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Companies with the highest level of carbon emissions will lose 43% of their value by 2025 as governments around the world implement climate policies, a new report has claimed.

Published Monday, the report from the UN-backed Principles of Responsible Investing (PRI), Vivid Economics and Energy Transition Advisors estimated how hard the world’s most valuable firms would be hit by environmental policies in the coming decades. It analyzed how companies in the MSCI ACWI index — which includes more than 2,700 firms across 49 countries — would be impacted by “an abrupt and disruptive policy response to climate change.”

 

According to the report, an “inevitable policy response” would permanently wipe up to $2.3 trillion from the value of the companies in the index.

The 100 highest-emitting companies in the index would lose 43% of their market capitalization by 2025, equivalent to a total loss of $1.4 trillion, it claimed, while the 100 best-performing firms could see their value increase by 33%, a total gain of $700 billion.

Fossil fuel companies would be hardest hit, PRI said, with the report’s authors expecting the sector to lose a third of its value as margins were squeezed by “demand destruction.” Among the biggest losers would be coal companies, according to the forecast, with PRI expecting them to lose 44% of their value and 64% of their profits as a result of new climate policies.

PRI claimed the 10 most valuable companies in the oil and gas sector, meanwhile, could see their valuations drop by 31%, an equivalent loss of half a trillion dollars.

The report predicted that oil would peak around 2027, with corporate profits from the commodity falling by 34%. Natural gas was expected to peak around 2040, with profits from gas expected to decline by 29%, PRI claimed.

 

Speaking to CNBC’s “Squawk Box Europe” on Monday, Michele Della Vigna, head of EMEA natural resources research at Goldman Sachs, shared a conflicting view, arguing that climate-friendly policies were sparking “the beginning of a major business transformation for big oil.”

“On one side, it takes big oil’s capital and risk management capabilities and applies it to green technologies, from renewables to sequestration to reforestation,” he explained.

“On the other side, by restricting the access to capital for the broader industry in the old oil and gas, it actually lifts the returns and the free cash generation in the oil business allowing them to finance this transition towards green energy — which is why I believe, in climate change, big oil will see improving profitability as they transform into big energy.”

However, Giles Keating, senior advisor at Torchwood Capital, disagreed, describing Della Vigna’s outlook as “a great Panglossian view.”

“Look at what happened with the autos industry, they kind of pretended to do electric cars for a decade and said the technology doesn’t really work, and we all know where that ended up — a collapse in demand, a collapse in their profits and their share prices. I actually think the oil majors are going much the same way,” he told CNBC on Monday.

Hard-hitting policies

PRI’s forecast outlined several specific policies that would have the most financial impact on the biggest polluters.

They included bans on internal combustion engines, which PRI said would lead to a fall in fossil fuel demand, as well as an expected 93% of energy being supplied by low-carbon sources by 2050. Zero deforestation policies and a switch to ultra-low emission vehicles would also have a big impact on profitability and valuations, the report said.

Elsewhere, carbon pricing policies would add “crippling costs for higher emitters,” the report noted.

carbon price can be implemented by taxing the distribution, sale or use of fossil fuels based on their carbon content, or via a quota system that sets regional emissions allowances in advance and lets companies bid for “permits to pollute.”

Speaking at a conference in London in OctoberBP CEO Bob Dudley said carbon pricing would be the most efficient policy at cutting emissions.

“Get a price on carbon and boy, the market will respond,” he said. “That’s going to change the (emissions) situation more than 18-month or four-year outlooks from politicians.”

https://www.cnbc.com/2019/12/0...-of-value-study.html

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ksazma posted:

I still don’t see what this has to do with Guyana getting screwed through a measly 2% royalty. Plus Guyana PSA will also be devalued by that 43%.

What risk did Guyana take in this endeavor?   What contribution did Guyana make?  

This has everything to do with what Guyana gets. It means the ROI came under pressure in terms of commodity price and recoupment window! 

Something has to give for the numbers to work, and usually is the party with the least risk!

2% on a big number is a good deal when you never had anything to lose!!

ksazma posted:

I still don’t see what this has to do with Guyana getting screwed through a measly 2% royalty. Plus Guyana PSA will also be devalued by that 43%.

Countries like Guyana will continue to get negligible end result benefits.

Guyana stands to reap billions over the next decade!  Then the party is over!  Guyana contributed absolutely nothing.  Had Exxon not discovered oil in the nick of time, or ran into the Tullow fiasco, Exxon would have eaten all cost and Guyana left with usual cane-sucking white mouth!

It is now for the GoG to deploy this windfall and build the economy for the next leg beyond oil!

Even with this tailwind lucky-strike, it will transform Guyana beyond any other prior lucky-strikes!

In Business there is a concept called Risk and Reward.  You are rewarded based on the risk you took!

Guyana took ZERO risk but is being rewarded because they have “tenuous” legal title to a piece of real estate way offshore, with the oil buried 15k feet. The territory is claimed by another country!  Guyana cannot even defend it in event of enforcement!

Half a loaf is better than none!!  Ayuh cane cutters need to ketch some sense!

Guyanese people should pay attention to what Saudis are doing with their economy, especially with ARAMCO. The CIA said the oil kingdom is running out of cash because of low energy prices.  We can observe the number of Trinis living in Guyanese-owned apartments in Queens have been increasing steadily since the price of oil fell in 2015. Angolans are running from a country that produces close to 2 million barrels of oil a day. Iranians are dying on the streets protesting high taxation and high prices.  Norway is forced to tap into its oil wealth the help the nation balance its budget and Suriname's 100 million a year earnings from oil has dwindled to 25 million putting severe pressure on that little's country's economy.

Why big-head David Hinds and old scrap Clive Thomas think Guyana can afford to give each citizen 5k annually?  People ought to start asking questions and not just sit back and believe everything that's told them.

Billy Ram Balgobin posted:

Guyanese people should pay attention to what Saudis are doing with their economy, especially with ARAMCO. The CIA said the oil kingdom is running out of cash because of low energy prices.  We can observe the number of Trinis living in Guyanese-owned apartments in Queens have been increasing steadily since the price of oil fell in 2015. Angolans are running from a country that produces close to 2 million barrels of oil a day. Iranians are dying on the streets protesting high taxation and high prices.  Norway is forced to tap into its oil wealth the help the nation balance its budget and Suriname's 100 million a year earnings from oil has dwindled to 25 million putting severe pressure on that little's country's economy.

Why big-head David Hinds and old scrap Clive Thomas think Guyana can afford to give each citizen 5k annually?  People ought to start asking questions and not just sit back and believe everything that's told them.

Well nuff people swallow whatever they hear!  I still remember the PNC banna steering at me when I asked him what happen when oil runs out!

As for Norway, they have a massive fund, 10% of all global equities, which generates income!  So they tap into the income portion.   That’s why they built it up!

The proposed Guyana sovereign fund will have a similar structure which, with parliamentary approval, will allow tapping into the income portion. And this will have limitations!

Nehru posted:
ksazma posted:

The question is if you get de top half or de battam half. 😀

I will take bottom half cause that is where is punani is

Bai, is that all you think about, punani, even when we talking ile?

Baseman posted:
Billy Ram Balgobin posted:

Guyanese people should pay attention to what Saudis are doing with their economy, especially with ARAMCO. The CIA said the oil kingdom is running out of cash because of low energy prices.  We can observe the number of Trinis living in Guyanese-owned apartments in Queens have been increasing steadily since the price of oil fell in 2015. Angolans are running from a country that produces close to 2 million barrels of oil a day. Iranians are dying on the streets protesting high taxation and high prices.  Norway is forced to tap into its oil wealth the help the nation balance its budget and Suriname's 100 million a year earnings from oil has dwindled to 25 million putting severe pressure on that little's country's economy.

Why big-head David Hinds and old scrap Clive Thomas think Guyana can afford to give each citizen 5k annually?  People ought to start asking questions and not just sit back and believe everything that's told them.

Well nuff people swallow whatever they hear!  I still remember the PNC banna steering at me when I asked him what happen when oil runs out!

As for Norway, they have a massive fund, 10% of all global equities, which generates income!  So they tap into the income portion.   That’s why they built it up!

The proposed Guyana sovereign fund will have a similar structure which, with parliamentary approval, will allow tapping into the income portion. And this will have limitations!

How can we put away monies in the sovereign fund when we desperately need it to pay off debts and fund new projects?  Can somebody educate me on this one.  I don't get it. 

Ray posted:
Billy Ram Balgobin posted:

Time to buy NIO

plenty day traders fooling round with this

I messed with an internet stock 20 years ago and got badly burnt.  I don't mess with day trading anymore.  

Billy Ram Balgobin posted:
Baseman posted:
Billy Ram Balgobin posted:

Guyanese people should pay attention to what Saudis are doing with their economy, especially with ARAMCO. The CIA said the oil kingdom is running out of cash because of low energy prices.  We can observe the number of Trinis living in Guyanese-owned apartments in Queens have been increasing steadily since the price of oil fell in 2015. Angolans are running from a country that produces close to 2 million barrels of oil a day. Iranians are dying on the streets protesting high taxation and high prices.  Norway is forced to tap into its oil wealth the help the nation balance its budget and Suriname's 100 million a year earnings from oil has dwindled to 25 million putting severe pressure on that little's country's economy.

Why big-head David Hinds and old scrap Clive Thomas think Guyana can afford to give each citizen 5k annually?  People ought to start asking questions and not just sit back and believe everything that's told them.

Well nuff people swallow whatever they hear!  I still remember the PNC banna steering at me when I asked him what happen when oil runs out!

As for Norway, they have a massive fund, 10% of all global equities, which generates income!  So they tap into the income portion.   That’s why they built it up!

The proposed Guyana sovereign fund will have a similar structure which, with parliamentary approval, will allow tapping into the income portion. And this will have limitations!

How can we put away monies in the sovereign fund when we desperately need it to pay off debts and fund new projects?  Can somebody educate me on this one.  I don't get it. 

That’s the plan!  People buy things on credit while still contributing to savings, 401k, etc!

The plan is good. It forces discipline!

Baseman posted:
Billy Ram Balgobin posted:
Baseman posted:
Billy Ram Balgobin posted:

Guyanese people should pay attention to what Saudis are doing with their economy, especially with ARAMCO. The CIA said the oil kingdom is running out of cash because of low energy prices.  We can observe the number of Trinis living in Guyanese-owned apartments in Queens have been increasing steadily since the price of oil fell in 2015. Angolans are running from a country that produces close to 2 million barrels of oil a day. Iranians are dying on the streets protesting high taxation and high prices.  Norway is forced to tap into its oil wealth the help the nation balance its budget and Suriname's 100 million a year earnings from oil has dwindled to 25 million putting severe pressure on that little's country's economy.

Why big-head David Hinds and old scrap Clive Thomas think Guyana can afford to give each citizen 5k annually?  People ought to start asking questions and not just sit back and believe everything that's told them.

Well nuff people swallow whatever they hear!  I still remember the PNC banna steering at me when I asked him what happen when oil runs out!

As for Norway, they have a massive fund, 10% of all global equities, which generates income!  So they tap into the income portion.   That’s why they built it up!

The proposed Guyana sovereign fund will have a similar structure which, with parliamentary approval, will allow tapping into the income portion. And this will have limitations!

How can we put away monies in the sovereign fund when we desperately need it to pay off debts and fund new projects?  Can somebody educate me on this one.  I don't get it. 

That’s the plan!  People buy things on credit while still contributing to savings, 401k, etc!

The plan is good. It forces discipline!

Thanks for the info.  I think, however that Guyanese as lazy as they are will get only more lazy.  The politicians' message will encourage more laziness.

Billy Ram Balgobin posted:
Baseman posted:
Billy Ram Balgobin posted:
Baseman posted:

Well nuff people swallow whatever they hear!  I still remember the PNC banna steering at me when I asked him what happen when oil runs out!

As for Norway, they have a massive fund, 10% of all global equities, which generates income!  So they tap into the income portion.   That’s why they built it up!

The proposed Guyana sovereign fund will have a similar structure which, with parliamentary approval, will allow tapping into the income portion. And this will have limitations!

How can we put away monies in the sovereign fund when we desperately need it to pay off debts and fund new projects?  Can somebody educate me on this one.  I don't get it. 

That’s the plan!  People buy things on credit while still contributing to savings, 401k, etc!

The plan is good. It forces discipline!

Thanks for the info.  I think, however that Guyanese as lazy as they are will get only more lazy.  The politicians' message will encourage more laziness.

Nah, they have many hard working Guyanese.  You see all those kids graduating from UG and GTI!  They want to work!

Prashad posted:

Oil companies are pulling out of Canada, Europe and Africa by the dozens every year.  The cost of operating there is just too high in a time of lower cost oil.

The lesson here!  Oil is not the king it used to be!  Guyana is not the cheapest either.  US is intent on flooding the world market!

ksazma posted:

Just when Guyana finds oil, it not king anymore. Proof positive that Guyana is cursed. I have to tell my buddy Django to not hope fuh too much from Guyana. 😀

Nah seh suh!  Look at the positive side!  Supposed Exxon had hit the Tullow oil first! They might have pack up and gone home!  And Guyana would still have white mouth!!

ksazma posted:

Just when Guyana finds oil, it not king anymore. Proof positive that Guyana is cursed. I have to tell my buddy Django to not hope fuh too much from Guyana. 😀

Ksazma is on to something here. If Guyana exports hundreds of thousands of ounces of real gold every year with a population of less than one million and it still poorer than a church rat on a Friday night then it has to be cursed.

Last edited by Prashad