Stranded Asset Impairment Estimates of Thermal Power Companies Under Low-Carbon Transition Scenarios

Chao Wang (), Chuyan Shan and Lidong Wang
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Chao Wang: School of Finance, Nanjing Agricultural University, Nanjing 210095, China
Chuyan Shan: School of Finance, Nanjing Agricultural University, Nanjing 210095, China
Lidong Wang: School of Finance, Nanjing Agricultural University, Nanjing 210095, China

Sustainability, 2024, vol. 16, issue 21, 1-14

Abstract: The aspiration to reach the net zero carbon target has initiated new ideas for the sustainable development of the world economy. However, it has also accelerated the formation of stranded assets in high-carbon-emitting companies. Taking a Chinese thermal power company as an example, this paper proposes a model to estimate the degree of impairment loss for thermal power companies by integrating the net present value model with forward-looking carbon emission pathways under different policy intervention scenarios. The results show that under the low-carbon transition scenario with different policy interventions, the percentage of impairment loss of thermal power companies reaches up to 64.09%. Furthermore, impairment losses formed by stranded assets in the thermal power sector impose a severe shock on the national economy, as most of the impairment losses will ultimately be borne by the state treasury. Compared with conventional thermal power generation, new-energy power generation has a weak performance in delaying company bankruptcy caused by stranded assets. Therefore, in the process of a low-carbon transition, governmental departments should focus on the impairment loss of thermal power companies caused by stranded assets and should further integrate “green support” and “brown punishment” policies to effectively promote the low-carbon transition of thermal power companies.

Keywords: low-carbon transition; thermal power generation; stranded assets; impairment loss (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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