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.
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.”
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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.
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.
“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.
“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.”
