Programmes Carbon Investment
There is overwhelming evidence that continued accumulation of carbon dioxide in the atmosphere will eventually lead to dangerous changes in the climate. Stabilising global temperatures requires net carbon dioxide emissions to be reduced to zero. Getting to zero emissions will require dramatic changes in investments and in energy systems, which carry their own risks.
The transition to a safe climate future is all the more challenging because total fossil carbon reserves, already owned by public or private investors, likely already vastly exceed the amount that can be released into the atmosphere if temperatures are to stabilise at or near the internationally-agreed goal of 2ºC. Investments in infrastructure, both in the energy sector and broader economy, risk “locking in” emissions that exceed a safe cumulative total.
How should investors, the ultimate owners of potentially stranded fossil fuel assets, respond? Many are already attempting to divest from coal, and some from all extractive fossil fuel operations. There is considerable interest in “low-carbon” investment opportunities, but currently less clarity on the longer-term question of how investment can provide a route to a zero carbon economy. Some argue that what is needed is active engagement with the fossil fuel industry, and that simple divestment only will not bring the required changes as long as the world economy remains overwhelmingly fuelled by fossil energy.
Academics from the Universities of Oxford, Harvard and Columbia are consulting with the scientific and investment communities in combination with fossil fuel industry stakeholders to address the issues involved. What would a safe fossil fuel investment look like in a world in transition to net zero carbon emissions? What does a company that remains engaged in fossil fuel extraction need to do to reassure its investors and customers that it is acting responsibly; and to ensure that its activities are not committing future taxpayers or shareholders to expensive climate adaptation, mitigation or remediation measures?
This Initiative aims to address a number of specific questions:
- How do investment strategies impact on committed cumulative carbon emissions?
- How can progress be measured to ensure a company or investment portfolio is on track to reach net zero carbon emissions before mean temperatures increase by 2°C?
- What role does investment in carbon capture and storage (CCS) play in the solution?
- What are the wider implications of investment strategies for the current and future ownership of fossil fuel assets?
The Oxford Martin Net-Zero Carbon Investment Initiative has been working closely with leading international governance initiatives on corporate carbon and climate risk disclosure, including the Financial Stability Board's Task Force of Climate-related Financial Disclosures (TCFD), and remains focused on embedding sound climate science within such international frameworks. In July the initiative co-organised a meeting on forward-looking carbon-related disclosures with the TCFD which was attended by representatives from major companies from across the economy and explored the challenging issues about physically informative forward-looking disclosures.