Divestment and the Energy Transition Anthony Hobley CEO, Carbon Tracker Initiative Bristol, 15 April 2016 #strandedassets

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

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 2040The Outlook for Energy: A view to 2040 BP (2016) BP Energy Outlook 2035BP Energy Outlook 2035 Shell (2014) Carbon Asset Risk responseCarbon Asset Risk response OPEC (2015) World Oil OutlookWorld Oil Outlook

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

Source: Rocky Mountain Institute The Model T Ford’s nominal price fell 62% in 13 years ( ) and the market flipped just as fast.

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 $220bn at risk $1.4tn at risk $520bn at risk

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’

… 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 2.0Tomorrow’s investment rules 2.0

… 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

Thank you Anthony Hobley CEO, Carbon Tracker Initiative #strandedassets