Stranded fossil-fuel assets translate to major losses for investors in advanced economies

Semieniuk, Gregor; Holden, Philip B.; Mercure, Jean-Francois; Salas, Pablo; Pollitt, Hector; Jobson, Katharine; Vercoulen, Pim; Chewpreecha, Unnada; Edwards, Neil R.; Viñuales, Jorge E.

Abstract

The distribution of ownership of transition risk associated with stranded fossil-fuel assets remains poorly understood. We calculate that global stranded assets as present value of future lost profits in the upstream oil and gas sector exceed US$1 trillion under plausible changes in expectations about the effects of climate policy. We trace the equity risk ownership from 43,439 oil and gas production assets through a global equity network of 1.8 million companies to their ultimate owners. Most of the market risk falls on private investors, overwhelmingly in OECD countries, including substantial exposure through pension funds and financial markets. The ownership distribution reveals an international net transfer of more than 15% of global stranded asset risk to OECD-based investors. 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.

Citation

Semieniuk, G., Holden, P. B., Mercure, J.-F., Salas, P., Pollitt, H., Jobson, K., Vercoulen, P., Chewpreecha, U., Edwards, N. R., & Viñuales, J. E. (in press). Stranded fossil-fuel assets translate to major losses for investors in advanced economies. Nature Climate Change, 12(6), 532-538. https://doi.org/10.1038/s41558-022-01356-y

• Journal Article Type: Article
• Acceptance Date: Mar 30, 2022
• Online Publication Date: May 26, 2022
• Deposit Date: May 30, 2022
• Publicly Available Date: May 30, 2022
• Journal: Nature Climate Change
• Print ISSN: 1758-678X
• Electronic ISSN: 1758-6798
• Publisher: Nature Research
• Peer Reviewed: Peer Reviewed
• Volume: 12
• Issue: 6
• Pages: 532-538
• DOI: https://doi.org/10.1038/s41558-022-01356-y
• Publisher URL: https://www.nature.com/articles/s41558-022-01356-y
• Related Public URLs: https://zenodo.org/record/6347122#.YpN7Wi-l1sM
• Additional Information: Data Access Statement : Data from Rystad (on energy supply assets) and ORBIS (on company owernship) were accessed under license and cannot be shared. Data are available, however, on reasonable request and with permission from Rystad and ORBIS, respectively, from the authors. Data underlying figures are available at ref. 45. An implementation from 2018 of the E3ME-FTT-GENIE scenarios will be available with the IPCC’s 6th Assessment Report database. Source data are provided with this paper.