“Two words: stranded assets.”
That was the reaction Wednesday from sustainability professional Jessica Davis after oil giant Chevron announced that it was writing down at least $10 billion and as much as $11 billion in assets.
“Oil companies have struggled to reap the profits of old and are falling out of favor with investors amid fears that electric vehicles and renewable energy, along with government regulations to address a warming planet, will constrain their futures,” the Wall Street Journal added.
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The news comes just a week after Spanish energy giant Repsol announced a $5.3 billion write-down of its assets. The company also pledged to be carbon neutral by 2050 and set a goal of “become a leading international player in renewable energies.” That move, according to Bloomberg, “throws down the gauntlet to competitors as large oil companies face mounting investor pressure to clean up their act.”
Shareholder advocacy group As You Sow said fossil fuel companies should act swiftly on that front.
“Chevron’s announcement demonstrates that companies must proactively address changing energy markets. Companies that fail to plan for a net-zero world will inevitably get caught—and investors will pay the price in unplanned write-downs and an economy battered by massive climate impacts,” said As You Sow president Danielle Fugere.
Lila Holzman, Fugere’s colleague and the group’s energy program manager, added that Chevron’s write-down “is a signal of much greater troubles to come in the oil and gas industry. Energy companies must start demonstrating now how they are planning to fully align with the Paris agreement to proactively adapt to the transition.”
“Business as usual, even efficient business as usual,” said Fugere, “is wholly insufficient in a market that is, and must, fundamentally change.”
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