Investors feel growing pressure to move away from fossil fuels, survey finds

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Data: BCG oil and gas investor survey, 2021; Chart: Thomas Oide/Axios

A new survey of institutional investors shows they feel increasing pressure to move away from fossil fuels and a growing belief that global oil demand will peak this decade.

Driving the news: The Boston Consulting Group polled 250 investors on the future of oil and gas, and how it fits into their strategies.

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  • Many are somewhat bullish on oil prices. 48% predict Brent crude will range from $60-$80 per barrel in 2024 and 20% seeing $80-plus.

  • Investors are “optimistic that the…industry can continue its recent streak of strong short-term shareholder returns.”

  • 19% “absolutely” agree that crude demand will peak by 2030 compared to 9% with that view in last year’s survey, while 41% “somewhat” agree.

  • 57% feel pressure to divest from fossil fuels, 65% feel pressure to reduce those fuels’ weighting in their portfolios, and 75% feel pressure to invest in “green” funds and companies.

The big picture: The findings show divides and convergence with climate advocates.

  • On the divides front, nearly 70% say companies should be “actively pursuing” growth in natural gas production, with 85% seeing it as a “bridge” toward decarbonization.

What’s next: BCG predicts increasing pressure on the oil industry. “Only 39% of respondents currently factor climate risk into their valuations of [oil-and-gas] companies, but another 40% say they plan to follow suit,” BCG notes.

The intrigue: There’s wariness about industry investments in carbon capture and storage, even as oil companies — including Exxon and Chevron — tout their efforts.

  • 59% are “uncertain” about its value, while 37% see it as “value accretive.” There’s higher confidence in renewable power, storage and hydrogen.

Go deeper: U.S. now the world’s top liquefied natural gas exporter

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