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Measuring the risk to upstream oil and gas from tougher climate regulations – New Verisk Maplecroft index

Measuring the risk to upstream oil and gas from tougher climate regulations – New Verisk Maplecroft index

As part of the Paris Agreement, countries committed to reducing emissions may introduce more stringent regulations across the upstream oil and gas industry. However, there is no ‘one size fits all’ solution – the economic and political situation in each country will dictate the stringency of carbon policy and its rate of implementation.

As a result, industry players are facing uncertainty over which assets and companies are most exposed to evolving carbon policies. To help provide greater clarity, Verisk Maplecroft has developed a bespoke Upstream Oil and Gas Carbon Policy Risk Index which identifies the risk of increased regulation in the oil and gas sectors of 81 countries.

The Upstream Oil and Gas Carbon Policy Risk Index is a key component of a new multi-client study by our sister company Wood Mackenzie - Positioning for the future: Benchmarking upstream corporate carbon emissions and value at risk. The study provides an apples-to-apples basis for comparing companies’ carbon emissions from their upstream assets and the associated risk to valuations for more robust decision-making.

Understanding the changing carbon policy environment

Where will climate policies affect upstream oil and gas most?

The Upstream Oil and Gas Carbon Policy Risk Index provides a lens through which current and potential future carbon regulation may be viewed on a country-by-country basis or at a portfolio level. Coupling this information with upstream carbon footprints and economic profiles provides a basis to assess the potential value at risk in company portfolios as a result of climate-related policies and regulation.

The index has been developed to answer some key questions being asked within the upstream oil and gas industry: Will carbon policies be implemented in my countries of operation? How stringent will they be? How do I assess which assets are most exposed to current and future carbon policy risks, and what does that risk look like at the aggregated portfolio level?

“In short, the index will help companies understand where evolving climate-related policies and regulation could target emissions reductions in the O&G sector,” states Verisk Maplecroft Director, James Allan. “By combining a company’s global emissions footprint with our index rating in each country of operation, you can assess where each company is most exposed in terms of climate-related regulatory risk, as well as how they compare with the competition.”

Other assets within the Wood Mackenzie multi-client study include:

  • Corporate portfolio and strategy assessment – Reports on 25 international oil and gas companies showing how each company’s upstream emissions profile is likely to evolve over the next 10 years (2016-2025), the potential ‘value at risk’ under different carbon costs and tax treatments and how they compare with their peers.
  • Upstream carbon emissions tool – Wood Mackenzie’s interactive model forecasting upstream asset emissions by geography, company or resource theme, and measures intensity on a field-by-field basis. This comprehensive tool also allows companies to view policy risk by country, and to calculate value at risk under different carbon price and fiscal treatment scenarios.

Visit: Positioning for the future: Benchmarking upstream corporate carbon emissions and value at risk for full information on the multi-client study, expert insights and a downloadable brochure.

More information about Verisk Maplecroft’s risk analytics can be found here https://maplecroft.com/human-rights-political-environmental-economic-risk-indices. Call us on +44 (0)1225 420000 or email info@maplecroft.com to see how our data can help your company.

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Jason McGeown, Head of Communications
Tel: +44 (0)1225 420000
press@maplecroft.com

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