Half of world’s fossil fuel assets could become worthless within 15 years — research

KUALA LUMPUR (Nov 15): As much as half of the world’s fossil fuel assets could become worthless within the next 15 years.

Citing a new research titled “Reframing incentives for climate policy action” published on Nov 3, energy portal OilPrice.com on Saturday (Nov 13) said governments across the globe will need to plan for a future without oil and gas in order to prevent a potential economic crisis.

It said Big Oil firms are already beginning to diversify their energy portfolios, but some pure-play fossil fuel companies may not survive the energy transition.

It explained that if these assets lose all value, the world could be facing a crash the likes of which have not been seen since the 2008 financial crisis

However, it said earlier adopters of renewable infrastructure and technology could profit from the new economy, supporting the creation of new job opportunities and building a new energy industry.

OilPrice.com said governments need to plan for a potential oil and gas crash, ensuring fossil fuel energy operations meet energy needs during the transition but that the supply does not outweigh the eventual waning international demand.

It said at the current projected rate of production, between US$11 trillion (about RM45.8 trillion) and US$14 trillion, could be lost in stranded assets.

It could essentially be an experience similar to that of the oil demand drop of April 2020, during the Covid-19 pandemic, when oil prices plummeted to minus figures.

Except, in this case, demand will not rise again, meaning that oil companies and economies relying on the oil sector will experience significant economic hardship.

THE SHIFT IS TOWARDS BIODISEL