ExxonMobil released today an analysis for how its oil and natural gas resources would fare in a carbon-constrained world.
Why it matters: The analysis is the latest in a string of moves by publicly traded oil companies in response to investor pressure to disclose the risks that action on climate change poses to their fossil-fuel products.
- Less than 5% of Exxon’s total value is represented by oil and gas resources that “may not be attractive investments” in a world that cuts greenhouse gas emissions the necessary amount to keep temperatures below a 2-degrees Celsius, the analysis says.
- Low-cost producers are likely to fare better than others in a carbon-constrained world, said an analyst who has reviewed the report.
- “This may validate the company’s historically strict capital discipline relative to some of its bigger-spending brethren,” said the analyst, who spoke on the condition of anonymity as the report was just being released.
The big picture: There’s growing concern about the potential for oil and gas companies’ assets to become stranded in a world that drastically cuts greenhouse gas emissions, and in fact some environmentalists are pushing for this. Some oil executives reject this notion, but it’s nonetheless a key component of an overall debate about how fossil-fuel companies handle a transition to a lower-carbon world.
- The report itself, which spans 28 pages
- The May shareholder vote that compelled today’s analysis
- Wall Street is starting to care about climate
- Leading U.S. producer issues first sustainability and climate report
- Investing like it’s 1999: Behind BP’s return to renewables
- Why big oil is slowly turning green