Oil and gas projects approved by major fossil fuel companies over the last 20 months threaten both shareholder value and efforts to keep Earth from overheating, according to an analysis released Friday.
Eighteen major investments totalling $50 billion would only become profitable if the world exceeds the Paris climate treaty targets for capping global warming, Carbon Tracker, a non-profit financial think tank, concluded, agency reports.
Similar infrastructure projects worth $21 billion dollars are waiting for a greenlight in the rest of 2019, the report noted.
Across all business sectors, global companies responding to pressure from society and shareholders are scrambling to lay out low-emissions pathways that are “Paris-compliant”.
The Paris Agreement calls for blocking the rise in Earth’s temperature to “well below” two degrees Celsius compared to preindustrial levels, and 1.5C if possible.
On current trends, the planet will warm about 4C by century’s end. For fossil fuel majors, that transition is especially fraught because the main driver by far of global warming has been the burning of their products: oil, gas and coal.
Even under the less ambitious Paris target, the more costly projects highlighted could become economically unviable, the new report found.
ExxonMobil’s $2.6 billion Aspen oil sands project in Canada, for example, would require an oil price of over $80 a barrel to deliver a 15 percent return.
“Investors may or may not be concerned about stopping climate change, but they are worried about the risk to their investment,” said Carbon Tracker’s Andrew Grant, a senior analyst and co-author of the report.
“There’s a danger that the fossil fuel companies will misread demand trends and invest in projects that are both bad for the climate and bad for investors,” he told AFP.
Some oil and gas giants — notably Shell, BP, Equinor (formerly Statoil) and Total — have sought to reassure investors that new investments fit within a low-carbon future, both in terms of profitability and greenhouse gas emissions.
“BP has supported the aim of the Paris Agreement, with its call to rapidly reduce greenhouse gas emissions in the context of sustainable development and eradicating poverty,” BP said in a statement, responding to the report.
– Stranded assets –
The company aims to become “a much broader energy company so that we are best equipped to help the world get to net zero while meeting rising energy demand.”
A major UN report last year concluded that global CO2 emissions must reach “net zero” by 2050 to cap temperature rise at 1.5C.
Allowing the planet to warm beyond that threshold would at the same time extend the net zero deadline.