What is Carbon Value-at-Risk?
Carbon VAR describes the asset's value at risk under a given carbon price assumption. It is a useful metric for quantifying the potential financial liability associated with carbon emissions.
💡 Tip:The VAR only reflects the impact of carbon costs on an asset’s base case valuation. It does not take into account the potential impact of shifts in demand for the commodity, together with the implications for commodity prices, under a lower carbon future.
Where can I find this in Lens Upstream?
Search for an upstream field asset (e.g. 'Mero' in Brazil) and run a Upstream Valuation
You can see what price assumptions are being utilized in the economic assumptions header.
A new sub-heading under the assets economic summary stats card will show Carbon VAR metrics. (Carbon VAR and Remaining PV post-tax including VAR)
💡 Tip: Carbon VAR is only available for single asset valuations.
A Carbon price grid is available at the bottom of the dashboard displaying the annual carbon prices for the country where the asset is located.
Lastly, you can export the calc file to see the "Emissions' tab for assets where VAR is calculated.
What if a carbon cost has already been accounted for in an upstream field asset?
If carbon cost is already present in the asset's fiscal regime, it will already be modelled into the asset's fiscal model. Therefore, no Value-at-Risk will be calculated.
The asset's economic stats card has a message showing users that Carbon VAR does not apply for this asset.
The Carbon prices grid is still present at the bottom of the dashboard.
The 'Emissions' tab is not available when exporting the calc file for that asset.