Estimating stranded assets and its integration into carbon emissions scenarios: the case of coal industries in Indonesia
Sonny Mumbunan | Research Center for Climate Change University of Indonesia (RCCC UI)
- Venue: International Workshop on the 2050 Calculator. Hyatt Regency Hotel, Mexico City, Mexico.
- Date, time: 14 March 2016, at 1 p.m.
The presentation shows preliminary progress in estimating stranded assets, ones that are at risk of value decline due to risks related to for instance climate change concerns, and integrating this estimation into carbon emission scenarios in Indonesia. The case is made for coal industries and the emission scenarios are under the 2050 Calculator being developed by the Ministry of Energy and Mineral Resources.
An estimation of stranded assets consists of a set of steps. First, constructing a supply curve that is derived from companies marginal cost curve; second, defining demand curve and price; and, third, calculating stranded assets. The demand definition explored in this exercise employs scenarios based on business-as-usual assumption, International Energy Agency’s demand projection, and carbon risks as perceived by companies in the coal industries. The stranded assets calculation takes account of discounting cash flows/profit of companies in the industry over the policy time frame as stated in Indonesia’s Intended Determined National Contribution (INDC) to reduce its greenhouse gas emissions.
Challenges and issues in estimating stranded assets and its integration into emissions scenarios are also discussed, especially on definition of stranded asset, data availability and discounting.