Carbon Asset Risk

Friday 01 April 2016

Fossil fuel companies are putting billions of investment dollars at risk each year by developing high-cost, high-carbon reserves that may never be burned. The Carbon Asset Risk Initiative (CAR) aims to prevent these fossil fuel companies from wasting investor capital by demonstrating how carbon risk poses an existential threat to their business models, accrues increasing levels of stranded assets, and puts trillions of capital expenditures at risk.

Carbon asset risk is an issue for all fossil fuel companies. The threat of climate change, carbon regulations and other market forces are shifting our economy to a low-carbon future. There's a clean energy transition under way – we already know the world needs to invest an additional $1 trillion per year in clean energy by 2030.

At the heart of the matter, no single actor will solve this issue. Investors, insurers, regulators, analysts, credit raters and asset managers are increasingly asking fossil fuel companies to assess, disclose, and address carbon asset risk, while questioning why companies are still investing in projects that aren’t economic.

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