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Stranded Assets, Fossilised Revenues

The report “Stranded Assets, Fossilised Revenues” from Kepler Cheuvreux ESG Sustainability Research, analyses the risk of stranded assets comparing the New Policies Scenario and the 450 Scenario from the IEA.

Key points

It highlights that USD28trn of fossil-fuel revenues are at risk in a 450-ppm world but that business as usual also has big risks for fossil-fuel companies.

The Kepler Cheuvreux sustainability team thinks that investors need more details on the breakdown of oil companies’ assets by project type and on their capital-allocation processes in order to be able to better assess carbon risk and cost/revenue risk. They see an opportunity for the oil industry to engage in a transparent dialogue with investors on the carbon risks it faces and thus provide a transparent stress test of its business model against potentialfuture climate-policy scenarios.