The economic value of fossil investment will shrink in a manner reminiscent of the rapid collapse of the Eastern European economies after the fall of the Wall in 1989.

 

2% annual GDP on investments


The consequences of a proposed 80-95% CO₂ reduction in 2050 passed by CE Delft in the study “Investment challenges of a transition to a low-carbon economy in Europe. It shows that annual investments in CO₂ reduction required to almost 2% of the GNP of the European Union.  CE Delft outlines four ways to allow these huge investments:

CO₂ price to surge


To interest investors for this huge transition there is already a CO₂ price required of 40 euros per ton (now € 6) and a further increase to EUR 100 per tonne in 2030 and 250 in 2050.  existing investments will decrease in value due to the huge shifts in the demand for goods and services (eg fossil infrastructure, fleet, buildings, machinery and production processes). And it makes investments still expensive technologies such as carbon capture and storage (CCS) profitable. It also means that the CO₂ price must be factored into every product and service.


Carbon tax on products

To ensure fair competition on the European there should be a system of net carbon tax could introduced on products and services, both inside and outside the EU. This draws the competitive differences between companies within and outside the EU ETS. This carbon tax can operate like the current VAT, creating a level playing field for enterprises and service inside and created outside the EU.

 

Source CE Delft