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Fueling the energy transition with fossil (not quite) stranded assets

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Listed:
  • Aude Pommeret

    (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc, USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Francesco Ricci

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, UM - Université de Montpellier)

Abstract

The energy transition is associated with many problems, not least the high requirement for raw materials to build the infrastructure needed to supply electricity from renewable sources. In addition, climate policies push out some fossil fuel power generation capacity, generating stranded assets. However, these decommissioned structures constitute a stock of scrap, from which raw materials can be recovered and recycled to build the new infrastructure for renewable energy. In this paper, we investigate whether such a recycling process could, first, contain the rise in the price of virgin minerals and second, ease the stranded assets phenomenon. To do so, we use a stylized dynamic model, featuring the brown capital decommissioning rate as a control variable: it reduces the brown stock available for energy production but also increases the scrap that offers recycling potential. We study the effect of such recycling on decommissioning and extraction strategies. We also show that the ability to recycle reduces the cost of getting rid of fossil fuels, thus bringing forward their phase-out.

Suggested Citation

  • Aude Pommeret & Francesco Ricci, 2026. "Fueling the energy transition with fossil (not quite) stranded assets," Sciences Po Economics Publications (main) hal-05487472, HAL.
    • Handle: RePEc:hal:spmain:hal-05487472
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