The magnitude of energy transition risk embedded in fossil fuel company valuations

This paper examines ExxonMobil, a widely-followed, mature, large oil and gas producer using discounted cash flow valuation modeling under two scenarios: “Business as usual”; and an adequate climate policy response that would limit warming to 1.5C. The analysis across the last two decades shows the m...

Descripción completa

Guardado en:

Detalles Bibliográficos
Autor principal:	Drew Riedl
Formato:	article
Lenguaje:	EN
Publicado:	Elsevier 2021
Materias:	Energy transition Asset pricing Valuation Carbon risk Climate change Science (General) Q1-390 Social sciences (General) H1-99
Acceso en línea:	https://doaj.org/article/dad6daaca74241d980f1487204168891
Etiquetas:	Agregar Etiqueta Sin Etiquetas, Sea el primero en etiquetar este registro!

id	oai:doaj.org-article:dad6daaca74241d980f1487204168891
record_format	dspace
spelling	oai:doaj.org-article:dad6daaca74241d980f14872041688912021-12-02T05:03:02ZThe magnitude of energy transition risk embedded in fossil fuel company valuations2405-844010.1016/j.heliyon.2021.e08400https://doaj.org/article/dad6daaca74241d980f14872041688912021-11-01T00:00:00Zhttp://www.sciencedirect.com/science/article/pii/S2405844021025032https://doaj.org/toc/2405-8440This paper examines ExxonMobil, a widely-followed, mature, large oil and gas producer using discounted cash flow valuation modeling under two scenarios: “Business as usual”; and an adequate climate policy response that would limit warming to 1.5C. The analysis across the last two decades shows the market continues to price in a “business as usual” future. ExxonMobil's overvaluation, relative to an adequate policy response scenario, has increased (pre-pandemic) from 50% to 70% of equity value at risk. Investors are taking significant energy transition risk without meaningful compensation. To avoid continued capital misallocation, negative externalities should be incorporated into underwriting.Drew RiedlElsevierarticleEnergy transitionAsset pricingValuationCarbon riskClimate changeScience (General)Q1-390Social sciences (General)H1-99ENHeliyon, Vol 7, Iss 11, Pp e08400- (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Energy transition Asset pricing Valuation Carbon risk Climate change Science (General) Q1-390 Social sciences (General) H1-99
spellingShingle	Energy transition Asset pricing Valuation Carbon risk Climate change Science (General) Q1-390 Social sciences (General) H1-99 Drew Riedl The magnitude of energy transition risk embedded in fossil fuel company valuations
description	This paper examines ExxonMobil, a widely-followed, mature, large oil and gas producer using discounted cash flow valuation modeling under two scenarios: “Business as usual”; and an adequate climate policy response that would limit warming to 1.5C. The analysis across the last two decades shows the market continues to price in a “business as usual” future. ExxonMobil's overvaluation, relative to an adequate policy response scenario, has increased (pre-pandemic) from 50% to 70% of equity value at risk. Investors are taking significant energy transition risk without meaningful compensation. To avoid continued capital misallocation, negative externalities should be incorporated into underwriting.
format	article
author	Drew Riedl
author_facet	Drew Riedl
author_sort	Drew Riedl
title	The magnitude of energy transition risk embedded in fossil fuel company valuations
title_short	The magnitude of energy transition risk embedded in fossil fuel company valuations
title_full	The magnitude of energy transition risk embedded in fossil fuel company valuations
title_fullStr	The magnitude of energy transition risk embedded in fossil fuel company valuations
title_full_unstemmed	The magnitude of energy transition risk embedded in fossil fuel company valuations
title_sort	magnitude of energy transition risk embedded in fossil fuel company valuations
publisher	Elsevier
publishDate	2021
url	https://doaj.org/article/dad6daaca74241d980f1487204168891
work_keys_str_mv	AT drewriedl themagnitudeofenergytransitionriskembeddedinfossilfuelcompanyvaluations AT drewriedl magnitudeofenergytransitionriskembeddedinfossilfuelcompanyvaluations
_version_	1718400741572345856

The magnitude of energy transition risk embedded in fossil fuel company valuations

Ejemplares similares