Tools for Assessing Climate Risk in Oil and Gas Portfolios

Over the past year, financial markets have been marshalling climate action. Earlier this year, the Securities and Exchange Commission (SEC) proposed new climate-related disclosure rules. Congress passed the Inflation Reduction Act that contains the first-ever fee on oil and gas methane emissions. And the EU’s Carbon Border Adjustment Mechanism would apply to key oil and gas end-use sectors including steel, fertilizer and electricity, if put into effect.

Placing a ‘shadow price’ (or internal cost) on greenhouse gas (GHG) emissions is growing in popularity. In a survey of 2,600 global companies conducted by McKinsey in 2019, 23 percent had adopted an internal GHG price already, with another 22 percent intending to do so within a couple of years.

The global economy is rapidly moving to factor climate risks into oil and gas pricing in the race to avoid the worst consequences of a warming world. Understanding how shadow pricing, such as a methane fee, will impact oil and gas asset portfolios is essential for sound investment planning and durable corporate climate alignment.

The shadow pricing feature built into RMI’s Oil Climate Index plus Gas (OCI+) webtool allows users to monetize climate risks from current and future policies and regulation.  Furthermore, RMI is working to expand OCI+ functionality, modeling more assets, incorporating satellite data, and updating with new years of operation. Test this free resource to get an overview of the financial risk your oil and gas portfolio could be facing:

The OCI+ helps put a price on the climate impacts of oil and gas supply chain emissions. Learn about the shadow pricing feature on the OCI+ web tool.

For a briefing on the OCI+ and opportunities for collaboration, schedule a consultation, and talk to RMI’s oil and gas experts please fill in the contact form below:

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