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Cost of Stranded Fossil Fuel Assets Will Exceed US$1 Trillion

Academics have this week published a paper in Nature Climate Change, a peer-reviewed scientific journal, outlining the potential costs and extent of transition risk investors in developed economies are exposed to by holding fossil fuel assets. Lost profits from global stranded fossil fuel assets will exceed US$1 trillion “under plausible changes in expectations about the effects of climate policy”, the paper said. This was calculated by tracing the equity risk ownership of 43,439 oil and gas production assets through a global equity network of 1.8 million companies to their ultimate owners, the researchers explained. Most of this risk falls on private investors in OECD countries, including “substantial exposure” through pension funds and financial markets. “Rich country stakeholders therefore have a major stake in how the transition in oil and gas production is managed, as ongoing supporters of the fossil fuel economy and potentially exposed owners of stranded assets,” the paper added.

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