Fossil fuel firms could waste up to £1.6trn by 2025 by ignoring international climate goals
According to a recent report released by Carbon Tracker, energy firms working within the fossil fuel industry could risk $1.6trn in expenditure by 2025.
The estimated loss is based on business ignoring low-carbon transitions and focusing on governmental emission policies, rather than global climate goals.
The report, dubbed Mind the gap: the $1.6 trillion energy transition risk, highlights the dangerous gap between current environmental conditions and Paris Agreement goals.
“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,” stated Andrew Grant, report author and Senior Analyst at carbon Tracker.
“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 oil industry accounts for 80% of future spending risk, at $1.3trn – the US is the most at risk, endangering $545bn, followed by Canada at $110bn, China with $107bn, then Russia with $85bn, and Brazil, which is risking $70bn.
The gas industry is risking $228, divided between Russia ($57bn), the US ($32bn), Qatar ($14bn), and Australia, Canada, and Norway (all $13bn).
Coal is risking $62bn, with China having the highest potential to lose the most, at $10bn.
“The energy industry is entering an era of uncertainty,” Grant added.
“Technological developments and climate policy are combining to slow fossil fuel demand in a way that is unprecedented in the modern world, leading investors to call for businesses to be tested against scenarios that reflect higher levels of climate ambition.”
“Energy companies must be transparent about their thinking surrounding low-carbon outcomes, and convince shareholders that they are taking these risks seriously.”
Read the full report here.
Drax advances biomass strategy with Pinnacle acquisition
The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022, which will rise to 3.4 million tonnes in 2027.
The £424 million acquisition of the Canadian biomass pellet producer supports Drax' ambition to be carbon negative by 2030, using bioenergy with carbon capture and storage (BECCS) and will make a "significant contribution" in the UK cutting emissions by 78% by 2035 (click here).
This summer Drax will undertake maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.
In March, Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for delivery October 2024-September 2025.
The limitations on BECCS are not technology but supply, with every gigatonne of CO2 stored per year requiring approximately 30-40 million hectares of BECCS feedstock, according to the Global CCS Institute. Nonetheless, BECCS should be seen as an essential complement to the required, wide-scale deployment of CCS to meet climate change targets, it concludes.