24.8 C
Friday, September 22, 2023

Fossils should be left in the ground to achieve Paris goals – Study

Fossil Fuel companies could be over-investing by $1.6 trillion if the world reduces its fossil fuel consumption in line with the central goal of the Paris Climate Change Agreement, according to a new study by the Carbon Tracker Initiative

Fossil fuel pollution from a coal power station

The bulk of fossil fuel reserves would need to be left in the ground if the international community is to reach its goal of limiting the global average temperature to well under 2 degrees Celsius, as set out in the 2015 Paris Agreement.

Report author and senior analyst at Carbon Tracker, Andrew Grant, said: “At present, governments’ policies fall a long way short of the ultimate goal committed to at Paris, but we should expect a ratcheting up of international efforts. Companies that misread the signals and overinvest in marginal oil, gas and coal projects based on a false sense of security could destroy shareholder value worth billions of dollars.”

The study looked at three potential future temperature scenarios between 2018-2025. These outcomes are based on possible global action on climate change:

  • The New Policies Scenario: If the world continues “business as usual”, a predicted global temperature rise of 2.7 degrees Celsius is expected.
  • Sustainable Development Scenario: Is aligned with taking action to limit further warming to 2 degrees Celsius.
  • Beyond 2 Degrees Scenario: Where action is taken to keep temperature to a maximum global rise of 1.75 degrees Celsius-the mid point of the Paris Agreement.

According to the study, oil and gas account for over 90% of total investment under each scenario. Absolute financial risk is therefore dominated by the oil and gas industry due to its greater capital intensity than for thermal coal.

The study found that meeting energy demand in any of the three scenarios would still require some investments in fossil fuels between 2018-2025. Investments will amount to $4.8 trillion for the New Policies Scenario, $4.0 trillion for the Sustainable Development Scenario and $3.3 trillion for the Beyond 2 Degrees Scenario. A significant decrease in investment with the best case scenario of 1.75 degrees Celsius compared to the 2.7 degrees Celsius scenario.

The study is the first to model demand for oil, gas and thermal coal under the International Energy Agency’s Beyond 2 Degrees Scenario introduced last year, aligned with 1.75C. This temperature limit is the mid-point of the Paris Agreement goals. Carbon Tracker compare it with the IEA’s New Policies Scenario, aligned with 2.7C, consistent with emissions policies announced by global governments.

Latest news

- Advertisement -
- Advertisement -

You might also likeRELATED
Recommended to you

%d bloggers like this: