Energy plays a central role in the global economy, and for more than a century one of the cheapest and most prevalent sources of energy has been fossil fuels. Unfortunately, fossil fuels have also been a major source of carbon emissions. In 2010, fossil fuels contributed nearly two-thirds of greenhouse gas emissions from human activity.
Some worry that a switch away from fossil fuels could have a significant cost to the global economy and undermine the financial system. New research conducted by CPI for the New Climate Economy project first compares the costs of low-carbon electricity and low-carbon transportation systems with current systems, then focuses on the risk of losses in the financial value of existing fossil fuel assets (so called “asset stranding”).
The analysis demonstrates that a transition to a low-carbon energy system could free up trillions of dollars over the next 20 years to invest in better economic growth.