Will Assets be Stranded or Bailed Out? Expectations of Investors in the Face of Climate Policy

Suphi Sen and Marie-Theres von Schickfus

No 238, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: The goal to keep global warming below 2°C implies that many energy-sector assets are at risk of becoming stranded. This paper investigates whether and how investors price in stranded asset risk due to climate policy. 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 do care about stranded asset risk due to climate policy, but that they also expect a financial compensation policy for their stranded assets. We show that these results are not driven by contemporaneous confounding events.

JEL-codes: G14 Q35 Q38 (search for similar items in EconPapers)
Date: 2017
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 (2)

Downloads: (external link)
https://www.ifo.de/DocDL/wp-2017-238-sen-schickfus-climate-policy.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ifowps:_238

Access Statistics for this paper

More papers in ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().