Stranded Assets and Renewables

Industry Reports
Typography

 

A working paper based on global REmap analysis

Assets like power plants can become “stranded” by unanticipated or premature write-downs, devaluation or conversion to liabilities. This will happen to some degree in the transition to a low-carbon economy. However delaying action to address climate change would result in significantly more severe asset stranding, according to this analysis by the International Renewable Energy Agency (IRENA). This raises concerns for investors and companies, as well as policy makers and regulators.

This paper examines the potential magnitude of asset stranding in the global energy sector due to a shift to renewables and energy efficiency that would be needed to fulfil the Paris Agreement. Governments, companies and financial institutions all face risk, with consequences along the whole investment chain in both mature and developing capital markets.

Early action on carbon-dioxide mitigation, however, would ultimately reduce asset stranding in upstream energy, power generation, and the industry and buildings sectors. In contrast, the value of energy assets stranded would be twice as high with delayed policy action, IRENA’s analysis shows. Developing countries, in particular, can reduce asset stranding – along with broader economic damage – by taking action sooner on energy decarbonisation.

Clearly, polluting assets should be stranded before they irreversibly alter the climate. Stranding such assets sooner, meanwhile, will cost countries less. The paper outlines high-level action areas for policy makers to consider.

This analysis of asset stranding is rooted in a broader decarbonisation study. To learn more, see Perspectives on the Energy Transition.

The paper also forms parts of IRENA’s global renewable energy roadmap analysis. For more information please visit www.irena.org/remap.

Advertisement

SolarQuarter Tweets

Follow Us For Latest Tweets

SolarQuarter ExcellentReads How Battery Storage Could Revolutionise Renewable Energy By Matt Langham Director, Aon UK https://t.co/nn7Ym7RP5R
Less than a minute ago
SolarQuarter ExcellentReads Energy Storage Can Improve the Delivery of Smart Energy Solutions in Smart Cities https://t.co/bpof1cZjoF
About 19 hours ago
SolarQuarter SolarQuarter IndustryPerspective “What Are The Major Trends We Will See In Solar Sector In 2018?” https://t.co/4EQv4AfzHU
About 20 hours ago

Advertisement

Translator

Advertisement

Upcoming Events