Fossil fuel firms risk wasting $2 trillion on uneconomic projects
Governments and companies must align plans with the energy transition underway to deliver a low-carbon future
Fossil fuel companies risk wasting up to $2.2 trillion in the next decade, threatening substantially lower investor returns, by pursuing projects that could be uneconomic in the face of a perfect storm of factors including international action to limit climate change to 2@C and rapid advances in clean technologies, think tank the Carbon Tracker Initiative warns today.
No new coal mines will be needed, oil demand will peak around 2020, and growth in gas will disappoint industry expectations, it finds in a new report highlighting the danger zone between industry business-as-usual strategies and action that would be needed to meet the UN commitment to limit climate change to 2@C.
The $2 trillion stranded assets danger zone: How fossil fuel firms risk destroying investor returns, maps out coal, oil and gas supply that makes neither financial nor climate sense in a 2@C world and how this affects both listed and public companies. The report warns: "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."
James Leaton, head of research and co-author of the report, said: "Too few energy companies recognise that they will need to reduce supply of their carbon-intensive products to avoid pushing us beyond the internationally recognised carbon budget. 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."
The US has the greatest financial exposure with $412 billion of unneeded fossil fuel projects to 2025 at risk of becoming stranded assets, followed by Canada ($220bln), China ($179bln), Russia ($147bln) and Australia ($103bln).
The companies that represent the biggest risk in a demand misread to the climate and shareholders alike in the next decade are a mix of state and listed companies, including oil majors Royal Dutch Shell, Pemex, Exxon Mobil, and coal miners Peabody, Coal India, and Glencore. Around 20-25% of oil and gas majors' potential investment is on projects that will not be needed in a 2@C scenario, and cancelling them would mean going ex-growth.
The report looks at production to 2035 and capital investment to 2025. It warns that energy companies must avoid projects that would generate 156 billion tons of carbon dioxide (156Gt CO2), in order to be consistent with the carbon budget in the International Energy Agency's 450 demand scenario, which sets out an energy pathway with a 50% chance of meeting the UN 20C climate change target.
Mark Fulton, advisor to Carbon Tracker, former head of research at Deutsche Bank Climate Change Advisors, and co-author of the report, said: "Our work shows thermal coal has the most significant overhang of unneeded supply in terms of carbon of all fossil fuels on any scenario. No new mines are needed globally in a 2@C world."
Carbon Tracker warned last month that big energy companies are ignoring rapid advances in clean technologies which threaten to undermine their business models, such as renewables, battery storage and electric cars, in a report[1] challenging nine business as usual assumptions made by the industry to argue that coal, oil and gas will all continue to grow in the next decades.
Anthony Hobley, CEO of Carbon Tracker, said: "Business history is littered with examples of incumbents[2] who fail to see the transition coming. Fossil fuel incumbents seem intent on wasting capital trying to hold onto growth by doing what they have always done rather than embracing the energy transition and preserving value by adopting an ex-growth strategy. Our report offers these companies both a warning and a strategy for avoiding significant value destruction."
COAL - In a 2@C world, demand can be met from existing mines and no new mines will be needed. "It is the end of the road for expansion of the coal sector," the new report states. Over the next decade, capital expenditure of $177 billion on new projects and $42 billion on existing ones is unneeded.
China, the US, Australia, India and Indonesia have the greatest exposure, accounting for over 90% of unneeded investment. Export markets are in structural decline as China seeks to peak its coal demand and India aims to become more self-sufficient in energy, threatening big exporters like Australia and Indonesia. In the US half of all potential projects from Peabody, Murray and Foresight will be unneeded.
OIL - "In the 450 scenario oil demand peaks around 2020. This means the oil sector does not need to continue to grow, which is inconsistent with the narrative of many companies," the report states. Spending of $1.3 trillion on new projects and $124 billion on existing projects is unneeded. Overall 43% of investment in new projects and 33% of new supply should be avoided to align with a 2@C scenario, avoiding 28Gt of CO2.
The countries with the greatest financial exposure are the US, Canada, Russia, Mexico and Kazakhstan. The biggest risk is from shale oil in the US, oil sands in Canada and conventional oil in Russia. All three, with Norway, are exposed to Arctic oil. Deep water projects in the US and Mexico and Venezuela's heavy oil are also in the danger zone. However, OPEC conventional production faces little risk due to its low cost.
GAS - In a 2C world gas growth will be "at a lower level than expected under a business as usual scenario", the report finds. Capital expenditure of $459 billion on new projects and $73 billion on existing projects is surplus to requirements. Overall 41% of investment in new projects and 25% of new supply, accounting for 9 Gt of CO2, is unneeded.
The US, Australia, Indonesia, Canada and Malaysia have the greatest exposure, accounting for three-quarters of investment risk. Within the markets we analyse (North America, Europe, and the LNG export market), two-thirds of new coal bed methane and Arctic projects are in the danger zone; half of the supply in new LNG projects is unneeded and very little new capacity will be needed in the US and Canada in a 2@C scenario.
CARBON CAPTURE AND STORAGE - Carbon Tracker's analysis assumes 24Gt of CO2 will be captured by CCS by 2035 in line with the IEA 450 scenario, but it warns that this would require CCS to grow to a level 150 times where it is today. Delays in CCS could significantly increase the reductions in coal that will be needed and the IEA has estimated that a 10-year delay in large-scale CCS deployment from 2020 to 2030 could cost fossil fuel producers $1.35 trillion in lost revenues.
From Wednesday 25th November the report will be available for download at https://www.carbontracker.org/report/stranded-assets-danger-zone/
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 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
If Biden 'Must Step Aside,' Why Aren't Democrats Filling the Streets to Demand It?
So far, one journalist noted, "the loudest voices trying to force him out of the race are elites: major media columnists and wealthy donors."
The number of congressional Democrats urging President Joe Biden to drop out of the race for the White House grew on Tuesday, but many of their colleagues—along with other elected officials and voters—remain supportive of the aging Democratic leader's effort to beat former Republican President Donald Trump a second time.
Since Biden's poor debate performance last month sparked concerns about whether he can defeat Trump and effectively serve another term, the president has remained defiant, insisting that he is determined to stay in the race—as he made clear with a Monday letter to Democrats in Congress that he also shared on social media.
Not only does the movement to convince Biden that he "must step aside" before the Democratic National Convention in August appear to be failing, "it's failing in a very predictable way," according to David Dayen, executive editor of The American Prospect.
"Though polling has consistently registered massive public concern with Biden's age and his ability to withstand the rigors of a high-stakes campaign, let alone another term in office until he turns 86 years old, the loudest voices trying to force him out of the race are elites: major media columnists and wealthy donors," he wrote Tuesday. "They lack democratic legitimacy and the public's respect, even as they are expressing the popular will. And they have given Biden the opportunity to parry their attacks simply by employing the politics of resentment."
"There is one group trying to change this. A very new organization (it literally started last Friday afternoon) founded by a handful of Democratic organizers called Pass the Torch is trying to motivate ordinary Democrats to speak out about the need for a stronger ticket to defeat Donald Trump," Dayen pointed out. While the group has a petition and is talking with convention delegates, he added, "an effort like Pass the Torch will really only derive legitimacy from having a large number of rank-and-file voices behind it."
Reflecting on Biden and Trump's disastrous debate in a Tuesday opinion piece for Common Dreams, writer and retired mental health worker Phil Wilson asserted that "members of a sane society would be thundering angrily through the streets given the choice between a smoldering ghost and an aspiring Nazi monster."
Wilson continued:
Who chose these two? Why are 50 million people curled up on couches, wrapped around plastic bowls of popcorn while these terrible, inept, and heartless fools cough up lies and trivial asides? We reflect upon levels of dementia and Nazi wannabe evil as if they were existential givens. Of course we all must decide on November 5th which genocidaire we prefer, the one who bombed the children of Gaza or the one vowing to deport up to 20 million innocent people. Do we pick the one who can barely remember his own name or the guy with a swirling vortex of hatred orbiting his eyeballs?
"This election is a farce—the dying throes of a criminal society, the death spasms of a plundering oligarchy that once devoured most of the world and now cannibalizes its own," he concluded.
Also writing for Common Dreams on Tuesday, University of Essex professor Peter Bloom argued that "the recent Trump-Biden debate served as a grotesque apotheosis of 'great man' politics, laying bare the dangerous fallacy of entrusting democracy to the outsized personalities of flawed individuals."
"The future of democracy, in the U.S. and beyond, depends on our ability to move beyond the cult of personality and reclaim politics as a collective endeavor," According to Bloom. "The alternative—a continued descent into gerontocratic oligarchy thinly disguised as populism—is too dire to contemplate. As we watch two aged politicians compete for the chance to lead a nation in crisis, let it serve as a wake-up call. The era of great men is over. The real work of rebuilding our democracy is just beginning."
Biden's campaign and supporters continue to frame his reelection as crucial to the fight to save U.S. democracy—particularly given that a victorious Trump would be armed with new king-like powers, thanks to a recent U.S. Supreme Court ruling.
As John Nichols, a national affairs correspondent for The Nation, noted Monday, Biden himself "says that the country is at 'an inflection point,' where the future of American democracy is at stake."
"This requires more than putting in your best effort in a controlled setting," Nichols wrote, describing Biden's Friday rally in Wisconsin as "serviceable" but far from what is needed. "It requires an absolutely determined candidate and a big, bold, risk-taking campaign that inspires Wisconsinites, and voters nationwide, to defeat Trump and Trumpism. If Biden really is determined to stay in this race, he owes it to himself, his party, and his country to be all in."
The president has received similar advice from progressives in Congress. Since the debate, Sen. Bernie Sanders (I-Vt.)—who sought the Democratic presidential nomination in 2016 and 2020—has stood by Biden but also stressed that he must "do better," for which the senator has received some criticism.
Progressives in the House were noticeably quieter—as Slate's Alexander Sammon noted last week, "There's no real upside for Squad members to put themselves in the line of fire during an already bitter public deliberation"—until multiple members of the informal group confirmed support for Biden on Monday.
"The matter is closed," Rep. Alexandria Ocasio-Cortez (D-N.Y.) told reporters Monday evening, citing her weekend conversation with Biden and his repeated statements over recent days that he has no intention of stepping aside. "He is in this race and I support him."
Rep. @AOC: President Biden has made clear that he is in this race. The matter is closed. Biden is our nominee. He is in this race and I support him. He is running against Donald Trump, who is a man with 34 felony convictions. Not a single Republican has asked for Donald Trump to… pic.twitter.com/MOvUu3VQU5
— Biden-Harris HQ (@BidenHQ) July 8, 2024
"Now what I think is critically important right now is that we focus on what it takes to win in November because he is running against Donald Trump, who is a man with 34 felony convictions, that has committed 34 felony crimes, and not a single Republican has asked for Donald Trump to not be the nominee," she continued.
Ocasio-Cortez explained that she has "communicated" to Biden that winning the election will require Democrats to "pivot and increasingly commit to the issues that are critically important to working people across this country," including rent and mortgage relief as well as the expansion of Medicare and Social Security.
"And if we can do that and continue our work on student loans, secure a cease-fire, and bring those dollars back into investing in public policy, then that's how we win in November," she added. "That's what I'm committed to and that's what I want to make sure we secure."
With lawmakers back on Capitol Hill following the Independence Day recess, Democrats in both chambers held caucus meetings on Tuesday. While Senate Majority Leader Chuck Schumer (D-N.Y.) told reporters, "As I've said before, I'm with Joe," Politicoreported that "many typically chatty senators almost entirely refused to talk with press about their caucus' conversation."
House Democrats met earlier in the day. Rep. Dean Phillips (D-Minn.), who ended his longshot primary challenge to Biden and endorsed him in March, told reporters, "If this has been vindication, vindication has never been so unfulfilling."
"I made my case eight months ago and I think it's time for others to share their perspectives," he said. "I'm deeply disappointed in a political system that has resulted in this dynamic that we now face."
Rep. Mikie Sherrill (D-N.J.) joined the small but growing contingent urging him to step down, saying: "I know President Biden cares deeply about the future of our country. That's why I am asking that he declare that he won't run for reelection."
As the Pass the Torch campaign highlighted on social media Tuesday, some congressional Democrats are worried that Biden remaining at the top of the ticket could have a negative downballot impact.
At least one congressman who reportedly urged Biden to exit the race over the weekend, Rep. Jerry Nadler (D-N.Y.), appeared to change course. He declined to comment on what he privately told Biden but said: "The president made very clear yesterday that he's running... We have to support him."
After House Democrats' meeting, Rep. Hank Johnson (D-Ga.) toldPolitico, "My personal takeaway is that Joe Biden has tremendous support from the Democratic caucus, and we're going to move forward."
Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, suggested in a Monday statement that even as public and private conversations are taking place within the party about the best way forward, nobody should forget the core differences between what Democrats and Biden represent compared to Trump and his Republican Party.
"Make no mistake, the foundation of our democracy is at stake in this election," said Jayapal.
"Any reporter or pundit who is asking about or talking about the aftermath of President Biden's debate performance and his health," she continued, "should also be spending at least the same amount of time and energy talking to Republicans about why they are still supporting a convicted felon who incited an insurrection and wants to be dictator on day one."
"Republicans should be calling for Donald Trump to step down as a candidate for president," she added. "The press should be covering for the American people the dozens of lies he told at the debate and the horrific statements he continues to make about immigrants and women. They should be asking every single Republican member why they support the democracy-destroying Project 2025."
While Trump has recently tried to distance himself from Project 2025—spearheaded by the Heritage Foundation, one of the sponsors of the Republican National Convention in Wisconsin next week—the Biden campaign and other critics have called "bullshit" on the frequently dishonest former president's claims.
"After trying and failing to cover up his deep ties to Project 2025 authors and Heritage Foundation leadership, Trump is putting his MAGA besties on full display," Biden campaign spokesperson Ammar Moussa said of the convention sponsorship Tuesday. "Donald Trump can't hide from Project 2025—it's his agenda, his vision, and his dangerous and extreme plan for America's future."
New Ally Joins Fight to Defend Rooftop Solar in California
"It's outrageous that California regulators keep attacking rooftop solar and it has to stop," said one attorney in the case.
A leading U.S. green group on Tuesday joined the legal challenge to a California rule banning solar contractors from installing or maintaining photovoltaic battery storage.
The Arizona-based Center for Biological Diversity (CBD) joined an amended lawsuit filed in San Diego County Superior Court against a California Public Utilities Commission (CPUC) regulation enacted last year in accordance with the wishes of Pacific Gas & Electric and two other investor-owned utilities.
The amended lawsuit supplements a complaint filed by CalPIRG, the Solar Rights Alliance, the California Solar & Storage Association, and a solar contractor adversely affected by the new CPUC rule. Climate campaigners and Democratic state lawmakers have previously launched challenges to the regulation.
CBD said the new rule "would increase the cost and administrative burden of installing rooftop solar and storage, vital technologies that make communities more resilient to utility blackouts and the fossil fuel-driven climate emergency."
Roger Lin, a CBD senior attorney, said in a statement: "It's outrageous that California regulators keep attacking rooftop solar and it has to stop. They're undermining California's climate goals and putting clean energy further out of reach for working-class families."
"This licensing trick is straight from the utility playbook and will cause electricity rates to skyrocket while worsening the climate emergency," Lin added. "People are dying from extreme heat and California desperately needs smart, resilient energy solutions. Instead, the board is propping up a brittle electricity grid that devastates critical habitats and promotes environmental injustice."
The new suit came on the same day that the California Energy Commission (CEC) announced nearly $19 million in new grants meant to assist communities in their efforts to automate the approval of residential solar energy permits.
"We are thrilled to be able to disburse funds to over 330 cities and counties across California to make it easier for residents to go solar," CEC Chair David Hochschild said in a statement, calling the program "a win for residents, building departments, solar businesses, and our environment."
UN Experts Say 'Targeted Starvation Campaign' by Israel Has Led to Famine Across Gaza
The starvation of Palestinians in Gaza "is a form of genocidal violence," said 10 rights experts.
While the United Nations still has not formally declared a famine in Gaza after nine months of Israel's near-total blockade on humanitarian aid, 10 top U.N. experts on Tuesday said they have seen enough.
"We declare that Israel's intentional and targeted starvation campaign against the Palestinian people is a form of genocidal violence and has resulted in famine across all of Gaza," said the experts.
Michael Fakhri, special rapporteur on the right to food, was joined in the statement by other experts including Francesca Albanese, special rapporteur on the situation of human rights in the Palestinian territory occupied since 1967, and Paula Gaviria Betancur, special rapporteur on the human rights of internally displaced persons.
They said the recent deaths of three children in various parts of the enclave led the experts, who do not speak on behalf of the United Nations as a whole, to declare a famine has taken hold.
"Fayez Ataya, who was barely six months old, died on May 30, 2024 and 13-year-old Abdulqader Al-Serhi died on June 1, 2024 at the Al-Aqsa Hospital in Deir Al-Balah," said the experts. "Nine-year-old Ahmad Abu Reida died on June 3, 2024 in the tent sheltering his displaced family in Al-Mawasi, Khan Younis. All three children died from malnutrition and lack of access to adequate healthcare."
"With the death of these children from starvation despite medical treatment in central Gaza, there is no doubt that famine has spread from northern Gaza into central and southern Gaza," they continued.
At least 34 Palestinians in Gaza—the majority being children—have now died from malnutrition since October, when Israel began its bombardment of the enclave in retaliation for a Hamas-led attack and Defense Minister Yoav Gallant announced there would "be no electricity, no food, no fuel" allowed in to Gaza.
Israeli officials said in response to Tuesday's statement that it has increased the aid allowed into Gaza recently, but hundreds of delivery trucks remain stranded in Egypt and a floating pier built by the U.S. has not significantly improved the humanitarian crisis.
The U.N. experts said that with the first death of a child from malnutrition and dehydration, it should have been considered "irrefutable that famine has taken hold."
"When a two-month-old baby and 10-year-old Yazan Al Kafarneh died of hunger on February 24 and March 4, respectively, this confirmed that famine had struck northern Gaza," they said. "The whole world should have intervened earlier to stop Israel's genocidal starvation campaign and prevented these deaths... Inaction is complicity."
The Integrated Food Security Phase Classification, which is backed by the U.N., said last month that Gaza is at high risk for famine and that nearly half a million people were facing "catastrophic" food insecurity, with an extreme lack of food.
In May, Human Rights Watch co-founder Aryeh Neier, who had previously hesitated to say Israel was committing genocide in Gaza, said Israel's "sustained policy of obstructing the movement of humanitarian assistance into the territory" ultimately convinced him that Israeli officials are "engaged in genocide."
In March, the International Court of Justice ordered Israel to ensure its military refrain from violating the Genocide Convention by preventing humanitarian aid from reaching people in Gaza, saying that "the catastrophic living conditions of the Palestinians in the Gaza Strip have deteriorated further" and that "famine is setting in."
A woman named Ghaneyma Joma told Reuters on Monday at a hospital in Khan Younis that she feared her son would soon die of starvation.
"It's distressing to see my child... lying there dying from malnutrition because I cannot provide him with anything due to the war, the closing of crossings, and the contaminated water," she told the outlet.
The Council on American-Islamic Relations called on the U.S. government, the biggest international funder of Israel's military and a persistent defender of its actions in Gaza, to ensure that a cease-fire agreement is reached and that Palestinians receive necessary humanitarian aid.
"The intentional starvation of the Palestinian people in Gaza can only occur with the active complicity of the Biden administration in Israel's campaign of genocide," said Ibrahim Hooper, national communications director for the group. "This complicity must end, and the Palestinian people must be offered a future in which they are free of occupation and can live in dignity."