7 • France: https://www.independent.co.uk/news/world/europe/france-banemmanuel-macron-oil-gas-exploration-2040-latest-global-warming-climatechange-a8121031.html • Ireland: https://www.thejournal.ie/fossil-fuel-divestment-bill-4124211Jul2018/ Slide 8: Lower demand implies lower cost supply options only o Carbon Tracker cost curve approach assumes economic logic plays out o Lowest cost supply will be most competitive for reduced demand o Risk mostly with future project options – reflects reality that capital has been sunk on existing projects This slide suggests that as the carbon budget is running down as emissions rise and carbon dioxide accumulates in the atmosphere year by year, there will need to be a cut-off point from which no new fossil fuel production for combustion should occur. Carbon Tracker has looked at future fossil fuel supply for all production, to estimate where this threshold occurs. We use cost break-even prices, assuming a 15% internal rate of return (IRR) to develop a ‘cost curve’ to plot projects against each other and the carbon budget. We refer to this as a ‘carbon cost curve.’ The line of the cost curve represents many thousands of individual global oil projects with different costs of production. We can then intersect differing warming thresholds as illustrated in the graph for scenarios developed by the International Energy Agency known as ‘Beyond 2 Degrees Scenario’; ‘Sustainable Development Scenario’; and ‘New Policies Scenario’. See https://www.iea.org/etp/explore/ . Carbon Tracker uses the analysis set out in this slide to demonstrate that oil projects located on the cost curve above these scenarios will not be needed and companies should not progress these projects. Slide 9: Oil & gas dominates upstream capex risk Carbon Tracker has modelled future production of oil and gas under different warming scenarios between 2018 and 2025; also the capital expenditure associated with these levels of production. o Significant fossil fuel investment to support remaining production is required even in low-carbon scenarios, but materially less o 1.75ºC requires $0.7tr less than 2ºC, which requires $0.9tr less than 2.7ºC o Oil & gas account for over 90% of capital expenditure in intervals between scenarios Carbon Tracker concludes that significantly less capital is necessary than otherwise planned, against at or below 2 degrees warming scenarios. Carbon Tracker