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Risk of a sharp collapse in asset prices of oil companies

The $1.3trn cost of leaving energy underground

Unless a solution is found for climate change in the coming decade, there is a risk of a sharp collapse in asset prices of oil companies. 

Alan Livsey: Feb 5, 2020

Donald Trump was thinking about the teenage climate activist Greta Thunberg when he took aim at what he called the “prophets of doom” at Davos in January. But just as easily he could have been targeting global investors whose trenchant criticism of hydrocarbons has led to a shift in investment away from the traditional energy sector and into renewables.

This move represents a big problem for energy groups such as Exxon, BP and Saudi Aramco. Vast swaths of their oil, gas and coal reserves may never be extracted and burnt because doing so would intensify global warming, worsening weather events and threatening the loss of farmland and huge population displacement.

That could leave them with large numbers of what are known as “stranded assets”.

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