Climate Progress Dashboard update: Oil and gas industry responds to pressure
Schroders Climate Progress Dashboard has shown that the world is still overshooting its temperature rise target by more than 2°C, with headway made by the oil and gas industries offset by a marked fall in investment in clean technologies, according to its latest quarterly update.
The dashboard is designed to give investors an insight into the progress governments and industries are making towards meeting the 2°C temperature rise target set by the Paris Agreement in 2015 and the transition to a low-carbon economy.
On average, the dashboard calculates that the world is on course for a 4.1°C temperature rise over pre-industrial levels, unchanged from three months ago. However, the oil and gas industry has made encouraging strides in the three months to 31 December, 2017.
Andrew Howard, Head of Sustainable Research, Schroders, said:
“According to the Climate Progress Dashboard’s quarterly update, the oil and gas industry could be starting to translate the growing pressure it is facing into a strategic response.
“Our recent research discussed the challenges facing the industry and the importance of capital discipline as the key driver of future profitability and valuations. There is further to go but the change is encouraging. Time will tell whether discipline holds with rising prices.
“The main setback over the last quarter reflects slowing climate finance flows. The challenge of encouraging capital into climate solutions on the necessary scale has attracted a lot of attention from policymakers and environmental groups and, while plans are typically ambitious, tangible action remains more elusive.”
Capital investment in the oil and gas industry dropped off sharply, translating into a projected temperature rise of 3.9°C, down from 5.3°C. Reflecting that trend, Exxon has announced that it will publish analysis of the impacts of climate change and tougher environmental policies for its business, while Shell has set a goal to halve the carbon intensity of the energy it produces.
However, climate finance saw its temperature rise trajectory increase from 3.3°C to 4.6°C over the latest quarter. Data from Bloomberg New Energy Finance showed that clean energy investment had fallen back to 2010 levels in late-2017, well down from the highs of 2015. The Climate Policy Initiative also released a detailed analysis in October confirming a 12% drop in global investment levels for 2016.
Schroders Climate Progress Dashboard key:
Click here to see the in-depth dashboard update.
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*as at 30 September 2017
 The Climate Progress Dashboard primarily uses data from Climate Policy Initiative, eg https://climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2017/