$1 trillion at risk if companies continue to pursue business-as-usual investment

LONDON/NEW YORK, SEPTEMBER 9 – The world’s largest listed oil and gas companies cannot be considered aligned with global climate targets unless they plan for major production declines, with half facing cuts of 50% or more by the 2030s, warns a new report from the financial think tank Carbon Tracker released today.

It reveals that companies are still approving billions of dollars of investment in major projects that are inconsistent with the 1.5°C Paris climate target, and even those with “net zero” commitments are continuing to explore for new oil and gas.

Mike Coffin, Carbon Tracker Head of Oil, Gas and Mining and report co-author, said: “Oil and gas companies are betting against the success of global efforts to tackle climate change. If they continue with business-as-usual investment they risk wasting more than a trillion dollars on projects which will not be competitive in a low-carbon world. If the world is to avert climate catastrophe, demand for fossil fuels must fall sharply. Companies and investors must prepare for a world of lower long-term fossil fuel prices and a smaller oil and gas industry, and recognise now the risk of stranded assets that this creates.”

Adapt to Survive – Carbon Tracker’s fifth annual analysis of the risk of investing in oil and gas producers – warns investors that companies have not woken up to the “seismic implications” of the International Energy Agency’s finding that no investment in new oil and gas production is needed if the world aims to limit global warming to 1.5°C.

This would see production at 20 of the world’s 40 largest listed companies shrink by at least 50% by the 2030s as existing projects run down with no replacements, the report finds. Most large shale oil companies would see production drop by over 80%.

ConocoPhillips, a shale specialist, is the oil major most exposed, facing a drop of 69%, followed by Chevron (52%), Eni (49%), Shell (44%), BP (33%), ExxonMobil (33%), and TotalEnergies (30%). Saudi Aramco is the only one of the world’s largest listed oil and gas companies that would see increased production because of its large spare capacity from existing fields.

Axel Dalman, Carbon Tracker Associate Analyst and report co-author, said: “In general, no new projects and a rapid decline in production could deliver a serious shock to company valuations, as new project options are rendered effectively worthless and future cashflows are reduced. Lower equity valuations would in turn increase the costs of capital and insolvency risk.  It is crucial for companies to have a strong transition plan, winding down oil and gas activities in an orderly manner and either diversifying into low-carbon businesses or returning capital to shareholders.”

The report also warns that if companies continue to invest in projects expecting a business-as-usual future of stable or rising demand, they risk being left with stranded assets that are uneconomic in a low-carbon world. National climate policies and rapid growth of clean technologies will reduce demand, drive down prices and lead to significantly lower revenues.

Even amid the Covid pandemic, as oil prices collapsed and boards cut dividends, companies continued to make investments that bet against the 1.5°C target. The report identifies five major projects approved in 2020 that are not even compatible with a 1.65°C target, with projected investments worth a total $18 billion over the next decade:

  • ExxonMobil’s $5.5 billion Payara and $1.8 billion Pacora oil fields in Guyana;
  • Petrobras’ $4 billion Itapu oil field in Brazil;
  • Woodside’s $3.9 billion Sangomar oil field in Senegal;
  • Petrobras, Shell and Total’s $2.7 billion Mero 3 oil field in Brazil.

Investors are increasing pressure on fossil fuel companies to align with the Paris climate target as awareness grows of the environmental and financial risks of pursuing business as usual. Carbon Tracker’s research gives them ammunition to challenge companies over their plans for the energy transition. It is used by Climate Action 100+, backed by investors managing over $55 trillion in assets, which presses companies to take action on climate change and cut emissions.

The report states: “The present circumstances are particularly dangerous.” Oil prices – currently at around $70/barrel – are “tantalisingly high compared with last year” as the global economy recovers from Covid and OPEC keeps a tight grip on supply. It warns this may encourage companies to approve new projects in the hope of cashing in on a new commodities “supercycle”.

Although leading companies have adopted net zero targets, only BP, Eni, TotalEnergies and Shell have acknowledged that their oil production will fall over the coming years. Only BP commits to falls in gas production, which Shell and Eni plan to grow.

Yet Shell, TotalEnergies, Eni and Equinor have all picked up new exploration licences in frontier areas like Suriname and Norway’s Barents Sea, despite their high cost. BP plans to develop new “advantaged” assets. “Such moves call into question these companies’ commitment to transitioning away from oil and gas,” the report says.

The report analyses the business-as-usual project portfolios of the world’s 60 largest listed oil and gas companies to assess how resilient they are in a low-carbon world. It finds that even on a slower decarbonisation pathway limiting global heating to 1.65°C, the majority of companies would see more than half their project portfolio at risk of being stranded.

More than a trillion dollars of business-as-usual investment is at risk including $480 billion in shale/tight oil projects and $240 billion in deepwater projects. ConocoPhillips is the oil major that is most exposed, with 88% of its business-as-usual project portfolio likely to be uncompetitive, followed by ExxonMobil 80%; Chevron 60%; Shell 53%; BP 40%; Total 39%.

Companies specialising in high-cost themes face some of the greatest reductions, including North American shale oil companies such as Pioneer Natural Resources, deepwater offshore companies such as Petrobras and oil sands companies such as Suncor Energy and Imperial Oil. On a 1.65°C pathway, 80% of shale/tight oil, 60% of arctic drilling, and 50% of deepwater projects would be uncompetitive. Almost no oil sands  projects would be economic.

Axel Dalman said: “Investors have a crucial role to play in driving the changes to the oil and gas industry’s behaviour necessary to reduce their exposure to transition risks. If they want to align with a 1.5°C climate target, it’s crucial that they only hold companies with robust plans to reduce production of oil and gas and approve no new projects. Investors seeking to align with other temperature outcomes must ensure that companies demonstrate how any projects they approve are compatible with a low-demand world, not just short-term prices.”



  • Carbon Tracker uses the IEA’s new Net Zero Emissions by 2050 Scenario to analyse the implications of a 1.5°C demand pathway for the world’s 40 largest listed oil and gas companies. The scenario is not formally modelled because it does not include gas demand projections broken down by region.
  • It uses International Energy Agency scenarios to model global supply of oil and gas under a 1.65°C pathway (Sustainable Development Scenario or SDS) and a 2.7°C pathway (Stated Policies Scenario or STEPS) consistent with policies announced by global governments. It uses STEPS to exclude from its analysis projects that are unlikely to be developed, allowing investors to focus on risk in companies’ “business as usual” portfolios.
  • With available supply outstripping demand, the research assumes that projects with the lowest production costs will be most competitive, while projects with higher breakeven prices run the risk of becoming “stranded assets”. The report presents results for the world’s 60 largest oil and gas companies, calculating their exposure using project supply data from Rystad Energy, and focusing on the gap between SDS and STEPS.


Once embargo lifts the report can be downloaded here: https://carbontracker.org/reports/adapt-to-survive/

To arrange interviews please contact:

Stefano Ambrogi                    sambrogi@carbontracker.org                      +44 7557 916940

Joel Benjamin                        jbenjamin@carbontracker.org                    +44 7429 637423

David Mason                          david.mason@greenhouse.agency              +44 7799 072320

Will Vowell                            will.vowell@greenhouse.agency                 +44 7532 044844


About Carbon Tracker

The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future. www.carbontracker.org