The Paris ratification has signalled a clear forward-moving direction, meaning that business as usual is no longer an option, says Anthony Hobley, CEO of the Carbon Tracker Initiative (CTI).
Hobley’s full comment can be viewed below:
“Ratification of the Paris Accord in record time shows there is no stopping the energy transition underway and signals the world’s ambition to decarbonize the world economy in the second half of the century.
“The writing is on the wall: National climate change commitments, rapid advances in clean technology, falling renewables costs and energy efficiency measures combine to significantly reduce demand for fossil fuels in next 20 years – a perfect storm for energy incumbents on the horizon.
“Despite this clear direction of travel stakeholders are still misreading the pace of change. Fossil fuel companies are ignoring the fundamental risk the ‘carbon bubble’ poses and clinging to orthodox growth strategies by cherry-picking BAU scenarios that perpetuate a belief in strong fossil fuel demand growth.
“In contrast, we found that companies could be worth considerably more, not less – the oil majors $100 billion more – if they aligned their portfolios with 2˚C by exercising capital discipline and opting for lower-cost upstream projects that make both financial and climate sense.
“To aid smooth transition governments and regulators should seize on the momentum generated and promote robust climate disclosure starting with the FSB’s Task Force recommendations. More risk disclosure is a common sense approach that improves company and market resilience, protects shareholder value and, crucially, drives orderly transition.
“Companies should urgently update their scenario analyses to reflect the implications of the transition while regulators should compel companies to disclose against a 2˚C reference scenario to show how (mis)aligned companies are to that pathway.
“Any wavering could, in the words of BoE head, Mark Carney, result in ‘huge losses’ for investors from climate action in an ill-thought-out and disruptive transition.”
Carbon Tracker Initiative will be participating in a programme of events at COP22 in Marrakech including an official side event in the Blue Zone to spotlight investor actions undertaken since Paris.