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Climate Change

World Is Still Overshooting 2°C Target Despite Oil & Gas Headway

Schroders Climate Progress Dashboard has highlighted the fact that, despite headway made by the oil and gas industries, a drop in clean energy investment means we are still overshooting efforts to reduce global warming to 2°C.

In July of 2017, leading global asset manager Schroders launched its Climate Progress Dashboard — a tool designed to provide investors with “a unique insight” into the global progress towards limiting global warming to the 2°C target and the overall progress of the transition to a low-carbon global economy. Schroders published the most recent quarterly update late last week, concluding that “the world is still overshooting its temperature rise target by more than 2°C.”

The headway made by the oil and gas industries — with capital investment in the oil and gas industry dropping in the last quarter of 2017, translating into a projected temperature rise of 3.9°C, down from 5.3°C — was offset by a decline in climate financing, which saw its temperature rise trajectory increase from 3.3°C to 4.6°C over the latest quarter.

Interestingly, despite the fact that Bloomberg New Energy Finance concluded that 2017 had been a record year for clean energy investment — reaching $333.5 billion, up 3% and reaching the second highest annual figure — Schroders highlights that clean energy investment was down in late 2017, and also highlights analysis published by the Climate Policy Initiative which showed clean energy finance had dropped 12% in 2016.

“According to the Climate Progress Dashboard’s quarterly update, the oil and gas industry could be starting to translate the growing pressure it is facing into a strategic response,” explained Andrew Howard, Head of Sustainable Research, Schroders.

“Our recent research discussed the challenges facing the industry and the importance of capital discipline as the key driver of future profitability and valuations[1]. There is further to go but the change is encouraging. Time will tell whether discipline holds with rising prices.

“The main setback over the last quarter reflects slowing climate finance flows. The challenge of encouraging capital into climate solutions on the necessary scale has attracted a lot of attention from policymakers and environmental groups and, while plans are typically ambitious, tangible action remains more elusive.”




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