New CERES investor report on synthetic fuels

A new report from CERES raises concerns about investor risks in development of oil shale and coal-to-liquid fuels, two forms of alternative fuel that require large amounts of scarce water resources, create major environmental impacts including contamination of drinking water sources, and have a significant carbon footprint, often larger than more traditional fossil fuels.

Identified risks include:

  • Water constraints
  • Regulatory risks
  • Uncertainty about and costs for carbon capture & sequestration
  • Core technological uncertainty
  • Market risks
  • Risks from public opposition

The report recommends that investors:

  • Engage with relevant companies (e.g., oil and gas companies, CTL developers, end users such as airlines and fleet operators) in which they are shareholders, to further understand the risks that companies are assuming and how they are mitigating those risks.
  • Evaluate the potential risks in their fixed income portfolios from state and municipal bonds, to the extent those bonds are used to support development of these fuels.
  • Advocate for public policies that address the risks and provide long-term investment certainty, such as a national carbon price and low-carbon fuel standard.

Ceres is:

a national coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change. Ceres directs the Investor Network on Climate Risk, a group of more than 90 institutional investors from the US and Europe managing approximately $9 trillion in assets.”

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