Carbon Tracker’s research has created a new debate around climate change and investment.

This report – “Carbon Supply Cost Curves: Evaluating Financial Risk to Capital Expenditures” – is a risk analysis which provides a tool for the majority of investors who cannot simply divest, so they can understand their risk exposure and start directing capital away from high cost, excess carbon projects.

The report – and the accompanying technical papers produced in collaboration with Energy Transition Advisors can be downloaded at the bottom of this page.

The report focuses on the following main topics:

Challenge demand assumptions

Conducting risk analysis to understand the implications of lower demand, price and emissions scenarios needs to be an open process. These stress tests can inform investor understanding and engagement on capex plans. Demand may be affected by a range of factors including supply costs, air quality standards, technological advances and carbon regulation.

Understand exposure on the carbon supply cost curve



Investors can consider a range of demand scenarios and then determine which price bands of production cost they think are at risk. This oil price sensitivity is an important proxy for how well a company can adapt to a low carbon future.

The private sector plays a key role



Listed companies have more exposure to potential production than national oil companies, especially as you go up the cost curve. This shows how important the private sector will be in determining how far up the cost curve we go, and what emissions we produce. Differentiating on production costs paints a very different picture to just looking at overall statistics on reserves and resources ownership.

Majors can enhance value

The majors have large interests across the cost curve, reflecting the sheer scale of their interests, and the desire to be involved in any large developments. Reducing high cost options may be viewed favourably by the market as a way of cutting capex and maintaining dividends.

Independents are gambling on a high oil price

Smaller companies have high percentages of their potential capex over the next decade in high cost, high risk projects. Some specialists in deepwater or oil sands have 100% of capex requiring above a $95 oil price. A low demand scenario challenges the whole business model of these operators.

Oil sands, Arctic and Deepwater

There is an estimated $1.1trillion of capex earmarked for high cost oil projects needing a market price
of over $95 out to 2025. This is largely made up of Deepwater, Arctic, Oil sands and other unconventionals. This should be the start point for investors seeking to reduce their exposure to the high end of the cost curve.






For a more detailed overview of the report please view the key findings presentation by Mark Fulton, former Deutsche Bank Climate Change Advisors head of research.




Find the media coverage report here.

Download the press release – 8th May 2014





  • <b>Chapter 1:</b> <BR>Oil Demand: Comparing Projections and Examining Risks

    Chapter 1:
    Oil Demand: Comparing Projections and Examining Risks

  • <b>Chapter 2:</b> <BR>From Capex Growth to Capital Discipline? Cost, Risk, and Return Trends in the Upstream Oil Industry

    Chapter 2:
    From Capex Growth to Capital Discipline? Cost, Risk, and Return Trends in the Upstream Oil Industry

  • <b>Main Report:</b> <BR>Carbon Supply Cost Curves – Evaluating Financial Risk to Oil Capital Expenditures

    Main Report:
    Carbon Supply Cost Curves – Evaluating Financial Risk to Oil Capital Expenditures