Insight
Why are the energy transition leaders not (yet) being rewarded by oil and gas investors?
Report summary
Equity markets are not rewarding decarbonisation progress in corporate valuations. But deferring decarbonisation strategies would be a strategic mistake. The move towards more certain, more quantifiable, and more immediate carbon risk is inexorable. The window to avoid material value erosion will start to close. Today’s crisis could even accelerate the period in which oil and gas companies can reposition for a low carbon future. We look at the factors weighing on greening strategies and why oil and gas companies must act now to avoid longer-term value erosion.
Table of contents
- Executive Summary
- Transition leaders are the most discounted companies in our coverage
-
Looming energy transition risks - more quantifiable, visible and growing
- The investor take
- Value at risk is already material – and rising
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What will differentiate corporate performance?
- Prove credentials – delivering double-digit returns and critical mass
- Help investors understand the value proposition
- Conclusion: the transition discount will subside
Tables and charts
This report includes 6 images and tables including:
- It's not easy being green: Market premium to Wood Mackenzie's group valuation, by CoRSi transition rating*
- Wood Mackenzie’s estimate of free cash flow from wind and solar*
- Wood Mackenzie’s carbon price forecast for a 1.5-degree scenario*
- Upstream NPV10 at risk from Scope 1 and 2 emissions under our 1.5-degree carbon price scenario**
- Wind and solar operating cash flow as a % of total group operating cash flow*
- PE and PCF multiples for 2022 as of 27 May 2022
What's included
This report contains:
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