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| Hauptseite > Publikationsdatenbank > The future is now – an analysis of energy transition risk, stranded assets, and path dependencies on the way to decarbonizing economies |
| Hauptseite > Publikationsdatenbank > The future is now – an analysis of energy transition risk, stranded assets, and path dependencies on the way to decarbonizing economies |
| Abstract | FZJ-2025-01320 |
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2024
Abstract: This analysis demonstrates that combining CO2 prices and carbon budgets can facilitate a cost-effective transition while aligning with political climate objectives. However, the net present value approach is exploratory and serves as a preliminary step, offering insights into energy transition linkages. Regarding stranded assets in the fossil fuel sector, the study emphasizes the challenge of balancing transition risks and different capital types, suggesting early investment scenarios for op-timal paths. The study models a variable CO2 price and introduces a variable carbon budget, where a tipping point if the budget is exceeded, indicates an increase in the CO2 price. The exploratory carbon budget highlights a tradeoff between risk acceptance and budget adherence. The study illustrates how the budget can inform optimal carbon pricing based on energy costs and offers in-sights into trajectories toward net-zero goals. Furthermore, the need for parameter adjustments and sensitivity analyses due to the complex factors influencing transition pathways has to be stressed. Lower CO2 prices lead to higher emissions and later phase-outs of fossil fuels for energy generation and vice versa. A mix between both instruments can make earlier transitions to renew-able energy generation more feasible at lower costs than a single instrument. Still, given the urgen-cy of climate change, policymakers must address uncertainty and take decisive action to avoid esca-lating the costs of inaction.
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