Committed emissions and the risk of stranded assets from power plants in Latin America and the Caribbean

Abstract

Latin America and the Caribbean (LAC) has the least carbon-intensive electricity sector of any region in the world, as hydropower remains the largest source of electricity. But are current plans consistent with the international climate change goals laid out in the Paris Agreement? In this paper, we assess committed CO 2 emissions from existing and planned power plants in LAC. Those are the carbon emissions that would result from the operation of fossil-fueled power plants during their typical lifetime. Committed emissions from existing power plants are close to 6.9 Gt of CO 2 . Building and operating all power plants that are announced, authorized, being procured, or under construction would result in 6.7 Gt of CO 2 of additional commitments (for a total of 13.6 Gt of CO 2 ). Committed emissions are above average IPCC assessments of cumulative emissions from power generation in LAC consistent with international temperature targets. To meet average carbon budgets from IPCC, 10%-16% of existing fossil-fueled power plants would need to be closed before the end of their technical lifespan. Our results suggest that building more fossil-fueled power plants in the region could jeopardize the achievement of the Paris Agreement temperature targets.

Getting to Net-Zero Emissions: Lessons from Latin America and the Caribbean

“…In the case of Latin America and the Caribbean, IDB research puts committed emissions from the power sector at 6.9 GtCO 2 (González-Mahecha et al, 2019). This is more than the emissions for the LAC power sector consistent with limiting temperature increases to 2°C or 1.5°C CO 2 according to the average scenario reviewed by the IPCC (approximately 6.5 and 5.4 GtCO 2 , respectively).…”

“…In LAC, natural gas already represents 52% and 63% of committed emissions from existing and planned power plants, respectively. Replacing planned coal plants with natural gas plants would only reduce committed emissions by around 10% (González-Mahecha et al, 2019). To avoid carbon lock-in, therefore, governments need to act early on emission reductions by focusing now on options that are consistent with a rapid transition to net-zero emissions, such as electric vehicles or zero-carbon electricity.…”

Achieving Net-Zero Prosperity: How Governments Can Unlock 15 Essential Transformations

“…Approximately 50% of these emissions are associated with electricity generation (Tong et al, 2019). In Latin America and the Caribbean, existing and planned power plants, especially gas power plants, would similarly emit twice as much GHGs as what scenarios reviewed by the Intergovernmental Panel on Climate Change (IPCC) suggest would be consistent with the region meeting 1.5 °C or 2 °C targets (González-Mahecha et al, 2019). This highlights the importance of phasing out all fossil-based electricity generation as soon as possible, especially those power plants that can be replaced by variable renewables, even if amortization periods have not been reached for certain generation projects at the time of phase-out.…”

Inclusion in Times of Covid-19

“…Assuming the world will eventually act as the situation becomes ever more dire, the longer the world waits to take decisive action, the higher will be the estimated costs associated with stranded assets in industries that are high emitters of carbon. 14 As of today, some 10% of fossil fuel power plants in the region will need to be retired prematurely to achieve the 2° Celsius goal of the Paris Agreement (González-Mahecha et al, 2019). Building additional fossil fuel power plants would only increase the costs of stranded assets and the urgency and economic costs of the transition in the power sector.…”