Carbon ‘Blueprint’ Shows Risks From Not Preparing for Cheap Fuel

(Bloomberg) — Oil and natural gas companies that fail to
consider the risks of a warmer planet and cheaper fossil fuels
are jeopardizing shareholder value, according to a report by
Carbon Tracker Initiative and Energy Transition Advisors.

“Senior management is overly focused on demand and price
scenarios that assume business as usual,” Paul Spedding, an
adviser to London-based Carbon Tracker and co-author of its
Blueprint report, said in a statement Thursday. “There may be a
risk assessment ‘gap’ between a management’s view of the future
and that resulting from action on climate change, technological
advances and changing economic assumptions.”

Properly assessing the risks associated with a major global
energy transition are “critical to ensure value is preserved,”
according to Carbon Tracker. High-cost investments in extracting
fuel from oil sands, deep ocean waters and the Arctic “are at a
significant risk of not making an acceptable return.”

Investors are taking notice. Last week, 98 percent of BP
Plc shareholders supported a measure asking for regular reports
on the effects of climate change on company strategy. Royal
Dutch Shell Plc is considering a similar measure, according to
Carbon Tracker, a non-profit research company established in
2009.

“Carbon Tracker’s focus is and has always been on the
financial implications of an energy transition,” Chief
Executive Officer Anthony Hobley said. “The overarching theme
of our analysis has been to improve shareholder value whilst
lowering risk.”

To contact the reporter on this story:
Justin Doom in New York at
jdoom1@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Will Wade, Carlos Caminada

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