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A recent study has found that power plants release more carbon dioxide (CO2) in countries where more fossil fuel assets are in jeopardy of being decommissioned. Also, in these countries, the plants operate closer to full capacity, causing them to emit CO2 at even higher levels.
The study concluded that power plants emit more carbon pollution in countries where vast amounts of fossil fuel reserves would be stranded under the Paris Agreement.
This is especially true for the United States and Russia, where up to 16 per cent and 12 per cent of their electricity sector’s carbon budget could be spent within 10 years mainly for replacing the ageing and highly polluting plants.
The study was published in Nature Communications on August 30, 2024. It flagged countries’ regulatory leniency and plants’ vested interest in their long-term contracts.
At-risk reserves motivate contractually bound plants to accelerate the processing and burning of their purchased inputs. The findings indicate that stranded assets and plants’ capacity utilisation rates positively interact - causing plants to further increase their emissions.
The term ‘stranded assets’ refers to the premature suspension of production of an asset (power plants in this case) before the completion of the economic cycle.
While the excess carbon released annually due to the stranded asset effect is moderate, its cumulative effect on the power sector’s remaining carbon budget could be significant in certain key countries, the study pointed out.
Using a worldwide data source on individual power plants’ CO2 emissions and the value of countries’ at-risk fossil fuel assets, researchers showed that between 2009 and 2018, plants emitted more CO2 in countries where more assets would be devalued under a 1.5 °C scenario. This may be due to these countries’ regulatory leniency and plants’ vested interest in long-term fossil fuel contracts.
The study focused on plants’ environmental performance between 2009 and 2018 because it is stated to be the time period when most international climate treaties were and are yet to be fully enforced.
Therefore, the time period is well suited for examining whether these plants will emit carbon at higher levels in anticipation of what the treaty enforcement will do to the future value of fossil fuel assets.
Power plants are amongst the world’s largest emitters of CO2 and are the primary cause for global warming. Almost 20 per cent of current global power plant capacity is at the risk of being stranded in order to meet the climate commitments set out in the Paris Agreement, stated a May 2018 study published in the journal Environmental Research Letters.
Also, by 2050, nearly 60 per cent of oil and fossil methane gas and 90 per cent of coal must remain unextracted to keep within a 1.5 °C carbon budget, according to a 2022 study published in the journal Nature.
Under this scenario, the world would be left with fossil fuel resources that cannot be burned and fossil fuel infrastructure (pipelines, power plants) that is no longer used and may end up as liability before the end of its anticipated economic lifetime.