Fossil fuel firms risk wasting $2tn

Fossil fuel firms risk wasting up to $2 trillion (£1.3tn) in the next decade by underestimating advances in clean technologies. The report states if action is taken to meet the UN […]

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Fossil fuel firms risk wasting up to $2 trillion (£1.3tn) in the next decade by underestimating advances in clean technologies.

The report states if action is taken to meet the UN goal of limiting climate change to 2˚C no new coal mines will be needed, oil demand will peak around 2020 and growth in gas will disappoint industry expectations.

That’s according to a new report which states: “If the industry misreads future demand by underestimating technology and policy advances, this can lead to an excess of supply and create stranded assets.

“This is where shareholders should be concerned – if companies are committing to future production which may never generate the returns expected.”

It adds the US has the greatest financial exposure with $412 billion (£270bn) of fossil fuel projects which are not needed to 2025 followed by Canada (£144bn), China (£117bn), Russia (£97bn) and Australia (£67bn).

James Leaton, co-author of the report by financial specialist firm Carbon Tracker, said: “Clean technology and climate policy are already reducing fossil fuel demand – misreading these trends will destroy shareholder value. Companies need to apply 2˚C stress tests to their business models now.”