Avoiding "Carbon Lock-in" is a Critical Part of Our Climate Fight

A new analysis by the Stockholm Institute, highlighted today in the journal Nature underscores that decisions about fossil fuel infrastructure affect our ability to win the fight against climate disruption. The study shows that when we see costly, major fossil fuel development sunk into the ground, it can dramatically alter a company's business decisions, irrationally perpetuating production of -- and our reliance on -- dirty energy sources. This, in turn, could undermine the impact of carbon emissions reduction policies and potentially delay the transition to clean energy.

If we are serious about avoiding the worst impacts of climate change, and realistic about the urgency and the steep climb we face, neither of these outcomes is acceptable. Here's how Carbon Lock-in works: Fossil fuel companies--especially oil companies--need to invest large amounts of resources up front to get production up and running. But once they sink those initial costs and begin operations, their marginal costs drop. This allows companies to absorb larger fluctuations in market prices--including potential carbon pricing. Stated another way, once companies overcome the initial hurdle of opening a new area to drilling or mining, it's going to be far more difficult to shut it down than it would have to avoid the production altogether. So, there's a point where we have "locked in" carbon emissions and fossil fuel dependence that we could otherwise have averted.

Importantly, the authors also illustrate that while this phenomenon is consistent across fossil fuels, it is particularly acute for certain types of production--particularly offshore drilling.

This comes as the Obama administration faces imminent decisions on how to manage our nation's publicly-owned offshore resources, and as the world's attention is focused on the urgent need to go "all-in" on the fight against global warming. These findings reinforce that the decisions made now are not just about defining the world we live in--they will shape the world our children inherit.

If we want to bestow the next generation a livable planet, we need to stop letting fossil fuel companies dictate that future, based on their vested interest in continuing status quo fossil fuel dependence. Instead, we must accelerate the transition to a clean energy economy by investing in renewables and energy efficiency, while saying "no" to expanded fossil fuel exploration that digs us deeper into the carbon hole.