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Stranded fossil-fuel assets translate to major losses for investors in advanced economies

Author

Listed:
  • Gregor Semieniuk

    (University of Massachusetts Amherst
    SOAS University of London
    University of Sussex)

  • Philip B. Holden

    (The Open University)

  • Jean-Francois Mercure

    (University of Exeter
    University of Cambridge
    Cambridge Econometrics)

  • Pablo Salas

    (University of Cambridge
    University of Cambridge Institute for Sustainability Leadership (CISL))

  • Hector Pollitt

    (University of Cambridge
    Cambridge Econometrics)

  • Katharine Jobson

    (SOAS University of London
    London School of Hygiene and Tropical Medicine)

  • Pim Vercoulen

    (Cambridge Econometrics)

  • Unnada Chewpreecha

    (Cambridge Econometrics)

  • Neil R. Edwards

    (The Open University
    University of Cambridge)

  • Jorge E. Viñuales

    (University of Cambridge
    Libera Università Internazionale degli Studi Sociali (LUISS))

Abstract

The distribution of ownership of transition risk associated with stranded fossil-fuel assets remains poorly understood. We calculate that global stranded assets as present value of future lost profits in the upstream oil and gas sector exceed US$1 trillion under plausible changes in expectations about the effects of climate policy. We trace the equity risk ownership from 43,439 oil and gas production assets through a global equity network of 1.8 million companies to their ultimate owners. Most of the market risk falls on private investors, overwhelmingly in OECD countries, including substantial exposure through pension funds and financial markets. The ownership distribution reveals an international net transfer of more than 15% of global stranded asset risk to OECD-based investors. Rich country stakeholders therefore have a major stake in how the transition in oil and gas production is managed, as ongoing supporters of the fossil-fuel economy and potentially exposed owners of stranded assets.

Suggested Citation

  • Gregor Semieniuk & Philip B. Holden & Jean-Francois Mercure & Pablo Salas & Hector Pollitt & Katharine Jobson & Pim Vercoulen & Unnada Chewpreecha & Neil R. Edwards & Jorge E. Viñuales, 2022. "Stranded fossil-fuel assets translate to major losses for investors in advanced economies," Nature Climate Change, Nature, vol. 12(6), pages 532-538, June.
    • Handle: RePEc:nat:natcli:v:12:y:2022:i:6:d:10.1038_s41558-022-01356-y
    DOI: 10.1038/s41558-022-01356-y
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    References listed on IDEAS

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    Cited by:

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    3. Yannic Rehm & Lucas Chancel, 2022. "Measuring the Carbon Content of Wealth Evidence from France and Germany," PSE Working Papers halshs-03828939, HAL.
    4. Yannic Rehm & Lucas Chancel, 2022. "Measuring the Carbon Content of Wealth Evidence from France and Germany," World Inequality Lab Working Papers halshs-03828939, HAL.
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    7. Gourdel, Régis & Sydow, Matthias, 2022. "Non-banks contagion and the uneven mitigation of climate risk," Working Paper Series 2757, European Central Bank.
    8. Hao Dong & Tao Li, 2023. "Climate Economics and Finance: A Literature Review," Climate Economics and Finance, Anser Press, vol. 1(1), pages 29-45, November.
    9. Marinkovic, Catalina & Vogt-Schilb, Adrien, 2023. "Is Energy Planning Consistent with Climate Goals? Assessing Future Emissions from Power Plants in Latin America and the Caribbean," IDB Publications (Working Papers) 13143, Inter-American Development Bank.
    10. Mehling, M. A., 2023. "Supply-Side Crediting to Manage Climate Policy Spillover Effects," Cambridge Working Papers in Economics 2345, Faculty of Economics, University of Cambridge.
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    13. Majid Mirza & Truzaar Dordi & Pedro Alguindigue & Ryan Johnson & Olaf Weber, 2023. "Sustainability in Private Capital Investing: A Systematic Literature Review," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 13(1), pages 119-119, July.
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