Businesses investing in coal, gas and oil risk wasting up to $1.6 trillion (£1.2tn) on capital expenditure if they don’t take the Paris Agreement into account, according to a new report.

Analysis firm Carbon Tracker said that companies should not base their investment decisions on current government policies – which at present would lead to a 2.7C temperature rise – but instead should plan towards the Paris target, which pledges to keep climate change well below 2C and aims for 1.5C.

The report is the first to analyse the implications of the gap between current policies and the internationally-agreed targets and uses the International Energy Agency’s 1.75C scenario, the mid-point in the Paris Agreement.

Andrew Grant, a Senior Analyst at Carbon Tracker, said: “Companies that misread the signals and overinvest in marginal oil, gas and coal projects based on a false sense of security could destroy shareholder value worth billions of dollars.”

No more coal

The report said $1.3tn of oil investment is at risk, with any further oil sands investment proving uneconomic.

Half of Europe’s planned gas developments could be uneconomic and a total of $228 billion globally.

No new coal mines will be viable – except in India to replace imports – and $62bn of investment is at risk.

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