Stranded Asset Implications Of The Paris Agreement In Latin America And The Caribbean

Date Posted: April 12, 2021 by admin


Through the implementation of national climate plans, combined with the development of ambitious strategies for 2050, Latin America and the Caribbean will be much better equipped to reduce their exposure to climate risks and asset congestion. Failed assets are a central issue for Latin American and Caribbean (LAK) countries, although the region is responsible for less than 10% of global carbon dioxide emissions [32] and already produces more than half of its electricity from renewable sources [33, 34]. For example, a recent analysis showed that the region ranks second in terms of the total amount of non-defying oil and gas reserves (behind the Middle East) and that fossil fuel production is an important component of many of the LAC`s economies. However, the risks associated with human-owned assets within the CTC have been largely neglected, with few studies attempting to assess their impact on the region or countries [10]; There is a clear need for instruments and analysis that help policy makers better understand the potential of assets that have been stranded in the LAC and their impact on low-carbon development strategies [35, 36]. In addition, financial institutions are not as robust in THE ADAs as in other regions [37, 38], which can affect countries` ability to cope with instability caused by failed assets. Seiwales are not the only ones to be victims of climate effects. In fact, like these poor whales, climate change and efforts to address them threaten to derail significant economic resources in the region. Our analysis shows that, although more than half of LAC`s electricity is generated from renewable sources [33, 34], failed assets in the energy sector are an important issue in the LAC. Achieving the long-term goals of the Paris Agreement could lead, depending on the decarbonization trajectory, to an early closure of $37 billion to $90 billion in capital for $37 billion to $90 billion in 2010. These costs represent huge potential losses for a relatively small group of stakeholders and reflect significant new capacity investment requirements. This webinar examines the issue of failed assets in Latin America and the Caribbean, which could result from the implementation of policies and measures under the Paris Agreement.

The evaluation is used by the Global Change Assessment Model (GCAM), a global model of multi-scale, intersectoral, human and physical land with regional details in LAC. An assessment of the costs associated with these early retirements and new facilities helps to highlight the economic impact of the fight against climate change. Scale is the main driver of capital costs, with each scenario averaging between $2.5 billion and $2.7 billion per GW in new production capacity (Figure 3). Investment costs for the “straight-to-2-C” scenario are the lowest ($1.9 trillion for the entire LAC between 2021 and 2050; see additional table 6), while the investment costs for the NdCs scenario at 1.5 degrees Celsius are the highest (nearly $2.6 trillion). These results are consistent with Figures 1 and 2 – while NdCs are not enough to limit warming to 2 degrees Celsius, they involve even more challenges in limiting warming to 1.5 degrees Celsius [7]. Overall, in the NdC scenario at 1.5oC, investment needs account for about 0.8% of ZONE A`s projected (exogenous) GDP between 2021 and 2050, even reaching 2.1% of GDP between 2031 and 2035. The threat of climate change and failed assets has attracted the attention of investors, policy makers and multilateral institutions. Investors are now trying to identify companies that are taking action to address climate risk and which are the most vulnerable. To support this process, the G20 Financial Stability Board`s Climate Financial Reporting Task Force contains a series of recommendations to help organizations disclose the information investors need to assess and assess climate-related risks and opportunities.





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