Big Oil and climate change: the long road Report

Insight 25 July 2019

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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below

What’s the key takeaway from this report?

Investor pressure on Big Oil to address climate-related risk has ratcheted up since the Paris Agreement of 2015. Over the past five years – faced with the reality of tight oil and looming peak demand – the Majors have focused on ‘future-proofing’ oil and gas businesses.

But are the Majors doing enough to transition to business models that are aligned with the goals of the Paris Agreement? This analysis has our take.

What’s inside this report?

The problem with industry oil demand projections
The journey ahead for oil companies and investors
Possible futures for the Majors at the extremes

We explore how investor pressure has shaped Big Oil's response to climate change.

A chart exploring how investors have shaped Big Oil's response to climate change.

This report explores the broader theme of how Big Oil will respond to decarbonisation. Get our thoughts on the industry issues that matter.

Report summary

The threat of climate change represents an existential challenge to the oil and gas industry, and to the Majors in particular. If they are to remain investible – five, ten years from now – all will need to transition to business models that are aligned with the goals of the Paris Agreement. What that actually entails is the trillion-dollar question – one which the entire industry is wrestling with right now. The answer is indeterminate and evolving; the timing ambiguous. But some things are clear. This is a journey. Everyone – consumers, policy-makers, corporations, investors – is moving in the same direction. Different routes, different velocities, but one direction. And the Majors have no choice but to make the journey. Staying put is not an option.

The fundamentals problem
- The demand problem
- The supply problem
- Oil price uncertainty
- The fundamentals problem
The Majors’ perspective
- Progress to date
- The pitch
The investor quandary
The journey
Final destination?

Tables and charts

This report includes the following images and tables:

The Majors liquids production vs. global demand scenarios (million b/d)
Climate and sustainability investor motions (selected), 2015-2019
The journey for oil companies and investors, from today’s vantage point

Oil demand projections (million b/d) and projected rise in global average temperature by 2100
Global oil supply cost curve, 2040 production capacity (million b/d)
Global oil recoverable resource estimates, BP and Wood Mackenzie