Spatial distributions of stranded fossil asset costs and benefits from climate change mitigation

Abstract

A global 2 °C climate target is projected to generate significant economic benefits. However, the presence of fossil fuel assets that are stranded as a consequence of climate change mitigation could complicate cost-benefit considerations at the country level. Here, we quantify the spatial distribution of stranded asset costs (SAC) together with that of the GDP benefits of climate mitigation (BCM). Under a 2 °C scenario, global total SAC is $19 trillion while global BCM is $63 trillion by 2050. At the country level, the sign of a country’s net benefit, the difference between BCM and SAC, is largely determined by the sign of its BCM. Net benefits are broadly positive across subtropical and tropical countries where high baseline temperatures imply GDP damage from climate change and negative across temperate countries where low baseline temperatures imply GDP gains. Notably, even major fossil fuel producers such as India, China, USA, and Saudi Arabia are projected to receive positive net benefits from a 2 °C scenario by 2050. Overall, 95% of global net benefit will be borne by low and lower-middle income countries. These results could inform the geopolitics of global climate change cooperation in the decades to come.

Keywords

• stranded assets
• fossil fuel
• benefits
• climate change mitigation