Big Oil's life is about to get tougher. One of the key stumbling blocks for investors trying to work out if a crude producer faces impending ruin is the lack of a reliable global warming base case to deploy when interacting with board members. That could be about to change.

The default scenarios used by investors peering into the future are from the International Energy Agency, which represents developed-world energy consumers. The IEA has pointed out that its projections are not forecasts, but analyses of what might be required to limit global warming to different ceilings. Some of these are in line with the 2015 Paris Agreement's objective of limiting temperature rises to substantially below 2 C. 

Yet the IEA's best-known one, the so-called New Policies Scenario, assumes minimal change from pre-existing, inadequate climate policies to a future in which warming soars to a ruinous 2.7 C. 

It's arguably not the IEA's fault that investors have adopted the NPS as a base case. But it allows the likes of Exxon Mobil to get away by stating in its 2018 Financial and Operating Review that $21 trillion of investment in oil and gas is needed between 2018 and 2040 even if that could fry the planet.

Principles for Responsible Investment have had enough. The body is supported by global investors who represent $86 trillion of assets and are supposed to take environmental, social and governance concerns seriously. Working with economists and financial analysts, it has calculated a rival to NPS. The new Forecast Policy Scenario takes as read that increasing tangible evidence of climate change will push politicians into tough countermeasures. 

By the 2030s, this "inevitable policy response" includes the steady phase-out of coal and gasoline-fuelled cars, marginal offsetting effects from carbon capture - which plays a big role in the NPS - and a large ramp-up in renewable energy and reforestation.

The FPS will create problems for heavy carbon emitters like Big Oil. If it became an NPS-style standard, boards would find it harder to deflect shareholders' ire - especially as the PRI will in a few months release more detailed research into what a realistic political response means for individual companies. Worse, the assumed policy pushback doesn't even limit warming to the 1.5 C as recommended by the Intergovernmental Panel on Climate Change - for that even tougher political prescriptions could be needed. If oil groups still try to deflect attention to the NPS, they will look ridiculous.

The author is George Hay, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews. bizopinion@globaltimes.com.cn