Asia's oil giants put policy before profit, S&P says


Asia carbon cutting will be critical to the effort to reduce global warming. The region releases more carbon dioxide than the rest of the world combined.

HONG KONG: Asia will have a hard time achieving zero carbon emissions, given it is the most populous continent, and most countries within are developing, S&P Global Ratings says.

In a statement on Monday, it said the region does have one big policy advantage: its governments typically control at least one national oil company (NOC).

S&P Global Ratings expects the NOCs will set the pace in Asia in slashing carbon emissions, even if this undermines their profits and credit standing.

This is according to report published on Monday, titled,"Asia's oil giants will be key to global climate fight."

"Asian NOCs will likely find it difficult to transition to an entirely new business model," said S&P Global Ratings credit analyst Danny Huang.

"They may strand assets in the process, and they probably will not be as successful in renewable energy, carbon capturing, electric vehicle recharging, and they like, as they are at making and selling fossil fuels."

Moreover, the transition could happen much more quickly than the rating agency now anticipates, which could be in five to 10 years instead of 10 to 20 years.

A fast transformation may be messy and disruptive.

Asia carbon cutting will be critical to the effort to reduce global warming. The region releases more carbon dioxide than the rest of the world combined.

Yet the move to carbon neutrality is one of the biggest policy challenges facing any nation. In Asia, much of the burden rests on the shoulders of the NOCs.

Many have already committed to targets that outpace the government's carbon goals.

"The firms are simply the most obvious and effective lever that states can pull in achieving net-zero emissions. But what is good for the planet may not be good for the credit metrics or ratings on the NOCs," said Huang.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights
   

Next In Business News

HeiTech Padu wins RM36.2mil MySikap contract
Soaring gas prices ripple through heavy industry, supply chains
Glomac profit tumbles in May-July quarter due to lockdown�
High flying Opcom makes RM2.6mil net profit in Q1
KLCI steps back 1.42 points as telcos weigh
Maybank extends over RM77bil in repayment assistance to customers as at Aug 31
CIMB targets RM30bil in sustainable finance by 2024
Indonesian shares lead Asia recovery on Evergrande assurance
Oil prices rise over US$1 after report of big draw in U.S. crude stocks
Ecomate offers 49m new shares under IPO

Stories You'll Enjoy


Vouchers