Report says global carbon policy isn't all negative
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While many investors have pulled back from fossil fuel investments on ethical grounds, others have been dissuaded due to intensifying global carbon reduction policies.
Although investors may be advised to divest crude oil assets from their portfolios, a new report suggests that there are ways to mitigate the risk from energy assets and that not all global policy will have a negative impact.
The report is from ARC Energy Research Institute, which conducts research for Canadian energy-focused private equity firm ARC.
It acknowledges that the full extent of global policy on greenhouse emissions is not yet known but that some jurisdictions, Canada included, have begun to impose carbon levies. As policy becomes cleare, low-carbon producers are likely to be more in demand.
“While some organizations and individuals claim that divestment is the only way to mitigate the financial risk of climate change policy, we have found that under a realistic range of carbon prices, numerous crude oil assets can continue to provide attractive investment returns,” said Peter Tertzakian, Executive Director at ARC.
Tertzakian noted that investors need clear and transparent ways to estimate future carbon costs and the potential financial impact on their assets.
The report, “Crude Oil Investing in a Carbon Constrained World: 2017 Update” includes analytical tools from Stanford University and the University of Calgary; the latest factors for modeling the GHG emissions from methane leakage; and additional, updated crude oil GHG emissions estimates, including for the Eagleford and Bakken plays.
Although investors may be advised to divest crude oil assets from their portfolios, a new report suggests that there are ways to mitigate the risk from energy assets and that not all global policy will have a negative impact.
The report is from ARC Energy Research Institute, which conducts research for Canadian energy-focused private equity firm ARC.
It acknowledges that the full extent of global policy on greenhouse emissions is not yet known but that some jurisdictions, Canada included, have begun to impose carbon levies. As policy becomes cleare, low-carbon producers are likely to be more in demand.
“While some organizations and individuals claim that divestment is the only way to mitigate the financial risk of climate change policy, we have found that under a realistic range of carbon prices, numerous crude oil assets can continue to provide attractive investment returns,” said Peter Tertzakian, Executive Director at ARC.
Tertzakian noted that investors need clear and transparent ways to estimate future carbon costs and the potential financial impact on their assets.
The report, “Crude Oil Investing in a Carbon Constrained World: 2017 Update” includes analytical tools from Stanford University and the University of Calgary; the latest factors for modeling the GHG emissions from methane leakage; and additional, updated crude oil GHG emissions estimates, including for the Eagleford and Bakken plays.
