Global fossil fuel subsidies

Global

As renewable energy prices continue to fall below conventional electricity prices, the future demand for fossil fuels is dwindling. Investors around the world are limiting investments in that industry. Experts have estimated that fossil fuel assets worth between $1 and $4 trillion may be stranded, depending on the stringency of the global climate action. South Africa, a coal intensive economy, is particularly at risk in the context of this impending global transition. This risk arises not just because of its coal export revenues but also because of its continued investments in domestic fossil fuel capacities. With the domestic imperative to shift to a low carbon economy, existing assets worth $31.2 billion are at risk of being stranded. Studies estimate that planned future investments will put further assets worth $25 billion at risk. Countries can avoid such risks through long term climate planning.

Stranded asset risk in coal intensive industry

South Africa

As renewable energy prices continue to fall below conventional electricity prices, the future demand for fossil fuels is dwindling. Investors around the world are limiting investments in that industry. Experts have estimated that fossil fuel assets worth between 1 and 4 trillion dollars may be stranded, depending on the stringency of the global climate action. South Africa, a coal intensive economy, is particularly at risk in the context of this impending global transition. This risk arises not just because of its coal export revenues but also because of its continued investments in domestic fossil fuel capacities. With the domestic imperative to shift to a low carbon economy, existing assets worth 31.2 billion dollars are at risk of being stranded. Studies estimate that planned future investments will put further assets worth 25 billion dollars at risk. Countries can avoid such risks through long term climate planning.

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Coal moratorium

Philippines

Philippines, one of the most climate vulnerable island countries in the world, recently announced moratorium on greenfield coal power plants for the foreseeable future. Philippines was facing heavy outages as a result of the inflexibility in its current power system that is heavily dependent on coal based electricity. To address this, Philippines is planning to increase the flexibility of its power supply and demand centres that will feature renewable energy more prominently. It can also be considered to be a strategic response to the global trend of phasing out coal and follows the ambitious climate declarations by key Asian economies like Japan, China and South Korea. With this declaration, Philippines signalled international investors about the country’s readiness for renewable energy investments. It has also recently allowed 100% foreign investments in exploiting the country’s rich clean energy resources like geothermal energy.

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