25 research outputs found
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Stranded fossil-fuel assets translate to major losses for investors in advanced economies
No full textThe distribution of ownership of transition risk associated with stranded fossil-fuel assets remains poorly understood. We calculate that global stranded assets as present value of future lost profits in the upstream oil and gas sector exceed US\$1 trillion under plausible changes in expectations about the effects of climate policy. We trace the equity risk ownership from 43,439 oil and gas production assets through a global equity network of 1.8 million companies to their ultimate owners. Most of the market risk falls on private investors, overwhelmingly in OECD countries, including substantial exposure through pension funds and financial markets. The ownership distribution reveals an international net transfer of more than 15% of global stranded asset risk to OECD-based investors. Rich country stakeholders therefore have a major stake in how the transition in oil and gas production is managed, as ongoing supporters of the fossil-fuel economy and potentially exposed owners of stranded assets
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Reframing incentives for climate policy action
No full textA key aim of climate policy is to progressively substitute renewables and energy efficiency for fossil fuel use. The associated rapid depreciation and replacement of fossil-fuel-related physical and natural capital entail a profound reorganization of industry value chains, international trade and geopolitics. Here we present evidence confirming that the transformation of energy systems is well under way, and we explore the economic and strategic implications of the emerging energy geography. We show specifically that, given the economic implications of the ongoing energy transformation, the framing of climate policy as economically detrimental to those pursuing it is a poor description of strategic incentives. Instead, a new climate policy incentives configuration emerges in which fossil fuel importers are better off decarbonizing, competitive fossil fuel exporters are better off flooding markets and uncompetitive fossil fuel producers—rather than benefitting from ‘free-riding’—suffer from their exposure to stranded assets and lack of investment in decarbonization technologies
Splitting the EU ETS: strengthening the scheme by differentiating its sectoral carbon prices
No full textSplitting the EU ETS: strengthening the scheme by differentiating its sectoral carbon prices / J.P.M. Sijm, H. Pollitt, W. Wetzels,U. Chewpreecha & P. Koutstaal. Energy Research Centre of the Netherlands (ECN) and Cambridge Econometrics (CE), May 2013, 138 p. (ECN--E--13-008) http://www.ecn.nl/docs/library/report/2013/e13008.pdf Abstract (© ECN) : The current EU ETS faces a dilemma. To induce low-carbon investments in the power sector, higher carbon prices are needed, while low carbon prices ..
Splitting the EU ETS: strengthening the scheme by differentiating its sectoral carbon prices
No full textSplitting the EU ETS: strengthening the scheme by differentiating its sectoral carbon prices / J.P.M. Sijm, H. Pollitt, W. Wetzels,U. Chewpreecha & P. Koutstaal. Energy Research Centre of the Netherlands (ECN) and Cambridge Econometrics (CE), May 2013, 138 p. (ECN--E--13-008) http://www.ecn.nl/docs/library/report/2013/e13008.pdf Abstract (© ECN) : The current EU ETS faces a dilemma. To induce low-carbon investments in the power sector, higher carbon prices are needed, while low carbon prices ..
FTT:Heat - A simulation model for technological change in the European residential sector
No full textThis is the final version. Available from Elsevier via the DOI in this record. The database of heat demand per technology type for each Member State is available as Supplementary Material online. A standalone Matlab version of FTT:Heat is available from the corresponding author on reasonable request.We introduce a new bottom-up model for simulating Future Technology Transformations in the European residential heating sector, FTT:Heat. The model simulates the uptake and replacement of heating technologies by households in all individual Member States up to 2050, and allows to simulate the potential effect of real-world policy instruments aiming at an increased uptake of low-carbon technologies. It features an explicit representation of households' technology choices, based on observed preferences and non-linear diffusion dynamics. Decision-makers are modelled as individual households, which are subject to limited information and bounded rationality. Their decisions reflect behavioural factors and preferences at the micro level, and may result in sub-optimal outcomes from a macroeconomic perspective. For demonstration, we simulate policy mixes for reaching the EU's 2030 renewable heating targets in each Member State. Under current diffusion trends, some countries are estimated to continue an ongoing transition towards renewable heating, while others would hardly see any decarbonisation. For increasing the share of renewable heating by at least ten percentage points until 2030, 20 Member States need to introduce additional policies, the necessary stringency of which differs between countries. Due to the slow turnover of heating systems, resulting cost increases faced by households could persist over decades.European Commission, Directorate-General for Energ
Author Correction:Climate–carbon cycle uncertainties and the Paris Agreement
No full textIn the version of this Article originally published, H. Pollit’s name was incorrectly listed as H. E. Pollit (H.E.P.) throughout the paper, this has been corrected to H. Pollitt (H.P.) in the online versions of this Article
Simulating the deep decarbonisation of residential heating for limiting global warming to 1.5 °C
No full textThis is the final version. Available on open access from Springer Verlag via the DOI in this recordWhole-economy scenarios for limiting global warming to 1.5 °C suggest that direct carbon emissions in the buildings sector should decrease to almost zero by 2050, but leave unanswered the question how this could be achieved by real-world policies. We simulate which policy measures could induce an almost complete decarbonisation of residential heating, the by far largest source of direct emissions in residential buildings. Under which assumptions is it possible, and how long would it take? We use the non-equilibrium bottom-up model FTT:Heat to simulate policies for a transition towards low-carbon heating in a context of inertia and bounded rationality, focusing on the uptake of heating systems. Our results indicate that the near-zero decarbonisation is achievable by 2050, but requires substantial policy efforts. We find that policy mixes are more effective for incentivising the uptake of fuel-efficient low-carbon technologies, compared to a residential carbon tax as the only policy. In combination with subsidies and procurement policies for renewables, near-complete decarbonisation could be achieved with a tax of 50–200 €/tCO2. Without being complimented by additional policies, carbon taxes show a decreasing marginal impact on total emission reductions, thus remaining insufficient for deep decarbonisation. In all scenarios, the decarbonisation of heating would increase projected heating costs faced by households initially, but could lead to cost reductions in most world regions in the medium term. We show that the potential impacts of policies highly depend on behavioural decision-making by households, especially in a context of deep decarbonisation and rapid transformation.European Commissio
Simulating the deep decarbonisation of residential heating for limiting global warming to 1.5 °C
No full textWhole-economy scenarios for limiting global warming to 1.5 °C suggest that direct carbon emissions in the buildings sector should decrease to almost zero by 2050, but leave unanswered the question how this could be achieved by real-world policies. We simulate which policy measures could induce an almost complete decarbonisation of residential heating, the by far largest source of direct emissions in residential buildings. Under which assumptions is it possible, and how long would it take? We use the non-equilibrium bottom-up model FTT:Heat to simulate policies for a transition towards low-carbon heating in a context of inertia and bounded rationality, focusing on the uptake of heating systems. Our results indicate that the near-zero decarbonisation is achievable by 2050, but requires substantial policy efforts. We find that policy mixes are more effective for incentivising the uptake of fuel-efficient low-carbon technologies, compared to a residential carbon tax as the only policy. In combination with subsidies and procurement policies for renewables, near-complete decarbonisation could be achieved with a tax of 50–200 €/tCO2. Without being complimented by additional policies, carbon taxes show a decreasing marginal impact on total emission reductions, thus remaining insufficient for deep decarbonisation. In all scenarios, the decarbonisation of heating would increase projected heating costs faced by households initially, but could lead to cost reductions in most world regions in the medium term. We show that the potential impacts of policies highly depend on behavioural decision-making by households, especially in a context of deep decarbonisation and rapid transformation
FTT:Heat — A simulation model for technological change in the European residential heating sector
No full textWe introduce a new bottom-up model for simulating Future Technology Transformations in the European residential heating sector, FTT:Heat. The model simulates the uptake and replacement of heating technologies by households in all individual Member States up to 2050, and allows to simulate the potential effect of real-world policy instruments aiming at an increased uptake of low-carbon technologies. It features an explicit representation of households' technology choices, based on observed preferences and non-linear diffusion dynamics. Decision-makers are modelled as individual households, which are subject to limited information and bounded rationality. Their decisions reflect behavioural factors and preferences at the micro level, and may result in sub-optimal outcomes from a macroeconomic perspective. For demonstration, we simulate policy mixes for reaching the EU's 2030 renewable heating targets in each Member State. Under current diffusion trends, some countries are estimated to continue an ongoing transition towards renewable heating, while others would hardly see any decarbonisation. For increasing the share of renewable heating by at least ten percentage points until 2030, 20 Member States need to introduce additional policies, the necessary stringency of which differs between countries. Due to the slow turnover of heating systems, resulting cost increases faced by households could persist over decades
Net emission reductions from electric cars and heat pumps in 59 world regions over time
No full textThis is the author accepted manuscript. The final version is available from Nature Research via the DOI in this record.Data availability:
The data that support the findings of this study are available from the corresponding authors
on reasonable request.Code availability:
The computer code used to generate results that are reported in this study are available from
the corresponding authors on reasonable request.Electrification of passenger road transport and household heating features prominently
in current and planned policy frameworks to achieve greenhouse gas emissions
reduction targets. However, since electricity generation involves using fossil fuels, it is
not established where and when the replacement of fossil fuel-based technologies by1 electric cars and heat pumps can effectively reduce overall emissions. Could
electrification policy backfire by promoting their diffusion before electricity is
decarbonised? Here, we analyse current and future emissions trade-offs in 59 world
regions with heterogeneous households, by combining forward-looking integrated
assessment model simulations with bottom-up life-cycle assessment. We show that
already under current carbon intensities of electricity generation, electric cars and heat
pumps are less emission-intensive than fossil fuel-based alternatives in 53 world
regions, representing 95% of global transport and heating demand. Even if future end19 use electrification is not matched by rapid power sector decarbonisation, it likely
avoids emissions in world regions representing 94% of global demand.Engineering and Physical Sciences Research Council (EPSRC)Newton FundEuropean Research Council (ERC)European Union Horizon 2020European Commissio
