CH AP TER 10: LO W-C AR B ON TR ANSITION AND INTER NATIONAL C OOPER ATION
into lower fuel prices for consumers than in unilateral action scenarios, and hence slower penetration of electric vehicles in transport and prolonged external oil demand for FFDC producers. Oil importers, including Organisation for Economic Co-operation and Development (OECD) countries, China, and India, maintain the dominant share in the global vehicle fleet toward 2050. In contrast, natural gas has a higher global value in the noncooperative scenarios. Gas owners seem to benefit from asymmetric climate policies, in which gas exporters in FFDCs free ride on the increased level of climate policy ambition by CPLs and attract emission-intensive industries, even paying the price of BCAT. Coal value suffers similar large losses in all scenarios.
Risk Distribution across Regions The countries that are the most generously endowed with fossil fuel wealth also face the highest value of fossil fuel assets exposed to transition risk. Three country groups—MNA, ECA, and the middle-income fuel importers (mainly China and India)—account not only for 83 percent of the global fossil fuel wealth in the NDC scenario but also for 77–80 percent of the global loss of fossil fuel wealth in the climate policy scenarios (figure 10.9). MNA loses the highest dollar value of stranded oil assets but the smallest percentage of its total fossil fuel wealth (figure 10.10).
Fossil fuel asset value (2018 US$, trillions)
FIGURE 10.9 Value of Subsoil Fossil Fuel Assets, by Scenario and Region, 2018–50 20 18 16 14 12 10 8 6 4 2 0 FF MNA
FF ECA
FF SSA NDC
FF LAC COOP
FF SEA UNILAT
COALEX
CPL-HI
CPL-MI
UNI-BCAT
Source: World Bank staff simulations with ENVISAGE. Note: COALEX = coal exporters; COOP = cooperative carbon tax implemented by all countries, including CPLs and fossil fuel–dependent countries; CPL = climate policy leader; ECA = Europe and Central Asia; FF = fossil fuel(–dependent countries); HI = high-income fossil fuel importers; LAC = Latin America and the Caribbean; MI = low- and middle-income fossil fuel importers; MNA = Middle East and North Africa; NDC = nationally determined contribution; SEA = Southeast Asia; SSA = Sub-Saharan Africa; UNI-BCAT = unilateral carbon taxes applied by CPLs with border carbon adjustment taxes; UNILAT = unilateral carbon taxes applied by CPLs without border carbon adjustment taxes.
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