Invest

Carbon Tracker launches new tool to manage carbon investment risks

Published

10 years ago

February 27, 2015

Blue & Green Tomorrow

A new tool from the Carbon Tracker Initiative has been launched to help investors challenge fossil fuel company boards over future investment decisions that are high risk when climate change is factored in.

The organisation will publish regular Capex Tracker surveys that detail the recent capital expenditure (capex) of 19 major oil and gas companies, including BP, Exxon Mobil and Total.

Carbon Tracker explains that the capex is the necessary precursor to production of fossil fuels, and eventually, combustion of carbon into the atmosphere. As a result, fossil fuel capex is a key leading indicator of future carbon emissions.

As the world move towards a low-carbon economy, there have been increasing concerns that fossil fuel stocks are overvalued when the need to tackle climate change is factored in because the majority of coal, oil and gas reserves will have to remain in the ground.

Mark Campanale, founder and executive director at the Carbon Tracker Initiative, said, “Capex Tracker is going to provide the world with a leading indicator to understand whether the flows of capital are set to create dangerous levels of climate change.

“Investment needs to start matching the lower levels of demand for fossil fuels that are required to align with a low carbon future.”

The first Capex Tracker data shows that since the first quarter of 2013, 2015 capex budgets for the fossil fuel companies assessed have been revised down by $23.7 billion (£15.4bn), or 10%. Plummeting oil prices have had a significant impact as companies seek to conserve cash, with the last quarter of 2014 alone seeing $12.4 billion (£8bn) stripped away from 2015 budgets.

The tool also shows whether efforts to reduce future carbon emissions are having an impact. Carbon Tracker states, “With respect to future emissions from the global energy system, today’s capex commitments are truly where the rubber meets the road.”

Photo: Martin Nikolaj Bech via Flickr