Woodside (ASX:WPL) share price struggles amid climate ‘code red’

The UN report says more needs to be done to combat climate change
The post Woodside (ASX:WPL) share price struggles amid climate ‘code red’ appeared first on The Motley Fool Australia. –

The Woodside Petroleum Limited (ASX: WPL) share price is in the red as the UN declares a “code red” for humanity and climate change.

At the time of writing, shares in the oil and gas producer are trading for $21.82 – down 0.55%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is 0.24% higher.

Let’s take a closer look at today’s news.

“The evidence is irrefutable”

These were the words of United Nations General Secretary, Antonio Guterres, when he handed down the report of the Intergovernmental Panel on Climate Change (IPCC). The IPCC is “the world’s most authoritative body on climate science”, according to the Australian Broadcasting Corporation (ABC).

“Greenhouse gas emissions from fossil fuel burning and deforestation are choking our planet and putting billions of people at immediate risk,” Mr Guterres said.

The report found humanity is only 10 years away from average global temperatures rising by 1.5°C compared with pre-industrial age temperatures. Beyond this mark, the Earth is susceptible to increasing and more severe fires, droughts, floods, and cyclones.

Motley Fool Australia previously reported on this phenomena. Climate economist Nikki Hutley told this reporter that it was inevitable we would hit this dreaded threshold but it was possible to avoid an even larger increase.

The UN report released last night says much the same, and put the Woodside share price in focus, along with other energy shares.

Global warming of 1.5°C and 2°C will be exceeded during the 21st century unless deep reductions in carbon dioxide (CO2) and other greenhouse gas emissions occur in the coming decades.

It adds it will take sustained and intensive effort across the globe to limit the effects of climate change.

From a physical science perspective, limiting human-induced global warming to a specific level requires limiting cumulative CO2 emissions, reaching at least net zero CO2 emissions, along with strong reductions in other greenhouse gas emissions.

General Secretary Guterres called the dire report a “death knell” for fossil fuels.

“The viability of our societies depends on leaders from government, business and civil society uniting behind policies, actions and investments that will limit temperature rise to 1.5 degrees Celsius.”

What does this mean for the Woodside share price?

While there are always a variety of factors that affect the share price of any company – including the Woodside share price – today’s report may be worrying investors.

As Australia’s largest oil and gas producer by market capitalisation, and the 35th largest in the world, this report is surely unwelcome news for Woodside management and shareholders.

In a presentation at the Credit Suisse Energy Conference of June this year, Woodside outlined its plans to transition to a low carbon future.

In it, the company committed to a 15% reduction in greenhouse gas emissions by 2025, a 30% reduction by 2030, and an “aspiration” for net zero carbon emissions by 2050.

It should be noted these targets and aspirations fall short of what the IPCC says is necessary to avoid any further increase in global average temperatures.

The company is also diversifying its energy portfolio, according to the presentation, towards hydrogen, ammonia, and a solar import facility. As well, Woodside says it is investing in carbon capture and storage technology and will vote to include climate reporting at its 2022 AGM.

It remains to be seen what any of this could mean for the Woodside share price.

Woodside share price snapshot

Over the past 12 months,Woodside shares have increased by 7.5%. The ASX 200 Index has, in the same time, increased by 23.6%.

Year-to-date, Woodside shares have depreciated by 5.4%.

The post Woodside (ASX:WPL) share price struggles amid climate ‘code red’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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