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Difference in total stranded assets faced by parent owners headquartered in a region and total stranded assets from power plants located in the same region a Difference in stranded assets between parent owner headquarter and plant location differentiating between fossil fuels. b Difference in stranded assets between parent owner headquarter and plant location aggregated over fossil fuels. Region abbreviations on the horizontal axis are as described in Fig. 1.
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Thoroughly assessing the owners and distribution of stranded assets in a 2 °C scenario is essential to anticipate climate policy resistance. We employ novel data to analyze owners and incidence of asset stranding in the power sector globally. We show that Asia-Pacific, Europe, and the US are highly exposed to stranded assets, especially coal plants...
Citations
... However, staying within the carbon budgets necessary for avoiding extreme climate change will involve the stranding of substantial amounts of fossil assets (Davis et al., 2010;McGlade and Ekins, 2015;Pfeiffer et al., 2016Pfeiffer et al., , 2018Tong et al., 2019;Lu et al., 2022;Rekker et al., 2023). Moreover, the heterogeneous exposures to renewable and fossil assets (Baer et al., 2022) and the high levels of ownership concentration (Semieniuk et al., 2022;von Dulong, 2023) will likely result in diverse transition impacts across different regions. ...
Despite dramatic growth and cost improvements in renewables, existing energy companies exhibit significant inertia in adapting to the evolving technological landscape. This study examines technology transition patterns by analyzing over 140,000 investments in power assets over more than two decades, focusing on how firms expand existing technology holdings and adopt new technologies. Building on our comprehensive micro-level dataset, we provide a number of quantitative metrics on global investment dynamism and the evolution of technology portfolios. We find that only about 10\% of firms experience capacity changes in a given year, and that technology portfolios of firms are highly concentrated and persistent in time. We also identify a small subset of frequently investing firms that tend to be large and are key drivers of global technology-specific capacity expansion. Technology transitions within companies are extremely rare. Less than 3% of the more than 8,400 fossil fuel-dominated firms have substantially transformed their portfolios to a renewable focus and firms fully transitioning to renewables are, up-to-date, virtually non-existent. Notably, firms divesting into renewables do not exhibit very characteristic technology-transition patterns but rather follow idiosyncratic transition pathways. Our results quantify the complex technology diffusion dynamics and the diverse corporate responses to a changing technology landscape, highlighting the challenge of designing general policies aimed at fostering technological transitions at the level of firms.
... Research on stranded assets has largely focussed on fossil fuel infrastructure, where stranded assets could reach US$1 trillion, with most losses occurring in OECD countries [10][11][12] . The scale of these potentially stranded assets often leads vested interests to resist climate policy and energy transitions 13 . ...
A large-scale food system transformation is essential in mitigating a host of environmental crises, including climate change. Dietary shifts, particularly a reduction in animal-sourced foods (ASFs) in high-income countries, are a key pillar. These shifts risk stranding substantial ASF-related assets. ASF-focussed assets represent 78% of EU27+UK fixed agricultural assets, with €158 billion linked to livestock and €100 billion to feed production. We estimate that reductions in ASFs of 9.5%, 60%, and 100% in dietary transitions could strand 18%, 50%, and 77% of these assets, respectively. We find that there is generally sufficient time to depreciate and phase-out assets, offering a pathway for limiting stranded assets. Investors should account for potential stranding risks in financial modelling, alongside climate-related risks. Given food producers’ high exposure to the risks of asset stranding – with potential cascading effects throughout the supply chain – integrated policy support is essential in ensuring a just, effective transition.
... find that it will be the fossil fuel producers with the highest production cost that will become uncompetitive and suffer most from stranded assets. von Dulong (2023) estimates that listed owners of fossil fuel assets, mostly located in Europe, the US, and China, may face stranded assets of up to 80 percent of their equity. We complement this literature by describing the regional distribution of the lenders exposed to stranded assets. ...
... In addition to encouraging more theory building on the green paradox, therefore, our study's findings suggest that if important policy-making communities are to develop effective transition strategies, they, too, must pay greater attention to the demand side of fossil fuel consumption. An important topic for future research is whether the effect of stranded fossil fuel assets on plants' emissions is strengthening over time 33 . The volume of emissions from the effect could dwindle as the fossil fuel sector shrinks. ...
Will power plants emit less or more CO2 in anticipation of stronger climate policies that would strand fossil fuel reserves? Here, using a worldwide data source on individual power plants’ CO2 emissions and the value of countries’ at-risk fossil fuel assets, we show that between 2009 and 2018, plants emitted more CO2 in countries where more assets would be devalued under a 1.5 °C scenario, which we theorize is due to these countries’ regulatory leniency and plants’ vested interest in long-term fossil fuel contracts. Although the extra amount of carbon emitted each year trigged by imperiled assets is relatively small, it would exhaust a sizable portion of the electricity sector’s remaining carbon budget when added up over time. This is especially true in the U.S. and Russia where up to 16% and 12% of their budgets, respectively, could be spent within ten years due solely to the stranded asset effect.
... Resulting from emissions regulations, aging and inefficient coal infrastructure, and alternative fuel price competition, 126.4 gigawatts from more than 300 coal-fired power plants were retired in the past two decades [5]. This introduces risks of stranded assets and job loss endured by utility companies and communities with high stakes in status-quo coal: more than 49 000 jobs were lost in the U.S. coal industry between 2008 and 2012; this exposure to energy sector investment loss may trigger resistance towards climate policies [6,7]. To that end, retrofitting existing coal facilities and converting them to use natural gas as fuel can be cost-effective by reusing existing systems and infrastructure and utilizing site permits, grid connection, and local personnel, thereby curtailing risks associated with energy transition. ...
Thermoelectric power plants account for approximately 40% of total U.S. water withdrawals each year. In 2022, 48.5 trillion gallons of water were withdrawn for cooling systems in electricity production, of which 962.9 billion gallons of water were consumed and no longer available for downstream use. Conventional steam coal plants, in particular, withdrew 18.3 trillion gallons of water for once-through and recirculating cooling systems in 2022 while contributing to 19.7% of total U.S. net electricity generation. As coal-fueled electricity production becomes less competitive, cases of coal-to-gas retrofits occur to avoid stranded assets. Two retrofitting methods are adopted in practice: coal-fired power plants are repurposed and replaced by natural gas combined-cycle plants, or the boiler of a coal plant is converted to burn natural gas. In this study, we construct panel data and employ an event study framework to examine changes in water withdrawal, water consumption, water discharge, and carbon emissions resulting from coal-to-gas retrofits in the continental United States from 2013 to 2022. Seventeen coal-fired power plants have been replaced with natural gas combined-cycle plants, and 167 coal steam units in 85 plants have undergone coal-to-gas boiler conversions. We find a sharp and sustained reduction in water withdrawal of 40.2–53.9 thousand gallons per megawatt-hour of net electricity produced when a coal plant transitioned to a natural gas combined-cycle plant. Water discharge was also reduced by 30.7 thousand gallons, and carbon emissions decreased by 0.59 short tons per megawatt-hour. Yet, boiler conversion did not lead to statistically significant changes in per megawatt-hour water withdrawal, water consumption, water discharge, or carbon emissions. Spatial assessment further informs resource planning of projected water-stressed regions, as 204.6 gigawatts of coal-fired power plants remain operable in the United States in 2022. Fuel transition should adopt a nexus approach and account for the interdependence between water resources and electricity production to realize sustainable development commitments.
... Prior research has underscored the significant social justice issues that arise from coal phaseout [3][4][5] . These issues encompass complex challenges, including the livelihoods of workers in the industry 6,7 , the management of stranded assets 8,9 , and the transformation of economic structures 10 . These challenges are particularly pronounced in coal-dependent developing countries such as China, India, and Indonesia. ...
The transition away from coal involves the widespread closure of coal mines. While the potential adverse consequences of these closures on industry and the local economy have received considerable attention, empirical evidence on the benefits of water resources remains limited. Here, we quantify the effect of coal mine closure on terrestrial water storage (TWS) in China using satellite data and a staggered difference-in-differences approach. Our findings indicate a rapid restoration in TWS following closure, with coal mine closures increasing TWS by an average of 18.8 ± 8.9 mm per year. This increase in TWS is primarily attributable to augmented groundwater storage and reduced industrial water usage. Furthermore, our analysis suggests that these TWS gains exceed the indirect impacts of climate change mitigation efforts on water resources, potentially complementing such strategies in water-stressed regions. Overall, our study underscores the positive environmental impact of coal mine closures on water availability in China, potentially facilitating the transition away from coal production and enhancing the sustainability of the energy transition.
... Binsted Similar studies have also been conducted elsewhere such as those from Iyer et al. 21 , Ou et al. 22 , Auger et al. 13 , Lu et al. 23 , von Dulong et al. 24 , Afrane et al. 25 among many others. While the existing studies on decarbonization and stranded assets in the electric power sector offer valuable contributions, the relationship between CDR technologies and asset stranding in the electricity sector requires similar attention. ...
Decarbonization and carbon dioxide removal (CDR) are crucial for achieving global climate targets. The power sector is pivotal in this process, yet the role of CDR in deep decarbonization and its implications on the sector have been underexplored. Using a global multi-sector model, we quantify the effects of CDR on the transformation of the power sector under different CDR reliance levels by 2050 — high (4–10 Gt/yr), moderate (2.5-5 Gt/yr), and low (≤ 1Gt/yr)—aligned with 1.5°C and 2°C climate targets. We show that BECCS is essential for future electricity demands, particularly in Asia and Central America. High CDR pathways could require 10–20% of electricity consumption in South America and Australia/New Zealand for carbon removal. Major economies like China, the US, and India face significant investment needs, risking stranded assets worth up to US$165–225 billion by mid-century under low CDR compared to high CDR. Regions heavily dependent on coal, such as China and India, face greater stranding costs, while gas-dependent regions like the Middle East and Russia have relatively lower costs. Global mitigation efforts with limited CDR require a 15% reduction in committed emissions compared to high-CDR scenarios, with the most pronounced reduction of 65% anticipated for India.
... al. (2022), McGlade and Ekins (2015), Welsby et. al. (2021), Von Dulong (2023), and France: 2022 ...
