Five of the world’s six largest listed oil companies risk wasting more than 30% of possible spending – with a total value of USD 2.3 trillion – on projects that are not aligned with the goals of the Paris Climate Change Agreement, and need to reconsider investments in order to protect the interests of investors.
This is the main conclusion of a new report by Carbon Tracker, entitled ‘2 Degrees of Separation’, compiled together with the Principles for Responsible Investment (PRI) and institutional investors.
James Leaton, Carbon Tracker’s research director said: “There are clear signs that oil demand could peak in the early 2020s – so companies need to start taking project options that would come onstream then off the table, and be transparent about how they are aligning with a low carbon future. Sticking with the growth at all costs scenario just doesn’t add up for shareholder value when the policy and technology momentum is heading in the opposite direction.”
The report finds companies are likely to perform better by aligning with a 2 degrees C world because lower cost projects have higher margins.
The oil price would need to average USD 100 a barrel over the long term for it to be profitable for companies to pursue projects that are not aligned with a 2 degrees C world.