A worldwide analysis of stranded fossil fuel assets’ impact on power plants’ CO2 emissions
Don Grant, Tyler Hansen, Andrew K. Jorgenson, Wesley Longhofer
Abstract
Will power plants emit less or more CO2 in anticipation of stronger climate policies that would strand fossil fuel reserves? Here, using a worldwide data source on individual power plants’ CO2 emissions and the value of countries’ at-risk fossil fuel assets, we show that between 2009 and 2018, plants emitted more CO2 in countries where more assets would be devalued under a 1.5 °C scenario, which we theorize is due to these countries’ regulatory leniency and plants’ vested interest in long-term fossil fuel contracts. Although the extra amount of carbon emitted each year trigged by imperiled assets is relatively small, it would exhaust a sizable portion of the electricity sector’s remaining carbon budget when added up over time. This is especially true in the U.S. and Russia where up to 16% and 12% of their budgets, respectively, could be spent within ten years due solely to the stranded asset effect. Since the signing of the Paris Agreement, power plants have emitted more CO2 in countries where more fossil fuel assets would be stranded under this treaty. In the United States, 16% of its electricity sector’s carbon budget could be spent within ten years due solely to the stranded asset effect.