Jun 2, 2022
As the global economy transitions to greater reliance on renewable energy, it is crucial that this be a Just Transition in which new jobs are created to offset reduced opportunities in fossil fuels. This is critical to mitigate political opposition to the renewable energy transition. We use a survey experiment in Jharkhand, one of India’s largest coal-producing states, to identify the characteristics that make alternative jobs attractive compared to coal jobs. We provide evidence of a coal penalty: respondents were 36.2 percentage points [95% CI: 33.1–39.5] less likely to choose coal jobs than alternatives. Additionally, respondents were much more likely to select high-paying jobs, while distance was not a strong deterrent to job selection. The findings indicate that coal jobs are unpopular on the margin, and suggest the viability of policies such as jobs training programs and relocation assistance that allow workers to take advantage of higher-skilled, higher-paid livelihoods.
Apr 7, 2022
In the context of reaching our climate targets—for example, the 2°C target set at Paris—the role of transition finance, and therefore transition bonds, is going to be key. This article provides a discussion of the goals, issues, and guiding principles for transition bonds. It first argues that a comprehensive transition bonds framework needs to align with appropriate climate transitions, allow for flexibility in getting to climate goals, and minimize greenwashing. The article then offers a simple transition bond rating framework based on the stringencies of climate targets as well as transition pathways. In this process, the crucial roles of sector-based approaches, offsets, regulations, and data quality are also discussed. In addition, the article sets out a research agenda, including identifying potential transition pathways, developing methodologies for additionality of proposed interventions, and creating regulation to ensure transparency.
Apr 6, 2022
In the context of climate change, developing countries with sizeable coal capacities; such as South Africa, Chile and India; are exploring coal plants retirements by repurposing them for productive uses. However, a framework to establish the economic rationale for repurposing does not exist. We develop a detailed cost-benefit framework for the same; for three applications – solar energy, battery energy storage and synchronous condenser; and apply it to a representative coal plant in India. Our findings reveal a strong economic rationale for repurposing. First, the present value of repurposing benefits outweigh corresponding decommissioning costs – the direct, indirect and total decommissioning costs are $58.11 million, $45.80 million and $103.91 million, respectively; the corresponding gross benefits from repurposing are $122.79 million, $468.03 million and $590.82 million, respectively. Second, even after excluding social benefits, net benefits of repurposing cover 10%–32% of capital expenditure of the repurposing options. Third, decommissioning costs are about 50% for coal plants in India (at $58 million) vis-à-vis plants in the US (at $117 million). Finally, we provide a methodology for selecting plants for repurposing; based on age, energy charges and qualitative factors. Our methods will serve as a template for coal plant repurposing in developing countries.
Mar 3, 2022
Governments are spending unprecedented amounts to escape the recession caused by the COVID-19 pandemic. In 2020 and 2021, the G20 group of the 20 largest economies spent at least US$14 trillion — close to China’s annual gross domestic product. Much of that total, rightly, went to shoring up health-care systems, wages and welfare. But climate action was widely promised, too — including ‘green new deals’ and ‘building back better’.
Our analysis suggests that, so far, those promises have not been met. We created an inventory of fiscal stimulus spending during the COVID-19 pandemic in G20 economies, and classified measures according to their likely impacts on greenhouse-gas emissions.
Overall, we found that only 6% of total stimulus spending (or about $860 billion) has been allocated to areas that will also cut emissions, including electrifying vehicles, making buildings more energy efficient and installing renewables. Worse, almost 3% of stimulus funding has targeted activities that are likely to increase global emissions, such as subsidizing the coal industry. And there’s been little change in strategies as nations have shifted from economic rescue mode during lockdowns to recovery, as shops and other businesses have reopened.
Here we outline our findings, lessons and research priorities. We call on all governments to combine economic and climate objectives in upcoming recovery bills — even cheap measures can be effective, such as making bailouts conditional on emissions reductions. Researchers need to improve their understanding of why responses to this COVID-19 recession are different to others, to help make economies more resilient to future shocks.
Feb 23, 2022
Coal-fired energy generation is the backbone of India’s power sector and considered a driver of its economic development. However, it is associated with detrimental environmental and health impacts in India and its fleet is currently struggling with overcapacity and inefficiency problems. One solution to address these challenges is the early retirement of some of India’s coal-fired power plants. In this paper, we introduce multidimensional indices that identify plants for retirement based on comprehensive criteria that include technical and economic characteristics of plants as well as their environmental impacts. We implement an ensemble approach, where we formulate 8008 indices based on all possible combination of seven relevant parameters and rank plants accordingly. This approach facilitates a comprehensive analysis of the plants’ performance on different parameters and provides a new outlook on plant retirements that differs from the common approach of retiring plants based solely on technical characteristics such as age, capacity, and heat rate. Our results show that top plants recommended for early retirement are typically 7 years older, 13% more expensive and have around 40% higher population exposure to emissions compared to an average plant in India. We estimate the potential costs saved from the retirement of the worst-performing 50 GW of generating capacity to be $21 billion resulting from shifting ownership towards a cheaper cost of capital and replacing coal by more competitive sources such as solar power.
