Many policymakers and companies have converged on goals related to the asserted need to limit global temperature increase to 1.5° C and to reach net zero global greenhouse gas (GHG) emissions by 2050.

The International Energy Agency’s (IEA) Net Zero Emissions (NZE) 2050 Roadmap envisions an energy sector path for net zero GHG emissions that includes a “25% drop in fossil fuel demand by 2030” and “fossil fuel demand fall[ing] by 80% by 2050.”1

In line with such assumptions, and similar assumptions included in the Intergovernmental Panel on Climate Change’s report series2 and elsewhere, Chevron Corporation (“the Company”) “is working to advance the global net-zero ambitions of the Paris Agreement,”3 including by “lowering the carbon intensity of our operations,” increasing “renewables from sources like wind, solar and biofeedstocks — even cow manure,” and “ investing in low-carbon technologies.”4

These investment decisions apparently presume agendas like the normative IEA NZE roadmap are possible and based on accurate assumptions, but what if the NZE goals and/or assumptions prove unsound?

A 2023 study by the Energy Policy Research Foundation (EPRF) found that net zero advocates have misconstrued the IEA’ s position on new oil and gas investment, and that the IEA has made questionable assumptions and milestones for NZE about government policies, energy and carbon prices, behavioral changes, economic growth, and technology maturity.5

The EPRF study found: “Oil and gas play irreplaceable roles in modem civilization that are not reproducible with low- carbon alternatives. The attempt to substitute them with inferior, less efficient, energy sources will have enormous micro- and macroeconomic consequences and profound geopolitical implications.”6

NZE advocates speak in terms of fossil fuels as “stranded assets,” but no consideration has been given to whether the true stranded assets might be the very renewable energy assets pushed by climate activists. Should the EPRF’s study prove true, our Company stands to lose on its renewable energy investments.

The Company should be commended for its willingness to pursue value-enhancing initiatives in the face of “stranded assets” criticism.7 However, that does not absolve the Company of its duty to make fully informed decisions when it comes to the investments it is making in renewable energy.

It is one thing to evaluate whether oil and gas assets will be stranded by an energy transition, but it is another thing to evaluate whether renewable energy assets will themselves be stranded if it turns out the push to net zero was counter-productive and value-destroying. This proposal is focused on the latter “reverse stranded assets” risk.