Investors urge SEC on reporting oil climate impact

A group of 19 environmental, investor and non-profit groups want the regulators, under new proposals, to ask that oil and gas companies disclose reported reserves that have higher than average greenhouse gas emissions associated with their extraction, production and combustion.

The group includes London’s F&C Asset Management, Ceres, a North American coalition of investors and the California Public employees’ Retirement System (CalPERS), the largest US pension fund. “We urge the SEC to pay more careful attention to the implications of climate change and carbon-related regulations ... since the risks and challenges posed are likely to grow rapidly in the coming years, with significant consequences for the oil and gas industries,” the group said in an open letter. “We are concerned that climate change, and policies adopted to combat greenhouse gas emissions, could render certain assets -- particularly those with high carbon intensity -- uneconomic.”

Governments in the US and Canada are considering climate change legislation that introduces so-called cap and trade schemes, limiting national emissions and putting a price on carbon dioxide (CO2). Under such schemes, companies with carbon-intensive operations will be forced to buy permits to cover their emissions. “Putting a price on carbon will change the dynamics of the energy marketplace,” Daniel Yergin, chairman of Cambridge Energy Research Associates (CERA), said in a report earlier this year. Heavy industry in the European Union have had to pay for emissions since 2005.

European CO2 permits currently trade around €23.00 per metric ton. With mandatory emissions reporting, the investors said they can assess the risk profile of energy companies more effectively. “The energy consumption required to extract a barrel from Canadian tar sands is very different to a simple barrel of crude from the Gulf of Mexico,” said Elizabeth McGeveran, a senior vice president at F&C, in a statement.

Research published on Tuesday on the potential impact of emissions trading schemes on superannuation funds shows that implementing carbon-efficient investment strategies does not hurt returns, UK-based environmental researchers Trucost said. Norway’s sovereign wealth fund sold its entire $850 million stake in mining group Rio Tinto, blaming it for environmental damage in Indonesia, the Norwegian government said this week. (Reuters)