Oil companies need to adapt to avoid massive losses and stranded assets. Unfortunately, I expect that they will milk the cow until it is dead. Despite constant dire warnings issued at an increasing rate from the world’s top scientists, oil companies appear to be searching for yet more fossil fuels to exploit and to burn.
Watching the news, I wonder if we are looking at 1.5 degrees in the rear view mirror. Australia has already warmed an average of 1.4 degrees and Bangladesh is having 50 degree days. Remember, objects in the rear view mirror may appear larger than they are. Like the Tyrannosaurus rex in Jurassic Park.
Carbon Tracker warns of multi-billion-dollars worth of stranded assets and the fact that net zero emissions ambition must start with significant action before 2030. High-cost oil production like shale will suffer first. The ripples into the global financial markets will cause further distress as “the most exposed companies are among the world’s largest, including ExxonMobil, ConocoPhillips, Rosneft, and Petrobras.
“Yet the real factor that determines the ultimate magnitude of global temperature rise, and the extent of each company’s financial risk, is which net zero scenario investors choose to model against.”
The report then goes on to examine and compare three possible scenarios — the International Energy Agency’s Sustainable Development Scenario (SDS), which is associated with 1.65°C of warming; the IEA’s Net Zero Emissions by 2050 Scenario (NZE), which targets 1.5°C of warming; and the Stated Policies Scenario (STEPS), which represents a high-demand or business-as-usual pathway resulting in 2.7°C of warming.
The report encourages investors (who will lose a lot of money if assets are stranded) to pressure energy companies to make the transition. With COP26 on the horizon, perhaps politicians can also get involved and work out how to transition without destroying the world financial situation (a bit like what is happening in Norway with the change in political power moving to the Greens).
One can only hope we will get sunburnt and not incinerated!
Don't want to miss a cleantech story? Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.