Abstract
The oil and gas (O&G) sector has made significant commitment to reduce greenhouse gas emissions by decarbonising operations and transitioning portfolios to lower-carbon products. However, assessing the impacts of physical climate risks on assets and value chains has remained a lower priority, despite climate change consistently rated the highest risk to the global economy. Here we present selected case studies of the most relevant physical climate risks that impact key infrastructure across the O&G sector, now and in the future, with and without global abatement (that is, in high and low emissions scenarios). We focus on physical climate risks including sea level rise impacts on an offshore processing region, flooding and drought impacts in an onshore processing region, and highlight supply chain impacts on shipping and ports due to climate extremes such as cyclones. These risks all have the potential to have significant and adverse impacts on Australia’s O&G sector and have a direct impact on the ability of the sector to transition to a low-carbon future. We conclude with an overview of why and how companies should undertake climate scenario analysis for physical risks, in alignment with the Task Force on Climate-related Financial Disclosures.
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