Chevron Sees Minimal Impact of Climate Change

Chevron Sees Minimal Impact of Climate ChangeChevron Sees Minimal Impact of Climate Change

Climate change is critical to future energy markets but its effect on Chevron oil and gas business will be minimal for decades to come, a company report claimed.

With the prospect of tighter emission controls, carbon pricing and growth in renewable energy, some investors and activists are pushing companies to reveal the potential impact on their businesses, World Oil reported.

The risk for shareholders is that some projects become loss-making, as the demand for oil and gas ebbs.

Exxon Mobil and Royal Dutch Shell have produced similar reports. Among other findings, Chevron said oil and gas will comprise 48% of the world’s energy mix by 2040, even under the IEA’s most unfavorable scenario for the industry. Now it’s 54%.

“Multiple scenarios” throw up the same result: Demand for oil and gas will remain strong for decades, said Mark Nelson, Chevron’s vice president for midstream, strategy and policy, said in an interview. The report, released on Thursday, “gives us confidence that we are testing our business in a way that is appropriate for our shareholders, given the context of many things that can change over time”. Nelson said.

The San Ramon, California-based company said it continually assesses the risks that environmental and carbon-pricing policies pose to its business model and has concluded there’s little threat at the present time. World energy demand will grow strongly under all scenarios, Chevron said.

The company sees the risk of it having so-called stranded assets, or uneconomic resources, as “very slim” due to the quality and diversity of its assets, Nelson said.

The report is published just a month after Mike Wirth succeeded John Watson as chief executive officer.

It follows a study published a year ago that Amy Myers Jaffe, an academic at the Council of Foreign Relations, said lacked the detail provided by some other companies.

Investors Hermes and Wespath Investment Management withdrew a proposal at Chevron’s annual meeting this year requesting an annual assessment of climate change impacts to give the company more time to come up with a fresh disclosure policy.


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