Ignoring Climate Change Makes no Business Sense

A new report, Mind the Gap: the $1.6 trillion energy transition risk, by Carbon Tracker Initiative compares fossil fuel demand in a 1.75˚C world with demand in 2˚C, and 2.7˚C scenarios.

Oil, gas and thermal coal face varying challenges and degrees of risk in a climate-constrained future. This report looks at each of these fuels in turn with a focus on the upstream end of the value chain, comparing potential supply to a selection of different demand scenarios that result in varying global warming outcomes.

The report finds that fossil fuel companies risk wasting $1.6 trillion of expenditure by 2025 by basing their business decisions on governments’ current climate policies instead of the Paris Agreement.

Although at present governments’ policies fall short of the ultimate goal of the Paris Agreement, we should expect a ratcheting up of international efforts. Investors could face losses in the future from stranded assets if fossil fuel companies overinvest based on a false sense of security.

The study updates their 2 Degrees of Separation, report and is the first to look at demand for fossil fuels in a 1.75˚C world.