Five of the world’s six largest oil firms are wasting a third of possible spending on uneconomic projects incompatible with international climate goals.
That’s according to a new report by Carbon Tracker and the Principles for Responsible Investment (PRI), which ranks 69 oil and gas companies by their exposure to climate risk.
It finds $2.3 trillion (£1.8tn) worth of projects are inconsistent with limiting climate change to a maximum of 2⁰C and will also result in a surplus of supply as clean technologies increasingly reduce demand.
The report suggests Exxon Mobil is the most exposed, with up to half of spending allocated to uneconomic projects.
Shell, Chevron, Total and Eni all have around average exposure of 30-40%, with BP having 20-30% at risk.
Saudi Aramco and 13 other companies are risking 10% or less of their spending.
The research finds lower cost projects have higher margins – the oil price would need to average $100 (£79.3) a barrel over the long term for it to be profitable for companies to pursue projects that are not aligned with a 2⁰C world.
It also shows going ahead with all “business as usual” projects would generate 380 billion tonnes of carbon dioxide by 2035.
James Leaton, Carbon Tracker’s Research Director, said: “There are clear signs that oil demand could peak in the early 2020s so companies need to start taking project options that would come onstream then off the table and be transparent about how they are aligning with a low carbon future.
“Sticking with the growth at all costs scenario just doesn’t add up for shareholder value when the policy and technology momentum is heading in the opposite direction.”
Global oil markets are expected to tighten in the third quarter of 2017, before loosening through 2018.