Exhibit 21 Initiative arbon Tracker Carbon supply cost curves: Evaluating financial risk to gas capital expenditures About Carbon Tracker Acknowledgements Disclaimer The Carbon Tracker Initiative (CTI) is a financial Authored by James Leaton, Andrew Grant, Matt Carbon Tracker is a non-profit company set-up not for profit financial think-tank. Its goal is to Gray, Luke Sussams, with communications advice to produce new thinking on climate risk. The align the capital markets with the risks of climate from Stefano Ambrogi and Margherita Gagliardi organisation is funded by a range of European and change. Since its inception in 2009 Carbon Tracker at Carbon Tracker. This paper is a summary which American foundations. Carbon Tracker is not an has played a pioneering role in popularising the draws on research conducted in partnership with investment adviser, and makes no representation concepts of the carbon bubble, unburnable carbon Energy Transition Advisors, ETA, led by Mark Fulton, regarding the advisability of investing in any and stranded assets. These concepts have entered with Paul Spedding. particular company or investment fund or other the financial lexicon and are being taken increasingly vehicle. A decision to invest in any such investment The underlying analysis in this report prepared seriously by a range of financial institutions including fund or other entity should not be made in by Carbon Tracker and ETA is based on supply investment banks, ratings agencies, pension funds reliance on any of the statements set forth in this cost data licensed from Wood Mackenzie Limited. and asset managers. publication. While the organisations have obtained Wood Mackenzie is a global leader in commercial information believed to be reliable, they shall not intelligence for the energy, metals and mining Contact be liable for any claims or losses of any nature industries. They provide objective analysis on assets, in connection with information contained in this James Leaton companies and markets, giving clients the insights the Research Director document, including but not limited to, lost profits need to make better strategic decisions. The analysis [email protected] or punitive or consequential damages. presented and the opinions expressed in this report www.carbontracker.org are solely those of Carbon Tracker & ETA. The information used to compile this report has twitter: @carbonbubble been collected from a number of sources in the Carbon Tracker would like to acknowledge the input More detailed papers on gas supply public domain and from Carbon Tracker licensors. of those who reviewed draft papers: Anthony Hobley, and demand are available at: Some of its content may be proprietary and Mark Campanale, Jeremy Leggett, Reid Capalino, www.carbontracker.org/report/gascostcurve belong to Carbon Tracker or its licensors. The Mark Lewis, Nick Robins, Shanna Cleveland. information contained in this research report does Designed and typeset by Soapbox, not constitute an offer to sell securities or the www.soapbox.co.uk solicitation of an offer to buy, or recommendation for investment in, any securities within any © Carbon Tracker Initiative July 2015 jurisdiction. The information is not intended as financial advice. This research report provides general information only. The information and opinions constitute a judgment as at the date indicated and are subject to change without notice. The information may therefore not be accurate or current. The information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable in good faith, but no representation or warranty, express or implied, is made by Carbon Tracker as to their accuracy, completeness or correctness and Carbon Tracker does also not warrant that the information is up to date. Contents Executive summary 2 Foreword 4 1. Introduction 5 2. Allocating the carbon budget 6 3. Demand scenarios 7 4. Supply cost curves 11 5. LNG carbon supply cost curve 12 6. European carbon supply cost curve 14 7. North America carbon supply cost curve 16 8. Capex implications 18 9. Conclusions and recommendations 24 Executive summary LNG supply Perfect storm Demand and price Fugitives on the run Asia Pacific Australia 2015 has only confirmed the direction of travel away Analysing the world’s gas supply brings you very The issue of fugitive emissions has raised questions Russia North Africa from fossil fuels. The G7 has agreed to aim to reduce quickly back to demand. Until LNG became over the climate benefits of unconventional gas. emissions by up to 70% below 2010 levels by 2050. commercially viable, many gas deposits were literally There is no consensus on the extent of the problem, Canada US Efforts to keep global warming below 2 degrees stranded, as they had no access to potential markets. but there is agreement action is needed. The are ratcheting up, which is tightening the carbon The advent of LNG technology has connected supply development of shale gas has prompted proposals East Africa West Africa budget remaining for fossil fuels. There are many and demand bringing gas to new countries, and from regulators and industry in North America. These Middle East Existing combinations of coal, oil and gas which could make competition to existing markets. The need for capital need to be delivered fast if gas is to demonstrate it up the future fossil fuel portion of the world’s energy intensive infrastructure means that new LNG supply can help meet carbon pollution targets. At the gas Other supply. This will vary across power, heat and transport is unlikely to progress far without the gas being prices in our scenarios, capturing this lost product uses, and between regions. This direction of travel to contracted in advance. This doesn’t mean you can’t should more than pay for itself, so there is little excuse a low carbon future is not just about getting a global have too much gas though – if utilities overestimate for not dealing with the problem. The solutions need deal on climate change. Even as the negotiations have the demand for their gas power generation, to be applied to all gas and coal developments and continued, there has been a perfect storm of factors oversupply can weaken prices. The drop in oil prices infrastructure, including conventional gas, as there is at work. These include concerns over health and air over the last year has also put pressure on contract no room in the carbon budgets for fugitive emissions quality, technological advances like domestic energy prices linked to the oil benchmarks. exacerbating the situation. storage products, the decoupling of economic growth and energy demand, and the continued fall in the cost Gas connoisseurs LNG left on the shelf? of renewables. Low carbon scenarios do include the potential for gas Partly due to the long lead time, LNG supply is demand to grow over the next decade. But if we are covered for a low demand scenario for the next to stay within a carbon budget the world needs to be decade. Beyond this LNG with supply costs below selective in developing gas supply, in order to ensure around $10/mmBtu delivered to Japan will be needed. we use the remaining budget most efficiently. This will But there are $283bn of high cost, energy intensive also be driven by the relative costs of different power LNG projects that would continue to be deferred sources in each region. The golden age of gas once if demand disappoints. In particular the number of mooted by energy commentators has not arrived in LNG plants in the US, Canada and Australia could most regions. With the costs of renewables falling, disappoint those expecting large LNG industries gas is already struggling to compete in some markets, to develop. or could be priced out soon in others. The shale gas revolution in the US has been the exception, but this has not been replicated in Europe where the swing has been from coal to renewables. 2 | Carbon Tracker 2015: Gas European diversity High carbon high cost Europe has a range of gas supply options – and as A consistent theme to our cost curve analysis has LNG supply a result may not need them all in the next couple been to identify the high carbon, high cost options of decades. The existing pipeline infrastructure which aren’t consistent with a reasonable carbon Asia Pacific Australia determines much of the trade, with Russian gas on budget. Gas is a mixed bag which prompts a wide Russia North Africa tap. The volume and price supplied by Russia will range of responses, which touch on issues beyond impact the marginal gas options for remainder of debating its climate benefits to energy security and Canada US the market. Again the breakeven threshold for a low water pollution. Sticking to our financial and climate demand scenario is around $10mm/Btu. Even if piped perspectives, the biggest question marks arise over East Africa West Africa gas or LNG doesn’t displace UK shale gas, the model unconventionals and LNG. The combination of these Middle East Existing has it supplying less than 1% of UK gas demand for two gas technologies appears to be the worst option, the next decade. There is also LNG overflow into the although fortunately there are limited options in this Other European market which could depress the spot price area at present. even further over the next few years, meaning more expensive options won’t break even for a while. The commitments to increase renewables and reduce emissions in the EU leave little room for gas growth, with cheaper renewables continuing to displace coal. Foreword | 3 Foreword Carbon Tracker’s financial research has created a new Major players in the gas industry are taking positive Carbon Tracker is not an advocate of a pure debate around climate change and investment literally steps to quantify and address the fugitive emissions divestment approach to fossil fuels.