(The) impacts of carbon neutrality transition pathways on coal and gas generation stranded assets in Korea

Abstract

Global efforts are continuing to reduce greenhouse gases to mitigate various risks stemming from climate change, and in joining the move, South Korea has declared its goal of achieving carbon neutrality by 2050. Achieving carbon neutrality requires a rapid transition in the energy sector where emissions are dominant. For energy transition, carbon-intensive energy sources in the power sector should be replaced with renewable energy sources or negative emission technologies, which are considered to have risk, such as generating stranded assets in fossil fuel plants. However, research on integrated assessment and analysis of changes in the power sector and the risk of stranded assets that will occur due to the introduction of carbon neutrality policies is insufficient. This study analyzes the impact on plant investors and consumers by analyzing additional stranded assets and energy expenditures in the residential building sector depending on the strictness and timing of the carbon neutrality policy compared to current climate policy. Studies have shown that stranded assets in both coal and gas plants are the largest in the NZ_med scenario when policies are introduced at midpoint and the least in the NZ_low scenario when policies are introduced at early stage. This result suggests that efforts to achieve carbon neutrality are needed from now on to reduce the damage to stranded assets and is expected to be used by investors to make investment decisions in fossil fuel-based power plants.