When we think of solving climate change issues, we often focus on the emissions currently being produced. A carbon inventory or GHG emissions report can only detail the previous year(s)’ emissions. However, a significant portion of future emissions, however, is also already “locked-in” due to existing infrastructure, policies, and commitments. Understanding these locked-in emissions is critical if we are to effectively combat climate change. But what exactly are locked-in emissions, and why should we be concerned about them?
What Are Locked-In Emissions?
The concept of locked-in emissions is tied to one of the fundamental paradoxes of climate mitigation: Very simply: we know the problem, we have the solution, we do not use the solution. There is consensus that climate change is a growing issue. There are also technologies that can lower the carbon intensity of economic activities in a cost-effective manner. Yet these technologies often languish in research labs or fizzle out after small scale pilot projects. So, why aren’t these technologies widely used now? One of the reasons is locked-in emissions.
Locked-in emissions (or carbon lock-in) refer to the future greenhouse gas (GHG) emissions that will be released due to decisions already made, especially through long-term investments in infrastructure such as power plants, factories, buildings, and transportation systems. Once these infrastructures are built, they tend to operate for decades, meaning they will continue emitting GHGs unless significant changes are made to how they function.
For instance, a new coal-fired power plant built today might operate for 40–50 years. During its operational life, it will continuously emit carbon dioxide, regardless of future climate policies unless it’s decommissioned early or retrofitted with carbon capture technologies. The emissions from such projects are considered “locked-in” because they are tied to infrastructure that’s already in place or under construction.
When investigating the challenge that locked in emissions pose to climate mitigation efforts, it is important to distinguish between the three different types of lock-in. Institutional lock-in is driven by national and local regulations or policies which promote the continuation of emitting activities. Infrastructural/technological lock-in is closer to that described above in which the life-span of emitting infrastructure or technological system ensures a certain level of emissions from their continued development and use. Finally, behavioral lock-in is the emissions generated through cultural or individual behaviors. These three types interact and connect. For example, several decades of automobile-friendly policies mean that the local infrastructure and personal habits have adapted and become dependent on cars. This implies that any solution entailing a switch to another form of transportation will need to be multi-dimensional, addressing institutional policy, infrastructure and technology, and behavioral practices. Without such a broad solution approach, any individual action is likely to fail.
The link between locked-in emissions and carbon budget
Locked-in emissions are not a new issue. The term already appeared in research papers over 20 years ago to describe the lag between policy creation and actual use of greener technologies, a sustainability application of a phenomenon long experienced . However, the problem of locked-in emissions takes a new perspective when we consider our remaining “carbon budget”. The carbon budget is the remaining CO2 humanity can emit to keep human-induced warming below 1.5C.
Check out the likelihood of staying under 1.5 ℃ and our current remaining carbon budget to achieve this objective!
According to ClimateChangeTracker.org , if we keep our current emission rate, our carbon budget will expire within the next 12 years. In this situation, locked-in emissions are a dangerous obstacle that must be removed as early as possible. This is especially challenging for emerging economies which still invest and rely heavily on fossil fuels with few resources to propel a clean energy shift.
Locked-in Emissions in the context of ESRS reporting
To comply to the EU CSRD, companies operating in Europe and meeting certain criteria are required to report according to the European Sustainability Reporting Standard (ESRS). This includes mandatory transition plan disclosure, including a “qualitative assessment of the potential locked-in GHG emissions from the undertaking’s key assets and products”. This assessment must explain if and how such emissions may jeopardize the achievement of the company’s emission reduction targets, as well as how the company plans to manage such high-emitting assets (if applicable). A decarbonization transition plan or roadmap that does not consider the effect of locked-in emissions is incomplete.
How many companies are disclosing their locked-in emissions?
Unfortunately, such information is hard to find at the moment. Once the first ESRS-compliant reports in line with the EU CSRD framework are published next year in 2025, we will be able to benchmark companies against one another not just on previous emissions reports, but also on their set future emissions. According to a study (French only) by Autorite des Marches Financiers, France’s securities commission, only one of the companies surveyed mentioned locked-in emissions in their current reports. Some companies stated that they were purposefully excluding them from their reporting due to uncertainty about calculating methods, a lack of common frameworks or guidelines to evaluate carbon lock-in in a neutral way.
Is your investment at risk of a carbon lock-in?
The UK government provides a guide for local and national decision makers to check if policies risk creating carbon lock-ins. Based on this guide, here are the six points companies should evaluate when considering a new investment:
- High Initial Investment: Does the investment require high capital costs with relatively low ongoing operational costs? (ex: a new coal-fired power plant that requires significant capital for construction but has low operational costs, discouraging from pursuing cleaner technologies)
- Lack of Alternative Uses: Are there limited alternative applications for the assets created by this investment? (ex: natural gas or oil pipelines that are designed to carry fossil fuels)
- Costly Retrofitting: Would converting or retrofitting this investment be prohibitively expensive? (ex: farm machinery that relies on diesel fuel and would require significant investment to transition to electric or biofuel alternatives)
- Vulnerability to Regulations: Is this sector particularly susceptible to international climate regulations ? (ex: sectors where investments are made may be vulnerable to international climate regulations and border adjustments (ex: production facilities for single-use plastics are likely to be subject to production regulations, potentially leading to excessive production before regulations take effect in order to recover investments)
- Vested Interests: Does this investment create strong vested interests that could resist change? (ex: a supply chain heavily reliant on fossil fuels)
- Job Concentration Risks: Will the investment generate a large number of similar jobs in a few locations, potentially leading to widespread unemployment if the market shifts? (ex: opening a new factory in a remote area)
Conclusion
Locked-in emissions represent a critical challenge in the fight against climate change, as they are deeply dependent on policies, infrastructure and personal behavior. While current reporting on locked-in emissions is limited, new regulations like the EU CSRD are pushing for greater transparency. Importantly, the focus on locked-in emissions is expanding beyond Europe. Companies in Japan and around the world may soon face similar imperatives to calculate and disclose these emissions. For organizations looking to proactively address this issue, the ACT (Assessing low-Carbon Transition) methodology serves as a valuable tool, providing integrated locked-in emission assessment and transition planning.
As we move forward, understanding and mitigating locked-in emissions will be crucial for both environmental sustainability and business resilience. Companies that take early action to address their locked-in emissions will be better positioned for the low-carbon future that lies ahead.
Useful Links
- ACT Assessment: low-carbon transition plan stress test
- ACT Step-by-Step: low-carbon transition plan design
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