Cumulative greenhouse gas emissions must be constrained to less than 1 trillion tonnes of carbon for a roughly 50% probability of mean global temperature increases of below 2oC above pre- industrial levels (Allen, 2009; IPCC, 2014). Commonly employed annual emission reduction targets – such as reducing emissions by 40% by 2030 – are irrelevant unless they contribute to the core objective of reducing the cumulative stock of CO2 in the atmosphere. Similarly, more important than the flow of emissions from energy infrastructure in any given year is the stock of future CO2 to which this infrastructure effectively commits us (Davis & Socolow, 2014). This paper brings together these two important stock concepts of Allen (2009) and Davis & Socolow (2014), focussing on the implications for energy sector infrastructure. We calculate the date at which the installed capital stock commits us to a 50% probability of 2oC warming, without subsequent stranding of energy sector assets. The core finding of the paper is that, on current plausible trajectories and with the IPCC range of assumptions about climate sensitivity, we will reach a ‘2oC capital stock’ – i.e. an installed capital stock that implies commitment to 2oC warming – at some point over the next 15 years. The implication for energy policy is significant: even if we were to completely stop investing in polluting energy infrastructure within a decade, it appears likely that climate policy will have to induce the early stranding of polluting energy sector assets, if warming is to be restricted to below 2oC. Investors may wish to pay closer attention to this risk to energy sector assets.
Alexander Pfeiffer, Richard Millar, Cameron Hepburn, and Eric Beinhocker


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