82
4.2.5 The Possibility of Carbon Pricing
A “stranded asset” is an asset whose value decreases as the social environment
changes. In 2013, the concept of a stranded asset was announced by the Carbon
Tracker Initiative, a non-profit think tank, and the London School of Economics,
and fossil fuel resources were considered stranded assets.
For the development of coal, petroleum, and natural gas, companies invest $674
billion a year, spending more than $6 trillion over a period of 10 years. In order to
keep the rise in average global temperature within 2 °C before the industrial revolution, we cannot utilize 60 to 80% of the recoverable reserves of these fossil fuel
resources, and most of the investment in these resources will become useless. In
other words, they would be considered stranded assets.
In 2015, Oxford University showed the possibility that many of the domestic
coal-fired power plants in Japan will become stranded assets. This is because there
are plans to build an excessive number of power plants, considering the competition
with other power sources and the renewal cost of existing coal-fired power. The
value of the power plants is ¥7 trillion to ¥9 trillion. If a coal-fired power plant
becomes a stranded asset, it means that the electric companies made a major mistake in management decision-making.
The problem lies in the cost of CO 2 emissions not being taken into account in
companies’ decision-making. Decisions on the kind of power station to build should
(10,000 kW)
-1000
-800
-600
-400
-200
0
200
400
600
800
2011/7 2011/12 2012/6 2012/12 2013/6 2013/12 2014/6 2014/12 2015/7 2015/12
Model error ratio: 2.2%
Forecast temperature error: 1.7%
Error: 3.9%
Date
Model + forecast error
Model error
Forecast power consumption
–Actually measured value
1-hour data, excluding singular days (12/28 -1/4, 4/29 -5/6, 8/10 -18, holidays, etc.)
Fig. 4.5 Forecast power consumption error in grid area of Tokyo Electric Power Company.
(Source: Created based on materials from the Center for Low-Carbon Society Strategy, Japan
Science and Technology Agency)
4 Technology to Support Low-Carbon Society (Utilizing Energy)
4.2.5 The Possibility of Carbon Pricing
A “stranded asset” is an asset whose value decreases as the social environment
changes. In 2013, the concept of a stranded asset was announced by the Carbon
Tracker Initiative, a non-profit think tank, and the London School of Economics,
and fossil fuel resources were considered stranded assets.
For the development of coal, petroleum, and natural gas, companies invest $674
billion a year, spending more than $6 trillion over a period of 10 years. In order to
keep the rise in average global temperature within 2 °C before the industrial revolution, we cannot utilize 60 to 80% of the recoverable reserves of these fossil fuel
resources, and most of the investment in these resources will become useless. In
other words, they would be considered stranded assets.
In 2015, Oxford University showed the possibility that many of the domestic
coal-fired power plants in Japan will become stranded assets. This is because there
are plans to build an excessive number of power plants, considering the competition
with other power sources and the renewal cost of existing coal-fired power. The
value of the power plants is ¥7 trillion to ¥9 trillion. If a coal-fired power plant
becomes a stranded asset, it means that the electric companies made a major mistake in management decision-making.
The problem lies in the cost of CO 2 emissions not being taken into account in
companies’ decision-making. Decisions on the kind of power station to build should
(10,000 kW)
-1000
-800
-600
-400
-200
0
200
400
600
800
2011/7 2011/12 2012/6 2012/12 2013/6 2013/12 2014/6 2014/12 2015/7 2015/12
Model error ratio: 2.2%
Forecast temperature error: 1.7%
Error: 3.9%
Date
Model + forecast error
Model error
Forecast power consumption
–Actually measured value
1-hour data, excluding singular days (12/28 -1/4, 4/29 -5/6, 8/10 -18, holidays, etc.)
Fig. 4.5 Forecast power consumption error in grid area of Tokyo Electric Power Company.
(Source: Created based on materials from the Center for Low-Carbon Society Strategy, Japan
Science and Technology Agency)
4 Technology to Support Low-Carbon Society (Utilizing Energy)