Oil & Gas Sector: Internalizing Climate Risk into Pricing and Valuation

Growth in fossil fuel extraction continues despite existing reserves already significantly exceeding the allowable level that offers a chance of staying within the 1.5 degrees Celsius temperature rise according to climate science. Few oil and gas companies are changing business models, and investors still allocate capital to the sector with seemingly bleak growth prospects. CCSI, along with Carbon Tracker and Columbia University’s Lamont-Doherty Earth Observatory, co-convened a virtual workshop with a representative group of financial actors as well as Columbia University professors of climate science and corporate finance to discuss the extent to which the market has been factoring in climate risk assessments. To set the scene, Lamont Prof. Galen McKinley (PPT here) and Carbon Tracker’s new energy strategist Kingsmill Bond (PPT here), presented on the latest climate science findings and the rapid transformation of the energy market.