 My name is Mark Jackard. I'm a professor in Vancouver, Canada, and I'm the chair of, or the moderator for this session, welcome. And we'll get right at it. We've got, we have three speakers, but they're divided into five speakers. So you do the math, and, and they've, I think they're doing it to befuddle me on time limit constraints and things like that, but I've written it all down. So, and each of the speaker, of the three speaker groups has 10 minutes, and I'm going to keep them really close to that. And so some of them have split up their time. After each group has spoken, unless you have a question that really focuses on something you didn't get, you know, explanatory about one of the slides, like a very, very focused question about what they said, otherwise I'm going to move us on. And so ask you to save it to the very end. So I, I possibly will entertain questions after individual units of speakers, but I won't let, I won't give you a long leash with that. All right? So now I would like to start right away then with our first speakers. And that's Jenny Liu, who's with the Science Policy Research Institute at Sussex, where she's a research fellow, and, and then followed or in collaboration with Ashwin Pong, who's with HSBC Global Research Department to the Climate Change Center. So Jenny, please go ahead. Thank you very much. I think we had a very engaging and interesting conversation earlier. So I'm not going to try to repeat elements on our slides that we've already touched today and try to focus on more detailed components, as I only have five minutes. So this presentation is a collaboration of industry and academia, and we came together. And the first part of the presentation, we're going to really give you a moral and ethical understanding of what divestment means. So this is a branching off a little bit of the discussion that we had earlier from Sivan. And then we'll go into the economic arguments and taking a look at a bottom up approach. So divestments, the framing of that first section, we're going to look at the social and environmental motivation. So as we spoke earlier this morning, there is the policy drivers at the national, international, and at regional levels at the European Union. So we won't go into that area, but we're going to focus a bit more on the economics, the materialization of the economy. And this is something that Maria brought up earlier. So what does that mean? We want to develop economically with using fear and fear resources. So this means that we might need technology to help us alongside with that. This could be new technologies, energy efficiency, low carbon technologies, carbon capture storage. So it's a huge option, but we have this huge problem of climate change. And the scale of transition that we need is massive. We need deep social and institutional changes to drive the underlying motivations of all parts of our economy. So this technological, economical paradigm needs to shift from a current, high carbon intensive, which is the ICD paradigm, beginning from the 17th till now, to something that is green. What does that look like? So we're just going to explore, well, possibly divestments might perhaps offer a potential opportunity where there could be opportunities and investments and profits. We have a very broad history. Divestment is not something new. It's happened in the 1900s, early 1900s, motivated by ethical and moral arguments from the church. This started in Europe, Nordic countries, the US, the UK, onto the mid 1900s. Do you have a discussion? More so of ethical industries that you're trying to avoid, sin industries. So it could be tobacco, arms, and later on, the apartheid in South Africa. But this evolved from social and moral issues and to broader environmental issues in the late 1990s. And this became particularly relevant with the Bluntland report, Our Common Future, and the definition of sustainable development. So divestments began to look into something that's a bit broader than just social. 2011, the divestment movement started from the bottom up, actually from university students. And it was an issue of mountaintop coal removal. And it began to spread across universities, NGOs picked it up, and very renowned environmentalists, and then, such as the United Nations, began to capture, this divestment movement is something significant. We're actually going to mobilize private public funds in order to transition globally into a high carbon energy model that we have into something that's clean and sustainable. So it's a lot of numbers out here. I just want to focus on a few components. In the last two years, we've seen this divestment movement from probably 70 different institutions, non-profit and for-profit institutions, over 500 that have divested. And this has been notable since the Paris Agreement. And it's not just this non-profit sector that has been really interesting, but the for-profit, which we're going to discuss in the last half. So the Rockefeller Brothers Fund, this is worth millions. Nord's Bank, this is worth billions. AXA redefining the AXA insurance worth over trillion terms of assets management. So these are not insignificant players that are divesting. We see that there's a growth of over 18 percent in for-profit institutions. And there's also from the individual scale, over five billion have pledged to be divested. So this is just from the bottom up movement. It's really beginning to gain traction. Why is this unlike any other divestment movement? Because in the past, it was restricted to particular countries, to Sudan, to South Africa, to tobacco. And now, fossil fuels and energy is addressing an ethical issue of climate change, intergenerational equity, interspecies equity. It's no longer one sector. It's cross-country, cross-sector. And the cumulative campaign outflows since 2014 is 15 billion. In 2016 is 3.4 trillion. It is not insignificant. So the questions that were asked earlier today, where are we going to get money to fund low carbon sources? So are we going to bankrupt these big players, these huge institutions that have this distinct and entrenched pathway? Probably not. But the outflows may be invested in perhaps low carbon technology, renewable technologies. So the next half of the presentation will give you a little bit more detail. Thank you, Jenny. So that was the more interesting part really. Ethics are one driver for divestment, of course. And the other factors, as Jenny's touched on, are those really which can disrupt the energy system. So if you think about energy supply and all the types of supply going to energy demand, investors are really interested in what can change those flows. So the speed of change, the size of the change of flow, and where the market has mispriced assets as a result of miscalculating how quickly those flows can change. The energy system is always in transition. But at the moment, the transition is very much focused on fossil fuels in the supply side and on some of the demand technologies which take those in. And so divestment of fossil fuels is one way of approaching that. And investors have taken different types of divestment approach. And we're going to look at that in a little bit of detail now with some divested portfolios. So, sorry. Thanks. So the questions for an investment for an investor are, first of all, what to screen out? Now, you can screen out different parts of the fossil fuel supply chain. So there's oil and gas and there's coal. You can start to look at service companies. So that's, I mean, some names like Halliburton and Schlumberger who take all their revenue from serving oil and gas production. And you can look at some of the users as well. So some divestment has focused on coal-fired utilities, for instance. In this exercise, we're focused on the supply side. And then this is a question of what you do with the money. So do you invest it into the screened index? Or do you put it into environmentally positive solutions? We're starting to see a bit of that coming through. The Guardian Media Group, for instance, said it would divest from all fossil fuels and put that divested cash into environmentally positive stocks. Also, AXA Group have said that they'd take some of the coal divestment money and put it into environmental stocks as well. And then what about performance? What are the metrics to consider? So here we look at total return, which is, for those that know, share price performance and dividends on top. And we also try to consider volatility a little bit. And we use the SHARP ratio here. It's one measure of volatility. It's essentially the performance of the portfolio minus the risk-free rate divided by the standard deviation of the portfolio. And, of course, volatility is very important to investors who need to pay regular money from an endowment or a pension fund over time. Just to give it a quick, kind of, 10 seconds of real-world context here. In my previous role, a couple of years ago, I worked with Newton Investment Management. It's one of the leading managers of charity in a university endowment money. And we started to get a lot of questions in, kind of, early 2014 about divestment. What would it look like for their portfolios if they'd not held fossil fuel and fossil fuel exposed stocks? And so I back-tested their portfolios, took in the findings to show them and, indeed, had some positive responses. A couple of those clients have since divested. So let's look at some of these portfolios now, what they actually look like. So the first set is a bit simpler. It's divesting stocks from these fossil fuel supply sectors, the first of all oil and gas, then the service companies, and then taking the metals and mining sector out as well. Now, that's a more difficult one as a sector on the whole, because that includes coal, but it also includes other large commodities, of course, like iron ore. Looking at these results, we can see... Over a five-year basis, outperforming. The time frame is very important, because it kept the ten-year period, and the five-year period, kind of, starts. We did this up to September 2014, and so it's kind of after the worst parts of the financial crisis, and so it misses out that period of kind of extreme market volatility. The sharp ratio is also interesting here. You can see that, so a higher score is better, and you can see vested stocks, i.e. on a risk-weighted performance, that they score better on that ratio. The next set of portfolios is... Sorry, gone too far. These are the ones where we've reinvested into green stocks, or the FTSE ET50 is a proxy for that, so that's a 50-stock index which holds environmental technology stocks, so a lot of renewables in there, really, and the results here, not great. We'll kind of touch on why in a minute, but you can see outperformance, if you stayed in rather than divested and reinvested into that green proxy. However, there's again one of the sharp ratios, a vested index over ten years. The next one, the last set of portfolios are the tilted portfolios, so here we've taken out selections of oil companies. To do that, we've used the carbon tracker initiatives research, which looked at companies which had most exposure to oil production, which has got a break-even price of $80 per barrel or more, and so it takes out a lot of Arctic production, oil sands and ultra-deep water. On the coal side, we've looked at the 20 companies with the largest coal production by volume, and here it's a bit more interesting. You can see outperformance in five years for fellows which have taken out the screen for oil and gas, selects oil and gas companies, and better sharp ratios overall. Now, the next slide, pretty small detail, with that huge spike out in the middle, that red line there is the ET50, so you can see a lot of froth around these environmental stocks, kind of pre-crisis, and then it came crashing back down. Over a ten-year period, you can see some of that dip there, but what you can see over the last few years, to 2014, is that it again started, effectively, came down here and then started to track. Kind of concluding comments very quickly, oops, sorry, are that this, the time frame is obviously crucial and the sharp ratios are probably a stronger divestment signal than total return, particularly actually on the back-pester-tester portfolio as a different client, but this exercise was backward-looking, the energy systems in kind of rapid transition at the moment, I would argue particularly around fossil fuels, and it failed to capture the last two years of very continued suppressed oil prices. A lot of people keep projecting, they'll go back up for various reasons they haven't done, and then we have other catalysts as well, so in policy. CleanTech, you know, was failed by Copenhagen, you could argue was supported by the Paris Agreement, and then future disruption around Paris, we're probably going to get a reciprocation this year, reviews and ratchets along the way, CleanTech keeps on getting cheaper and cheaper, and we have new technologies on the CleanTech side as well. Thank you very much. Great. Okay, hello, thank you. My name is Lucas, I work for the Oxford Smith School in the Sustainable Finance Program, so we have a project that we've been working on with Chatham House and E3G, looking at pathways for international oil companies to transition to a two-degree constraint essentially, and what that means for their capital allocation, their dividend policy, and any business model diversification. And the first step in this exercise was to really go through the gray literature of energy scenarios and outlooks to identify what the differences are between sort of the central scenarios and what the two degree scenarios are. So I'm going to present sort of some of that, a survey of those outlooks, and just walk you through some of our findings. So Ingrid couldn't be here today, but I do encourage you to have a look at the paper, and I'm going to, I apologize in advance, there's going to be lots of charts and graphs as we run through the slides, but we're trying to put everything together into a data pack, so if you want either the slides or the actual underlying data, please reach out and we can provide those to you. So these are the scenarios and the outlooks that we looked at, so you can see here I've sort of delineated all the different publication years, so some of them going back quite a while, what else do we have to say? So not the most recent ones aren't all from 2016, so some are pre-Paris, some are post-Paris, and this isn't a complete universe of the different scenarios of all these different organizations, just the ones that are more recent that we find relevant. I think we see two things immediately that there are more scenarios more recently, especially since the implications of a carbon constraint have become clear, and then especially since 2014 we even have these low oil price scenarios starting to enter the gray literature, so we think that's a really good sign. So how did we do this exercise? We went through all the outlooks, we collected everything from the data appendices that we could that were comparable. We used data point apps to pick out the points that weren't explicitly in data appendices, and we did the conversions and other conversions to make sure that everything was side-by-side comparable. So we'll start just with a couple of these macroeconomic uncertainties and the different scenarios. So GDP growth and population growth, these are fundamental drivers of final energy demand. So the different scenarios have different outlooks on these two factors, and there's some discrepancy between the different scenarios as to whether these are endogenous to the different scenarios or whether they're exogenous assumptions. So that kind of information is really useful to have. But almost all the scenarios have this total primary energy demand outlook, and we collected everything and mostly there through 2040. And so I think the story of the decline of the near term decline of coal in low carbon scenarios is very clear. But what wasn't clear to me, at least until putting everything side-by-side, was the role of efficiency and actually reducing total energy demand in the near term and the story that that has in between the sort of central scenarios and the low carbon scenarios. On a more regional basis, we can break that down and look at what it means for energy GDP decoupling. Almost all the authors had some view of decoupling, and the main discrepancy there was how fast India and the non-OECD, non-China, rest of world decoupled energy consumption from GDP. So moving over now specifically to oil demand, we're going to look at oil and gas because these are most important for international oil companies. The difference here you can see is between the amount of oil for transport. And we think the big story of especially the last year has been on light duty vehicle electrification. So you can see here is quite a spread of outlooks from the different publishers. And we've had a lot of news in those last year. We've had 400,000 pre-sales in a month of the Tesla Model 3. We had Ford just a couple of weeks ago announced that by 2020 they were going to introduce 13 new electric vehicle models. And you can see here that the outlook for Exxon and OPEC for instance is very, very different than the outlook for some of the other authors. So what does this mean for oil production? So in the near term, oil production in low carbon scenarios declines rapidly. And obviously not all the central scenarios agree with that outlook. But also particularly for OPEC portion, by combining and comparing all the scenarios we get a bit of a consensus that a low carbon scenario or a low oil price scenario means an increase in OPEC production. We can kind of flip that around and look at what that means for a long term oil price. And here we have the scenarios for the sort of existing gray literature for oil price. And then we see that low carbon scenarios represent this lower for longer outlook of the oil price being below $100 per barrel through to 2040. Switching over to gas demand, quickly we see lots of uncertainty around the amount of gas demand for industry and power. We're going to get a future generating mix purported by these different outlooks. So gas here competing with coal, competing with low carbon, which is nuclear and CCS, and competing with renewables. And the one thing that we would like to see more information on is the role of LNG infrastructure in actually enabling this competition for gas. We have a recent McKinsey report that says that LNG is going to be oversupplied for the next decade. This means that infrastructure might not get built. So the ability of gas to actually make these gains in the overall energy mix we think is still quite uncertain. This is the big one, obviously, carbon dioxide emissions. You can see here almost all the scenarios show us bursting through any two degree limit quite quickly. And even scenarios that purport to be faster transition or advanced technology scenarios still break through those two degrees limits. And the only ones that explicitly stay within those limits are specifically two degree scenarios. But what I think was interesting was looking back over the history of projections and looking at the direction of travel. So we went back through five years of the world energy outlook projections and compared the projections for solar PV and wind capacity. And we can see that they've been amended upwards every single year. So the outlook for that amount of generating capacity has changed. And then if we compare to the or let's just say at least on and then even if we compare to the historic the historic outcome of that capacity, we see this still even looks conservative, I would say to think that the future is even on 450 scenario going to going to be what they project. We can also do that for a total primary energy demand. So here's BP in 2030 and Exxon in 2040. We see we've got less nuclear year on year but more renewables and then coal or kind of change our mind gas we're not quite sure about. And in the near term for the IA that's a very similar story. Nuclear we're not sure about renewables. Yes. Coal maybe we've changed our mind recently. Gas maybe we've changed our mind recently. But I think here this is the this is sort of the big story at the end of the day is that even though we're that that interplay between gas and coal and renewables and and and nuclear hasn't really moved the needle very much on these emissions outlooks and sort of by definition, you know today's new policies scenario is tomorrow's central policy scenario. But we didn't really see the needle move until this last world energy outlook. So I'm looking forward to the next world energy outlook, which will be the first pope Paris that's going to be in November. And then we'll we'll send out a chart like this again to see where the needles moved in a couple months time. So what are sort of our collective findings from doing this exercise? We find that there's a consensus now among the scenarios that a low carbon future is a low oil price future and is a high OPEC production future. So this is really a perfect storm for international oil companies. We see a substantial gap exist between two degrees or low carbon scenarios and sort of the central planning scenarios of some of these organizations. And we say, OK, this reflects some skepticism on the ability of policymakers to deliver a two degrees transition. And if even if we accept that, say fine, accept that at face value, I think that the people behind or making decisions based on these scenarios need to be mindful of the rate of change, some of the direction of travel stuff. Otherwise, I think you could have company directors very soon making decisions on scenarios that are obsolete. And so sort of the reluctance to publish more ambitious transition scenarios I think will only do a disservice to the decision making as the direction of travel seems to be towards a lower carbon pathway. Interplay between renewables low carbon we've talked about, but I think there's lots of talk about with regards to transparency in these outlooks and in these scenarios. So I think, you know, just doing the exercise, there's some very basic things about how annoying it is to try to scrape together the data and convert all the units and all that sort of thing. But because the carbon constraint is so strategically important for these different organizations, the amount of opacity in terms of what the actual assumptions are and the actual models that underlie some of these outlooks make it very difficult, I think, to engage on sort of the correctness or the merits of the different scenarios. So we'd definitely be interested in seeing some kind of open modeling framework or some kind of peer review process for these gray literature energy outlooks. And basically, if Exxon is making investment decisions based on a 10% electric vehicles in 2040, Eisen Investor would really want to know that. And I think that needs to be part of the broader discussion on these topics. So what is next for us is we're going to build a decision support tool that allows people to sort of role play capital allocation and business model diversification and shareholder dividend decisions through each of these scenarios. And then we're going to bring that out and role play that with different groups. So I invite you to contact us about it. And thank you very much. Welcome to our third book speak. Kida and Mr. Pappan is here. Good morning, everyone. Thanks for being here. It's my pleasure to be here. The starting point of the project that we're going to present on was actually a quantification of and tracing of cumulative historic emissions as a percentage of all industrial sources from fossil fuels and cement back to the original primary producers of the oil, gas and coal and in some cases cement produced since 1854 to 2013 because we wanted to highlight how we can trace the quantitative contribution from primary producers as a starting point for leveraging their future action to reduce curves. So if we take a look at the left hand column, the seven years so investor owned and state owned oil, gas and coal companies contributed 148 gigatons of carbon dioxide since 1751 to the atmosphere. If you deduct for their production of oil, gas and coal, I mean, if you account for their oil, gas and coal, but deduct non-energy uses of petroleum in particular. Now, at the encouragement of Peter Frumhoff of Union of Concerned Scientists, we also wanted to take a forward look at what their stated and declared proven reserves of oil, coal and gas would contribute if fully produced. So we took a look at the 70 investor owned and state owned oil, gas and coal companies and added up their future production if fully exploited and they would add up to 255 gigatons of carbon out of a remaining carbon budget in 2013 of 275 gigatons of carbon. Now, the vast majority of that is for state owned oil and gas companies and some state owned coal companies as well. That's about 76% of the remaining carbon budget and only about 16% is traced back to the investor owned oil, gas and coal companies that we all know as ExxonMobil and VBODY and such. And some of that work is detailed in the paper that I published in 2014 Tracing Atmospheric Emissions as well as the paper I did with Naomi Reskes last year on potential emissions from reserves. So if we look at some of those reserves as well as their historic emissions, we see that the black columns are the historic contributions. So the largest companies historically have been Saudi Aramco, Chevron, ExxonMobil, et cetera. But if you add the emissions from their stated reserves in the red columns plus methane and green, we see that the largest potential emissions come from the state owned oil and gas companies. So we wanted to look at one particular company and see how, if they were to align its future emissions by exploitation of its reserves, how they can align themselves with a science-based target for a downward path on emissions and production. So I'm cooperating with CDP in London to analyze one particular oil and gas company whose state of reserves amount to five billion tons or so of carbon dioxide, again accounting for non-energy uses of some portion of their petroleum. See how it can align its investments, not only in future oil and gas and when their various levels of stated reserves will be exhausted, but also other investments and renewables and so forth. So I'm going to hand it over to Paul Griffin to explain the model that we developed. Thank you so much, Paul. So first of all, the science-based targets initiative is founded by CDP at World Resources Institute and a product of the SBT initiative, Editorial Decarbonization Approach whereby the science-based targets were desegregated by contribution sectors. However, the oil and gas sector was not included in this first version. So to describe the concept of science-based targets for absolute emissions, the way in which a benchmark is allocated to a company is via the contraction method. In this way, a company's historical emissions, no, sorry, company's emissions are benchmarked according to the same pathway as the global, as a global scenario, the IEA2DS in this case is simply contracted from the global level to the company level, so it's pro-rata. So what does this mean in terms of the implications for our company? Well, scope one plus three emissions are looked at here and we have in 2010 nearly 250 megatons of CO2E. Scope one, by the way, is operational emissions, emissions under the company's direct control and scope three emissions, oil and gas, is primarily from the combustion of their products. So the blue line is the IEA2DS and this is the science-based target line and the four DS is the orange line here. And you'll see that there are dots along this line. The dots represent the doctrine emissions associated with the reserves portfolio of the company, so that 1P emissions that would will come from 1P emissions, the time at which that would take for that to be realised would be, as it is indicated here. You'll notice that on the blue line the dots are further spread apart and in fact the 3P doesn't even feature on this chart because their 3P reserves, the emissions locked in would actually surpass their entire 2050 budget for science-based budget. And if you were to move down this line towards 2100, you'd find that any reserves portfolio would account for ever-increasing amounts of time because the sensitivity of that portfolio would increase as annual emissions pathway would reduce longer for those emissions to be realised. So now to discuss the emissions intensity allocation method and in this case the company is converged with the benchmark, with the science-based benchmark. Starting from the base year the company reaches the same intensity in 2050 and in doing so those are the other laggards. Company B would have more to do than the more carbon-efficient companies, company A to reach the reduction for 2050. So in terms of what this looks like here is the base year so starting from the base year here the blue line is the intensity represented from our company and the dotted line, the scenario. And business as usual is how it would look as you can see. Vergence path here starts from the base year and converges to the IA2DS and this is emissions intensity of total primary energy production. In terms of ways in which this company could transition to attaining this science-based target possibilities were models here. Natural gas switching by 50% operational oil and gas efficiency so scope one emissions reducing that to zero. You see that doesn't make a huge amount of difference because scope one is by far the smaller part of the total inventory and then renewable options and even a reforestation offset potentially could add something to that. But even with these in place there is a significant action remaining so it is a large ask to meet that. The effect of CCS is to have changed ever so slightly the orientation the downward path here but in this case what I have done is the amount of CCS in natural gas production within the scenario within the 2DS scenario is about 15%. So applying double that to natural gas combustion would reduce over time factor and thereby increase the effect of natural gas switching and reduce the BAU because there is already natural gas within the portfolio but there is still action remaining. So linking the two contraction and convergence together this chart is of production mix of natural gas and oil and shown alongside that is the intensity of that production mix so we are a company to do nothing but continue as a business then what you see at the bottom there is that their budget to 2050 is exceeded and it is 10 gigatons of CO2 so what ways can it stay within its budget? There are two ways first of all it could simply wind down production and thereby it would not be required for them to reduce intensity but obviously it would not be able to grow as a business in that sense and the other option is to grow in terms of total output but to diversify the production into low carbon as well simultaneously and in doing so reduce intensity the implication of this is that the company follows both the contraction and the convergence together and in doing so it sees itself of less as any oil and gas producer but more of as a primary energy producer. Up on conclusions companies can begin to plan their transition around reserves lock-in as you saw up with dots CCS provides a range of flexibility but it is obviously not the solution alone it simply has a limited effect on the total mix and oil and gas companies would need to follow both the contraction and convergence science-based target methods in order to continue growing and be prosperous whilst being science-based next steps on the modelling side to extend the analysis to 2100 modify scenarios that we're looking at 1.5 1.7 degree limit and to consider further consideration for company level allocation and for this I refer to the carbon supply cost curve researched by CTI in which the lower cost oil is prioritized over high cost oil and marginal cost curve such that there's a variable allocation depending on the cost of the company's oil production so considering those that aspect as well and to apply levelized cost assessment so the scenarios can actually themselves be costed as well thanks for listening we've got 20 minutes for discussion number one Alicia Pujana from Fluxo, Mexico I would like to ask Paul and thank you for all those beautiful presentations do you consider as well to change the structure of the oil market and gas market since oil, gas and coal reserves are so localized and concentrated but for no renewables land sun and air are not concentrated today oil market and gas and carbon markets are very concentrated there are not competitive markets do you assume a change in that structure as it stands the methodology doesn't distinguish between the distribution or the concentration of resources so that's something that would want to do to develop it and be more comprehensive of that and one of the things that I mentioned was the supply cost curve but still that assumes a perfect market so you know there's lots of caveats that would come with the science based target methodology because it can't be perfect and it has to be scalable as well and simple enough that companies can follow it and be measurable and impartial I think I was number two also known as Harold Winkler from the Energy Research Center University of Cape Town my question is to Lukas if I understood you said in the two degrees scenario there was a low oil price but high opaque production just explain why there would be high production and whether that's for seeing not being able to sell late or what's driving the high production sure yes that is correct that there seems to be some consensus in the scenarios the idea is that under a low oil price opaque is going to be able to take more market share or at least defend their market share this is kind of reflective of a little bit a return to a bit more economic fundamentals since the oil price came down in 2014 they have the lowest cost supply base and so then under a low price they take more of the production Christoph McGlade from the International Energy Agency one of great quick comment first of all your reviews Lukas of our projections on the renewable side the reason the new policy scenario has consistently increased the amount of renewables has been deployed is because policies have constantly been ratcheted up so if you look back to 2011 the renewable policies that were in place were a lot weaker than they are now we are more or less obliged to mention that because we are constantly criticized for raising for renewable projections and then two questions I think could go to anyone in the panel the first one is are oil and gas companies really in a good position to diversify towards wind for example as was mentioned more towards non-core businesses for them it strikes me that the risk portfolio for these different projects will be different and the oil and gas companies might be best placed and secondly related to that how do you view whether companies themselves should be required to produce two degree scenarios and how their business will be able to handle the two degree scenario do you think this is a positive move forward or they should have to benchmark their portfolio their business towards something like two degrees scenarios such as from the IA I do think that companies should be required although that may have to come from shareholders demanding that companies do at least produce a two degree scenario but you see the vision between the US based on the Canadian companies as well as the European companies as to their level of investment and interest in renewables versus continuing as an oil and gas company I would say that the European companies are much more open to increasing their portfolio start oil for example for the 200 million dollar fund diversifying towards renewables I would just add I think there are many strategies that they can take and just to run for cash is a strategy or to diversify is another strategy and they're going to have to choose whatever makes sense for them fourth place is notoriously the worst one isn't it so my question is for the whole panel really what would you say to a fossil fuel major that came back to you saying we heard various possible strategies a major could take investing in renewables runoff the third one obviously is investing seriously in carbon disposal CCS in the short term more radical means of disposing of CO2 in the long term if a carbon major said we're going to be disposing of CO2 permanently verifiably it's equivalent to 10% of the fossil content of what we sell and produce by 2030 or 2035 or some date like that and after that we're going to increase the sequestered fraction at a rate that's commensurate with reaching 100% sequestration before temperatures breach 2 degrees or whatever goal that the global governments agree would you then leave that company alone and if you would maybe we should tell the companies that we would leave them alone if they did that they're not offering to do this at the moment and if their offer was on the table then we might get some more serious buying companies in putting their own resources behind this technology which we are ultimately going to need I would support that Miles and if I were United Airlines I might be switching my fuel buying to that company yeah I suppose just to pick up where you left off and where companies want to go they can be leaders or ligards whether they want to reinvest new technologies such as renewables is a question but there's also incremental technological innovation so in oil stands production we already have new more efficient ways of producing extracting oil but there is this locking and path dependency so renewables is part of the solution but there's also ways of increasing efficiency sorry just to turn into the question of whether or not oil and gas companies should diversify I think there's a few reasons why they are well placed so I'd agree with that I think Christopher made that point in terms of cost of capital I mean they still can raise cheaper capital often but of course that relationship is changing quickly and you can see that in some of the multiples being applied to equity by the markets switching quite quickly but I guess at a more structural level there are kind of paths to decision makers and the scale of resources they have which they can deploy quickly and on a global basis and their relationships with existing utility companies all put them in a strong position to quite quickly pick up with business especially kind of building out of new new capacity and new energy frameworks within countries they are quite well placed to do so and then should companies be required to show how they're positioned I think they should be I mean I think companies should show how they are how they're managing different kind of classes of risk I mean we've kind of published on this kind of idea quite recently in terms of physical risks phase but kind of the transition risks and also liability risks which is possibly a kind of more emergent thing in the future as you can see with cases against Exxon and some other smaller oil and gas companies and so kind of demonstrating what the metrics are and their progress against those in terms of managing those risks would be a strong step I mean I guess all companies should do that but particularly ones in certain sectors which are more acutely exposed to transition in the energy system Better than four Great Thank you Peter Frumhoff at the Union of Concerned Scientists So this is a primary question for Paul and Rick I'm pleased to see that you're beginning to develop the CDP at all initiative sexual decarbonization or two degree pathway for the oil and gas industry fossil fuel industry I know with the other decarbonization or sectoral reduction pathways you've had quite a lot of uptake from companies something like 180 companies have made commitments to reduce emissions including some significant multinationals Is the development of this decarbonization or two degree pathway a reflection of a dialogue that's now happening with the fossil fuel companies perhaps to take on reduction commitments has that happened yet are you seeing any movement or is this really in advance of and in the hopes of being able to encourage that Paul might answer this as well but to my knowledge no there's just some study in certain companies that are exploring what it would mean for them but I haven't seen any public commitments by any oil and gas companies to do so Yeah it's pretty sparse the only one that we're aware of and has produced something that can be debatably at least described as two degrees or science based is total but I've looked over the methodology of their approach and actually someone said there's more than one way to skin a cat and basically there's lots of myriad of ways that you can sort of make the path a little bit shallower and in fact and in this case whereas I was looking at the boundary of total primary energy production so how the intensity would reduce to 2050 given these options of not just all gas and coal but hydro nuclear solar, wind and so on well total in their assessment decided to exclude from their options hydro and nuclear because they didn't see themselves going into that which is they may have their reasons and legitimate reasons from their perspective but what the effect of that is is that the benchmark becomes a shallower intensity reduction so they need to be aware of standardizing it but yeah there's not much activity from the sector so this is starting a conversation to engage them further Bear in mind too that there might be some emerging legal pressure on companies to see that let themselves be seen as climate stewards and that might propel some action to not only study but make public amendments to lower the future emissions I was thinking after after 7 who went today hi Pete Erickson with Stockholm Environment Institute and I've heard the term science-based targets before but I admit I hadn't really looked into it much so I thanks for your presentation and introduction to it and it was really I was excited about it but it also was shocking in a way because it seemed to me that it implies it carries with it this implication or assumption that if every company just starts from where they are and you know starts reducing some that somehow we can get to two degrees and it seems to me that that's problematic for a couple reasons one is it ignores the free riders that aren't going to take that path and then it seems like it also steps aside the fact that really some companies and some whole industries don't have anything like the same place that they have now in a low carbon economy you know certainly the coal industry but parts of the oil and gas industry too so I wonder if you could comment on how you address that in your communication around this or even in the work itself going forward yeah I agree that if every company had a plan and that they actualize their commitments to science-based targets we wouldn't actually achieve the goal so I think it's a comment on to go a bit further we just see this scenario as a starting place and we want to follow up with what it means to reduce those objectives below two degrees and go on from there but I agree with your point Greg Mutt with Oil Change International I've got a technical question for Rick which is you showed a number for proven reserves which was about 250 gigatons of carbon and I wanted to check what definition you're using there because on most definitions the global reserve is I think somewhere between 600 and 800 gigatons of carbon or between 2 and 3000 gigatons of CO2 so I'm wondering is that just from your list of companies those reserves and if I may I've also got a question for Lucas which is on the slide you showed of the historic growth of renewable energies and the IEA's forecasts the striking thing there for me was that the historic growth is showing the classic S-curve shape of a new technology it's accelerating upwards we don't know whether it's going to keep exponentially getting a steeper curve or whether it's going to grow on a straight line and at some point it will flatten off what all of those IEA projections had was it flattening off relatively soon which would imply a saturation of the power market somewhere around 10 or 20% I think and the oil company forecasts are the same so my question is have you tried extrapolating those technology S-curves to see what assumptions they're making about where renewables ultimately end up? Yeah thanks Greg for that question let me try to clarify the emissions I show at 255 gigatons is only for the 70 companies that have the facilities the investments and the infrastructure able to produce those reserves and they're on their books what I excluded were at least 185 gigatons of carbon owned by countries in which companies we don't have data for the companies themselves such as all of Chinese coal coal production for example is outside of that column as well as Poland and Kazakhstan and North Korea for example and their coal infrastructure so I'm only looking at the investor owned and state owned companies Yeah sure on S-curves so I think there are people in the audience who can probably answer this question better than I can but I think there are many types of first of all for modeling S-curves there's many types of sigmoid functions so depending on which one you choose peak you end up with a different midpoint inflection point and they all when you have a nice little exponential curve like that you can pretty much fit any S-curve that you like to it with a reasonable degree of correlation so it makes it very difficult to choose and then particularly in renewables and the penetration of renewables I think there are other sigmoid curves that are sort of hidden within that one curve because basically we know penetration of renewables will depend on a lot of other technologies that are at that very bottom of their own sigmoid curves at the moment so we don't know when we're going to see an explosion in storage or flexible generation or high voltage DC that kind of thing that will actually impact the renewables curve Hi, Samantha Smith from the Just Transition Center in the International Trade Union Confederation I think I worked for the company that was the model for your study there so I have some thoughts but I will corner you guys in a break and ask some questions and I have another question really which can be for a few people on the panel and it's this so oil companies are primarily valued by their reserves today so as you're looking at this transition pathway do you have any thoughts about how investors might react to this move from valuing a company based on its reserves to valuing it based for example on a pipeline of wind power projects that's one question how would you see that playing out would that be something very dramatic that's a bit of the stranded assets theory or is that something that you think could be managed Not specifically I mean there haven't been large scale examples yet of how the market would react because no oil companies have done renewables in any great scale I can't, I mean I'm trying to think of precedent of where we've moved from an asset based valuation to revenue based valuation I can't is it problematic for the market to do that possibly in the short term there could be some kind of undervaluation or kind of froth on those companies but I can't see a specific problem with them in terms of managing a transition for those companies to that I mean maybe it's a time for them to communicate clearly what their company is worth based on terms of future projections of locked in contracts with utility companies or something Thank you very much for your presentation regarding actors I think that's important instead of just looking at countries the question is talking about oil companies what did you see in your story about the relationship to see them as companies but as companies owned in a certain way or with institutional arrangements different between each other specifically how they relate to the country of their origin and if you saw that if you could just say a short thing about how that could change the results or if there would be differences It's not something that I have looked at closely but it's pretty clear that government policies have a strong impact on how they will act whether it be Venezuela or Norway or Saudi Aramco to the extent that we can pressure the national governments to institute policies that make sense in lieu of climate stewardship or the better that comes internally to the company particularly in Norway for example where this majority shareholder is the government and how it interacts with the company and the company's internal goals Gertran Kramer My name is Gertran Kramer I'm as of recent an academic but until early this year I worked for Shell one of the oil and gas companies that came I can say from working there that there is no shortage of careful analysis of the climate predicament and forward thinking of how companies can respond I think what's a bit missing in the present analysis is the notion which I'm sure is in the back of your minds that after all CO2 is a commons problem which means that individual parties find it simply difficult the way the world is to act on it that is in particular true for fossil fuel companies because companies are held to account to do the things they are good at and provide the products that the market caters for so at some point during the discussion there was the remark shouldn't companies have state sort of ambitions or emissions or portfolios etc I think they would very happily do that if there were actually consumers who are likely to back that up the case of CCS came to the fore and the others would like nothing better than to get going with it the problem is there is no mechanism to recover the cost so that is a problem that cannot be denied and I think when it comes because there is in this aspect of morality shouldn't companies do this or that I think it is a very positive sign that I think virtually all independent oil majors now in one way or the other are speak out publicly for carbon pricing it took them perhaps a long time to get towards that point but it is very good that they are there and I know from inside how the frustration is that politicians don't act on it so Miles, would you like to contribute some thoughts very quick final comments including as we think of it today there is no mechanism to recover the cost of CCS there was no mechanism to recover the cost of double held tankers in the early 1970s the industry collectively agreed to introduce them because they knew that they were no longer going to get a license to continue to operate unless they did so so CCS needs to become a license of operation of fossil fuel extraction until we get to that point we are not going to solve the problem so I want to ask so for the past two years I have been in conversation with five of the largest oil companies in Canada about decarbonization in two degree pathways and what I have come to realize is that when they talk about decarbonization their vision is the decarbonization of oil that they what they are talking about is reducing emissions both at the production and at the consumption they are actually investing in CCS in the trunk this idea that somehow we are going to reduce emissions to such an extent that they can increase production of oil in the future and so I raise that because I think that there is a cultural and strategic barrier for the big incumbents to doing big plays into clean tech venture capital or renewable energy because they have to admit then that they will have stranded assets or that climate policy will succeed and I don't know given the valuation that they have of their companies how to overcome that barrier because I think we need them, we need their capital Thank you Yeah, Nolan Bergman University of Sussex Lucas you mentioned this difference between mainstream scenarios and two degree scenarios arguably that difference is why we are here so what are the key qualitative points between the two? My question We only get three responses here so not five We all need to contribute personally as well as in terms of our corporations to commit to participate in the solutions if that means choosing a petrol provider that makes the public stand for climate stewardship we should favor those consumers those producers Sure, on key qualitative points one of the key qualitative points is a skepticism of policy that will actually enact that kind of pathway A little bit off of divestments but the key incumbents the energy biggest energy oil producers have a vested interest in carbon capture storage because it allows them to continue with status quo we have a question of consumers what are the choice? In the divestment movement you do see investors pulling out and saying that look we'd rather put our money in another let's say low carbon pathway this is what you can say from the bottom up approach we need there isn't one particular approach we need all approaches, we need incumbents to be involved we need carbon capture storage and we need more pressure on the biggest emitters and so please join me in thanking