Climate Policy, Stranded Assets, and Investors' Expectations

Suphi Sen and Marie-Theres von Schickfus

No 7945, CESifo Working Paper Series from CESifo

Abstract: Climate policies to keep global warming below 2℃ might render some of the world’s fossil fuels and related infrastructure worthless prior to the end of their economic life time. Therefore, some energy-sector assets are at risk of becoming stranded. This paper investigates whether and how investors price in this risk of asset stranding. We exploit the gradual development of a German climate policy proposal aimed at reducing electricity production from coal and analyze its effect on the valuation of energy utilities. We find that investors take stranded asset risk into consideration, but that they also expect a financial compensation for their stranded assets.

Keywords: stranded assets; climate policy; expectations; utilities; event study (search for similar items in EconPapers)
JEL-codes: G14 Q35 Q38 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Climate policy, stranded assets, and investors’ expectations (2020)
Working Paper: Climate policy, stranded assets, and investors expectations (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7945

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