China And The US Ratify COP21 Agreement, G20 Meeting: Early Outcomes For Investors?

Sep. 06, 2016 11:58 AM ETARLP, BP, BTU, CLDPQ, CVX, KOL, SHEL, TTE, WLB, XOM59 Comments
Keith Williams profile picture
Keith Williams


  • China, US ratify the COP21 agreement, so 26 countries representing 40.06% emissions have ratified; countries covering 14.94% emissions needed to become binding.
  • China takes the lead and positions addressing climate change and exit from fossil fuels in a positive light.
  • China and US ratification of COP21 means further downward pressure on oil price.
  • Capex expenditure by oil and gas majors needs to consider developing assets that will be stranded.
  • G20 made limited progress on fossil fuel subsidies, green financing and investment risks.

Source: treehugger

Just prior to the commencement of the G20 summit, the US joined China in announcing ratification of the Paris COP21 climate agreement, bringing the number of countries that have ratified to 26, representing 40.06% of global emissions. The world's two largest emitters of greenhouse gases have agreed to cut emissions to try to curtail global warming to 1.5C.

This is a significant step towards the end of the fossil fuel era and dismantling the fossil fuel industry. This is going to take time to implement, but the agreement to act is clear.

Here I address some immediate outcomes of the US and Chinese action to ratify the agreement and the G20 summit. This creates a new downward pressure on oil prices, as well as immediate need by the major coal, oil and gas companies to reassess capex and new projects.

A major reason for dismissing the possibility of progress in addressing greenhouse gas emissions in the past has been that the developing nations would require action from the developed world (who have caused most of the emissions so far) before the developing world would take action. In recent days China has convincingly demolished that argument by taking the lead on addressing greenhouse gas emissions.

The cross purposes discussion

There have been two dialogues going on about the world's energy supply.

1) Fossil fuels must be burned regardless:

This is the position taken by the fossil majors, traditionalists and fossil fuel entrepreneurs. The argument is that the world's economy needs fossil fuels to continue not only to grow, but also to survive.

This makes the argument a one dimensional one. In effect it says that no matter what the consequences of burning fossil fuels, we have to keep doing so regardless.

You can read this argument clearly in, for example, BP's (

This article was written by

Keith Williams profile picture
Keith began his career as a research scientist (developmental biology, biochemistry, molecular biology) at the Australian National University, University of Oxford (UK), the Max Planck Institute for Biochemistry (Munich, Germany) and finally Macquarie University (Sydney) where he held a Chair in Biology and established the Centre for Analytical Biotechnology. Pioneering the area of proteomics (with Marc Wilkins in his group coining the term), Keith established the world’s first government-funded Major National Proteomics Facility (Australian Proteome Analysis Facility) which was involved with industrialising protein science. Keith left academe with his team to found Proteome Systems Ltd in 1999 to commercialise proteomics. The company had a strong focus on intellectual property, engineering/technology and bioinformatics. As CEO he led the company to ASX listing in 2004. Since 2005 Keith has been involved in new business development in biotech, e-health and other emerging technologies. Keith sees climate change and sustainable development as a major issue for humankind and also a major business disruptor/risk and opportunity. Keith holds a Bachelor Agr Science from the University of Melbourne and a PhD from the Australian National University. He is a Fellow of the Australian Academy of Technological Sciences & Engineering and received an AM (Member of the Order of Australia) for services to the Biotechnology Industry. He has received various industry awards including an Innovation Hero Medal from the Warren Centre for Advanced Engineering. With 300 scientific papers and many patents written, Keith has a clear view of innovation in the Biotechnology and Climate/Renewable Energy space. He is not a financial advisor but his perspective adds relevance to decision-making concerning feasibility and investment in technology innovation.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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