Quotation Cahen-Fourot, Louison, Campiglio, Emanuele, Antoine, Godin, Eric, Kemp-Benedict, Trsek, Stefan. 2021. Capital stranding cascades: The impact of decarbonisation on productive asset utilisation.


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Abstract

The aim of this article is to assess the exposure of economic systems to the risk of physical capital stranding following a reduction of fossil fuel production and use. We calculate cross-sectoral and cross-country ‘marginal stranding multipliers’ for 43 regions, and study how supply-side capital stranding might propagate via international production networks. We show how the fossil industry has the potential of creating significant stranding cascades affecting downstream sectors and the economic system as a whole. We then focus on cross-country stranding impacts and rank countries according to their external stranding potential and to their exposure to external strandingrisk. Finally, we analyse more in depth the origins and transmission channels of the stranding links affecting the most exposed countries (US, China and Germany). Our results confirm the relevance of including multi-regional production networks and physical capital stranding into the ongoing effort to assess the macro-financial implications of a low-carbon transition.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Capital stranding cascades: The impact of decarbonisation on productive asset utilisation
Year 2021
URL https://epub.wu.ac.at/8007/
JEL C67; E22; L71; O10; Q32

Associations

Projects
Mistra Financial Systems
People
Cahen-Fourot, Louison (Details)
Campiglio, Emanuele (Details)
Trsek, Stefan (Details)
External
Antoine, Godin (French Development Agency, France)
Eric, Kemp-Benedict (Stockholm Environment Institute, United States/USA)
Organization
Institute for Ecological Economics IN (Details)
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