Countries that are slow to decarbonise will suffer but early movers will profit; the study finds that renewables and freed-up investment will more than make up for the losses to the global economy.
It highlights the risk of producing far more oil and gas than required for future demand, which is estimated to leave $11tn-$14tn (£8.1tn-£10.3tn) in so-called stranded assets – infrastructure, property and investments where the value has fallen so steeply they must be written off.
The lead author, Jean-Francois Mercure of the University of Exeter, said the shift to clean energy would benefit the world economy overall, but it would need to be handled carefully to prevent regional pockets of misery and possible global instability.
“In a worst-case scenario, people will keep investing in fossil fuels until suddenly the demand they expected does not materialise and they realise that what they own is worthless. Then we could see a financial crisis on the scale of 2008,” he said, warning oil capitals such as Houston could suffer the same fate as Detroit after the decline of the US car industry unless the transition is carefully managed.
Natural gas produces 21% of global CO2 emissions.
The Department of Environmental Conservation denied permits for two proposed natural gas power plants, saying they were incompatible with the state’s climate law, which calls for an end to fossil fuel-generated electricity by 2040.
Though the proposed plants would be more efficient than those currently in operation, the state agency said the plants would generate “significant” amounts of pollution and that their construction now, less than 20 years from the targeted net-zero emissions date, would be “inconsistent” with what is required by the climate law.
New York’s climate law requires polluters to account for two sources of emissions: from the plants themselves and from the natural gas supply chain. Once the latter was included—figures which in the past were nearly always ignored when determining a power plant’s pollution—the emissions quickly exceeded the DEC’s thresholds, the decisions say.
Wall Street Journal » China’s electricity shortages have hit factories that produce a lot of the goods we use every day, including Apple gadgets and furniture. The country’s coal problems expose the growing pains in transitioning to a greener future and risks to the global supply chain.