8 analyses this in more depth in our report ‘2 Degrees of Separation’ which can be found in Appendix 1. Slide 10: Higher risk capex mostly private-sector Carbon Tracker is frequently asked about a comparison of the scale of state-owned fossil fuel projects by volume, versus those owned by stock exchange quoted companies, such as Shell or Exxon, or other privately held entities. Whilst most fossil fuels by volume in absolute terms are owned by governments, we find that a high proportion of fossil fuels on the high end of the production cost curve are owned by corporations, thus making them most vulnerable to lower demand scenarios. o Despite distribution of reserves, majority of affected capital expenditure is held by private sector o Disproportionate ownership of high cost assets by corporations o Non-listed, state owned entities own just 12% of oil & gas capex in 1.75ºC to 2.7ºC gap The source of this data is the International Energy Agency and Rystad Energy. Carbon Tracker is a subscriber to data provided by Rystad Energy. Slide 11: Company level distribution of capex Following from slide 10, where we look at the relative exposure of state versus corporate owned fossil fuel production, Carbon Tracker has looked company by company at which entities own the highest cost fossil fuels. o Exposure to high-risk projects varies by company o Capital expenditure is POTENTIAL – much still hasn’t been sanctioned, so there remains flexibility not to progress o Success in navigating the energy transition will be driven by management behaviour from now on Carbon Tracker concludes that investment to support future production, whilst based on scenarios for future energy demand, is a conscious decision made by the boards of corporations. Boards and management decide which demand scenarios to adopt. For example, oil majors including Shell, BP and Exxon use scenarios for demand which would involve oil production which, if burnt, would create emissions that breach the Paris climate agreement. • • • • BP is projecting a 24% increase in oil use by 2035 Exxon expects a 27% increase by 2040 Shell’s ‘Current Outlook’ of 2016 forecasts an increase of 37% to 2040 OPEC proposes a 54% increase to 2040 Sources: ExxonMobil (2016) The Outlook for Energy: A view to 2040