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Key Findings

  • Exxon states: “The risk of climate change is clear and the risk warrants action.”
  • US listed coal majors have seen share price declines of over 75% since 2011, in stark contrast to the 42% gain in the Dow. Australian listed coal companies have matched this underperformance.
  • Coal demand continues to undershoot expectations, with new data in Germany, Japan and Australia.
  • Transitioning to a gas dominated electricity system will see US emissions continue to rise.
  • Manufacturing Australia predicts that Australia’s gas export plans could cost 100,000 jobs due to surging domestic gas prices.
  • McKinsey is the latest to acknowledge “The disruptive potential of solar power”. Solar stocks have massively outperformed the wider market since 2013, reversing some of the 2011-12 losses.
  • First Solar, the US’ largest solar PV manufacturer, continues to achieve record efficiencies.
  • One of the largest undeveloped coal basins in the world remains stalled, with both GVK and Adani again pushing out their expected financial close for the Galilee by another year.
  • Wiggins Island Coal Export Terminal is a year behind schedule with A$1bn of writedowns expected on this 100% debt/preference share funded A$3.3bn project.
  • Chinese Premier Li Keqiang declares a “war on pollution”, announcing that China will shut down 50,000 small coal-fired furnaces across the country in 2014
  • China’s first carbon market in Chongqing plans a 4.1% pa cut to carbon dioxide emissions starting in 2014, using 2013 as the baseline.
  • Santos agrees to not undertake drilling activities on private land without landholder consent.
  • UniSuper announces it is adjusting its Socially Responsible Investment Option to “screen companies involved in fossil fuel exploration and production”.
  • In the face of investor pressure, Peabody has agreed to release a report regarding fossil fuels and their impact on climate change, and potential liabilities.
  • Blackrock, the world’s largest fund manager highlights the “licence to operate” risk for any company operating in the Great Barrier Reef.
  • The Norwegian Sovereign Wealth Fund commences a review of whether to divest its holdings of all fossil fuel stocks.

Please view full report PDF for references and sources.

Press release: Briefing note: Fossil fuels, energy transition, and risk

Tim Buckley

Tim Buckley, Director, Climate Energy Finance (CEF) has 30 years of financial market experience covering the Australian, Asian and global equity markets from both a buy and sell side perspective. Tim was formerly Director Energy Finance Studies, Australia/South Asia, IEEFA, and was a Managing Director, Head of Equity Research at Citigroup for 17 years until 2008.

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