Earth Day was April 22, and its usual message—take care of our planet—has been given added urgency by the challenges highlighted in the latest IPCC report. This year, Ars is taking a look at the technologies we normally cover, from cars to chipmaking, and finding out how we can boost their sustainability and minimize their climate impact.
The numbers are startling.
We know roughly how much more carbon dioxide we can put into the atmosphere before we exceed our climate goals—limiting warming to 1.5° to 2° C above preindustrial temperatures. From that, we can figure out how much more fossil fuel we can burn before we emit that much carbon dioxide. But when you compare those numbers with our known fossil fuel reserves, things get jaw-dropping.
To reach our climate goals, we’ll need to leave a third of the oil, half of the natural gas, and nearly all the coal we’re aware of sitting in the ground, unused.
Yet we have—and are still building—infrastructure that is predicated on burning far more than that: mines, oil and gas wells, refineries, and the distribution networks that get all those products to market; power plants, cars, trains, boats, and airplanes that use the fuels. If we’re to reach our climate goals, some of those things will have to be intentionally shut down and left to sit idle before they can deliver a return on the money they cost to produce.
But it’s not just physical capital that will cause problems if we decide to get serious about addressing climate change. We have workers who are trained to use all of the idled hardware, companies that treat the fuel reserves and hardware as an asset on their balance sheets, and various contracts that dictate that the reserves can be exploited.
Collectively, you can think of all of these things as assets—assets that, if we were to get serious about climate change, would see their value drop to zero. At that point, they’d be termed “stranded assets,” and their stranding has the potential to unleash economic chaos on the world.
Fantastic assets and how to strand them
To explain stranded assets, Armon Rezai of the Vienna University of Economics and Business turned to actual strandings. If you have a boat and it runs aground, you can no longer derive any financial benefits from the boat—it remains an asset, but it’s no longer useful. The same thing goes for any goods it was carrying, as well as the crew that was familiar with all its peculiarities.
While that sort of one-off disaster can definitely occur with fossil fuel production and use, it doesn’t represent the sort of wholesale threat to all fossil fuel production that’s at issue in the near future.
But there are many ways that assets can become stranded beyond freak events, and many of them are relevant to fossil fuels. Joyeeta Gupta of IHE Delft noted that assets could be stranded by something as simple as a brand falling out of fashion, leaving its owners with excess production capacity. Technological changes can also make a product obsolete, stranding all the infrastructure used to make, sell, and service it.
All of the people we talked to noted that these sorts of strandings are a normal part of capitalism. And they definitely apply to fossil fuels, as people have started to seek out cleaner alternatives and renewable technologies undercut them in price.
But there’s an added risk here: policy interventions by governments. Already, various governments have put a price on carbon emissions, launched carbon trading systems, and taken other actions to either discourage the use of fossil fuels or encourage the use of cleaner alternatives. (Of course, many of them have done that at the same time that they pursued other policies that promoted fossil fuel use.)
It’s tempting to consider these stranding mechanisms in terms of trying to identify which of them will be decisive. But all of them can—and in fact are—acting in parallel. And if we want to reach our climate goals, they’ll have to act much more quickly than they have been.