anything that is currently being countenanced by any country…. No county is doing what’s required at the moment – anywhere near for 2°C. The rhetoric is very loud. We hear this all the time, but the action is very weak.”

Carbon Tracker’s modelling tool to measure the extent to which oil and gas companies are aligned with demand levels consistent with a 2.0˚C carbon budget”, will doubtless serve the interests of governments, opposition parties, NGOs, and activists, as well as investors.

Below is a repost of this short article with added subheadings, text highlighting and hyperlinks. To read it on the Carbon Tracker website, click on the following linked title.

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Fossils Face $2.3 Trillion in Stranded Assets Under 2.0°C Carbon Budget by Carbon Tracker Initiative, June 22, 2017

$2.3 trillion in fossil fuel projects are incompatible with global carbon reduction commitments

US$2.3 trillion in “upstream*” oil and gas projects—about a third of the projects fossils would expect to complete by 2025 under a “business as usual” scenario—are inconsistent with global carbon reduction commitments or “rapid advances in clean technologies,” the UK-based Carbon Tracker Initiative and the UN Principles for Responsible Investment (PRI) initiative conclude in a blockbuster report this week. [*Exploration and production companies are “upstream”; refiners are “downstream].

First-ever report ranks biggest companies by their exposure to low-carbon transition consistent with 2.0˚C carbon budget

The report “is the first to rank 69 of the biggest oil and gas industry companies according to the extent of their exposure to the low-carbon transition,” Carbon Tracker states. “It provides a way of understanding whether the supply options of the largest publicly-traded oil and gas producers are aligned with demand levels consistent with a 2.0˚C carbon budget, and will equip investors with the authoritative information they need to challenge companies on their investment strategy and approach to climate risk.”

New market realities put 60% of project spending at risk; two-thirds are private companies

The report shows that the new market realities put up to 60% of project spending at risk for the most exposed companies, and that about two-thirds of the oil and gas production that would be surplus in a 2.0°C scenario is in the hands of private companies.

ExxonMobil, Shell, Total, and Canadian fossils, Imperial Oil, Encana, Suncor, and Husky at risk

The Globe and Mail notes that ExxonMobil would be at risk of wasting half of its investment in new oil fields in a 2.0°C world, while other international fossils like Shell and Total “would see up to 40% of their budgets misspent.” CBC News points to Imperial Oil and Encana as Canadian fossils with 50 to 60% of their spending at risk, Suncor Energy and Husky Energy as companies falling in the 40 to 50% range.

Carbon Tracker did modelling without benefit of complete company data

“We’ve had a sort of ongoing discussion with investors, and there’s a growing desire to understand who the winners and losers might be in the energy transition,” Carbon Tracker Research Director James Leaton told CBC. But for that conversation to proceed, fossils themselves will have to provide more data, added Nathan Fabian, director of policy and research at UN PRI {Principles for Responsible Investment].

“The companies haven’t provided enough data, which is why we’ve gone and done the modelling ourselves,” he said. “We’re hoping that having published this modelling, that the companies will now be a bit more forthcoming on scenarios they see, and how they might start to reduce their [capital expenditures] on upstream activities.”

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