The document discusses the risks associated with fossil fuel investments amidst an energy transition, highlighting that major fossil fuel companies are overestimating future energy demand and underestimating the role of renewables. It warns of significant stranded asset risks, with regulators acknowledging the potential financial instability linked to fossil fuel reserves. The growing trend of divestment from fossil fuels, with major institutions committing significant funds, indicates a shift toward sustainable investment practices.

1. Divestment and the Energy Transition
Anthony Hobley
CEO, Carbon Tracker Initiative
Bristol, 15 April 2016
www.carbontracker.org
@carbonbubble #strandedassets

2. There is a huge overhang of carbon in our energy system
Carbon Tracker has allocated to fossil fuel companies a carbon
budget to 2050 with 80% likelihood of staying below the 2˚C
threshold.
Source:
Carbon Tracker,
Unburnable Carbon 2013

3. • BP is projecting a 24% increase in fossil fuel use
by 2035
• Exxon expects a 27% increase by 2040
• Shell’s ‘Current Outlook’ 37% to 2040
• OPEC is clinging valiantly to 54% to 2040
Are fossil fuel companies betting on
an uncertain future?
…Yet
Companies are overstating energy demand, underestimating an
increasing role for renewables and ignoring looming changes in
energy.
Sources:
ExxonMobil (2016) The Outlook for Energy: A view to 2040
BP (2016) BP Energy Outlook 2035
Shell (2014) Carbon Asset Risk response
OPEC (2015) World Oil Outlook

4. A good reason for reviewing the scenarios and assumptions
underpinning energy industry plans is that
their track record of getting it right is not that strong.
Track record anticipating disruption isn’t
great

5. Source: Rocky Mountain
he Model T Ford’s nominal price fell 62% in 13 years (1908-21) and the market
flipped just as fast.

6. No new coal
mines required
Oil demand peak
in 2020,
no need for
continued growth
Growth in gas will
disappoint,
esp. capital-
intensive
LNG
The $2 trillion stranded assets danger zone:
How fossil fuel firms risk destroying investor
returns
Nov 2015
Download full report at
http://www.carbontracker.org/report/stranded-assets-danger-zone/
$220bn at
risk
$1.4tn at
risk $520bn at
risk

7. Regulators are taking increasing
notice of the risk…
Mark Carney, Governor of the
Bank of England:
The carbon budget renders ‘the vast
majority of reserves “stranded” – oil,
gas and coal that will be literally
unburnable’
The abrupt transition to a low-carbon future is ‘a financial stability risk’

8. … and so are investors
• Institutions and investors
worth $3.4 trillion now
committed to fossil fuel
divestment.
• Growth of over 80x,
from $50 billion in Sept
2014
• EY survey: two-thirds of
investors concerned about
stranded asset risk
• 36% of investors divested
over last 12 months
Source: Tomorrow’s investment rules 2.0

9. … and so are investors
• Fossil-free stocks have outperformed standard portfolios
every year for the past five years (MSCI)
• NYC’s biggest pension fund lost $135 million from oil &
gas in one year

10. Thank you
Anthony Hobley
CEO,
Carbon Tracker Initiative
www.carbontracker.org
@carbonbubble #strandedassets