Stranded assets of green transition

The result of green transition is the rise of stranded assets that refer to the assets characterized by high risk of being out of operations in the future - e.g. the problematic issue is specified by the period of profitable production of fossil-fired assets. The global climate policy negatively influences the financing of fossil-based investments, what has the impact on the strategic decisions concerning assets development, making it green orientated. It is reflected in the real operations. Thirteen states of USA defined in year 2020 goals concerning climate neutrality. Power companies responded this initiative - e.g. Xcel Energy Inc. decided to reach 80% of emissions’ reduction until 2030 (increase of natural gas utilization, investments in power storage, pumped-storage plants, new types of nuclear power plants, green hydrogen). Similar initiatives took European power companies: Endesa, E.ON, RWE, CEZ, EdF or Orsted, which decided to be climate-neutral by 2025 (Orsted plans to install 30 GW of renewable energy and from 2021 bases on electric vehicles). Orsted influences twenty thousand of its suppliers to be climate neutral as well, demanding to present the carbon footprint minimalization schedule. European Union plans to become by 2050 first territory climate neutral, aiming to create a fair, competitive and carbon neutral society. 

Important step was done by European Parliament in January 2020 that adapted the European Green Deal and legally confirmed the ambitions of net zero emission goal in the European Climate Law. It highlighted the need to decarbonize the power sector. At the same time European Commission prepared budget of EUR 1 trillion for investments in green projects by 2030 that considered the instruments attracting the private investments as well. The climate aspiration of EU were confirmed in the Fit for 55% legislation package that aim is to adjust EU climate and energy policy towards minimum 55% reduction of GHG emissions by 2030 (comparing to year 1990). The following actions shall be executed for this purpose:

· application of emissions trading in new sectors of the economy, particularly in construction and transport;

· reduction of emission limits and requirements of emissions reduction’s acceleration;

· reinvestment of the obtained funds from the sale of European Emission Allowances (EUA) to projects related to the implementation of climate goals;

· improvement of energy efficiency;

· acceleration of the low-emission transport development through a prohibition of the sale of cars burning fossil fuels from 2035 and creation of separate emission trading system for road transport fuels;

· adjustment of the fiscal policy in the EU to the implementation of the Green Deal objectives by modification of products and technology taxation in the direction supporting green transition;

· prevention of emissions leakage by introduction of boarder climate carbon tariff - Carbon Border Adjustment Mechanism that shall improve the EU producers competitiveness and market position from year 2026 by charging the imported products with emission costs based on EUA price;

· protection and development of natural GHG sinks in order to made climate neutral the EU land, forestry and agriculture sectors that shall remove 310 million t. CO2 by 2030.

The scope of the package shows the cross-cutting nature of the fight against climate change, which applies to all sectors of the European economy.