Declining oil demand due to stronger climate policies and progress toward phasing out fossil fuels
First written in FY2020. 4 of 5 entries say "Worsened", first in FY2021. Latest entry: FY2026.
Cosmo Energy Holdings moved to the "Worse" side of this theme in 2021, 3 years before the typical company in this theme (2024).
The whole theme swung hardest in 2025: 7 of 9 companies on the "Worse" side.
3 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「As decarbonisation and other developments progress, demand for petroleum products could decline at an unforeseen pace, profitability could fall due to higher costs from GX-ETS, carbon levies and other factors, and the Group's business assets could become stranded.」
For climate-change risks, the company explicitly identified, as a top-risk scenario, the stranding of business assets in addition to an unforeseen decline in oil demand and lower profitability caused by carbon costs. - FY2023WorsenedAnnual report
「Under the 2°C scenario, decarbonisation would advance substantially, reducing oil demand through the introduction of carbon pricing and the accelerated shift to renewable energy and EVs, while increasing the need to reduce emissions from the business and review the portfolio. Under the 1.5°C scenario, decarbonisation is expected to advance more rapidly than under the 2°C scenario, while carbon pricing and emissions-trading prices would rise further, accelerating the decline in oil demand.」
The company conducted scenario analyses of climate-change risks under 4°C, 2°C and 1.5°C scenarios, specifying the decline in oil demand and the need to review the portfolio if the transition to a low-carbon economy advances. - FY2022WorsenedAnnual report
「However, if Japan or other countries strengthen climate policies or amend or newly introduce environmental laws and regulations, demand for petroleum products could decline at an unforeseen pace. This could affect the Group's operating results and financial position, particularly through its petroleum-related businesses.」
The company again explicitly identified the risk that stronger climate policies and environmental regulations could cause demand for petroleum products to decline at an unforeseen pace, and identified accelerating the transition of its business portfolio as its response policy. - FY2021WorsenedAnnual report
「In April 2021, the Japanese government announced that it would raise its target for reducing greenhouse gas emissions by fiscal 2030 to 46% from fiscal 2013 levels, and stated its aim of achieving carbon neutrality by 2050 by bringing overall greenhouse gas emissions to zero.」
Regarding climate policy, the Japanese government's 2030 reduction target was raised from 26% to 46%, and a carbon-neutrality policy for 2050 was presented. The company stated that external pressure from the phase-out of fossil fuels and declining oil demand had intensified. - FY2020First statedAnnual report
「Under the Paris Agreement, Japan aims to reduce CO₂ emissions by 26% from fiscal 2013 levels by fiscal 2030, and the Group has set a target at the same level. If the global shift away from fossil fuels accelerates in response to emissions-reduction targets, the spread of electric vehicles and the sharing economy will expand. Although demand for gasoline will remain, demand for fossil fuels is expected to decline gradually.」
Climate policies, electric vehicles, the sharing economy and the accelerated phase-out of fossil fuels were disclosed as standalone risks that could reduce demand for petroleum products at an unforeseen pace.