Investing in fossil fuel infrastructure undermines the shift to a low carbon economy, researchers warn – and it’s not just coal
By Megan Darby
Investing in fossil fuel infrastructure today locks in greenhouse gas emissions for decades to come, hampering efforts to tackle climate change.
This “carbon lock-in” problem is most obvious for coal-fired power stations, which are highly polluting and last 40-50 years.
But gas plants and cars also come with a significant lock-in risk, according to analysis from the Stockholm Environment Institute.
On the supply side, energy companies are sinking capital into costly offshore oil and gas platforms that do not fit with a cost-effective shift to a green economy.
Researchers looked at the lifetime emissions of investments planned under business as usual. They compared these with a scenario in which global warming is limited to 2C – the internationally agreed goal.
Coal power generation posed the biggest threat to climate goals, in part because it is cheap compared to alternatives. It would take a carbon price of US$50 a tonne to drive a shift away from coal burning once the plants are installed, the report found.
In the EU emissions trading system, the world’s biggest carbon market, pollution permits change hands for less than US$10/t.
Touted by energy companies as part of the solution to climate change, gas power generation is roughly half as carbon-intensive as coal.
Yet gas plants are also being “over-built” compared to the 2C goal, researchers said.
As for cars with internal combustion engines, these are less long-lived than power plants, but come with wider structural issues.
Continuing to make petrol-guzzling models means sustaining a network of refueling stations at the expense of alternatives like public transport and electric vehicles.
At the mines and wellheads, the SEI calculated coal, oil and gas are set to be over-produced to the tune of 7 gigatonnes CO2 a year. That is more than total US emissions.
On this side, oil and gas are more vulnerable to lock-in than coal, because of the higher capital costs of building an offshore platform than setting up a mine.
“Because they are capital-intensive and costly to develop, these resources would not be developed in a cost-effective, low-carbon scenario (e.g. with a carbon price),” the researchers wrote. “Once they are in place, however, extraction is likely to continue.”
To avoid the lock-in effect, they recommended policymakers impose strict emissions performance standards, ban the worst offenders and use a high shadow carbon price when considering investment.