GDP at Transition Risk

Dirk Schoenmaker and Willem Schramade

No 21586, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Sustainability transitions expose economies to transition risk, but the share of GDP at risk remains unclear, limiting policymakers’ and financiers’ ability to mitigate stranded assets risk. We develop a two-stage model to quantify GDP exposure to transition risk, combining sectoral carbon intensity with transition preparedness. Applying this to the EU energy transition, we find GDP at risk from transitions ranges from 8% (Sweden) to 43% (Poland), driven by carbon-intensive sectors like manufacturing and power generation. These results are driven less by differences in legacy exposures than by transition efforts. Our model bridges macroeconomic and sectoral transition risks. And it provides both policymakers and institutional investors with a simple toolbox to assess transition risks.

Date: 2026-06
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