March 10-14, 2023 — Opinion by Mathew Carr
BP’s writedown at just one refinery may indicate the scale of risk of stranded assets in the oil industry, because there are 732 refineries globally, according to Statista.
See chart below indicating $1 trillion risk.
EU carbon closed Friday above €100 a ton, fell to €96 Monday. The carbon price is almost 50% higher than the level assumed by BP, so that’s why I think there will be more writedowns to come.
Carbon prices are generally rising and more and more of the GHG are being covered by carbon pricing,
Friday chart for carbon futures:
Source: ICE Futures Europe. €/ton
The write down, if applied to the world’s 732 petroleum refineries, amounts to a valuation reduction of $1.02 trillion. This is not detailed analysis, yet indicates the scale of the risk in oil company accounts over the next few years of the energy transition as consumers switch to electric and hybrid vehicles.
(Updates to tweak headline, earlier added global petroleum refineries)