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Climate policy and stranded carbon assets: a financial perspective

Abstract:

Unanticipated climate policy curbs the value of physical capital that is costly to adjust. We illustrate this by showing that climate policy to keep peak global warming below 2°C depresses the share prices of oil and gas majors and their market capitalisation, curbs exploration investment and oil and gas discoveries, boosts proven reserves left abandoned in the crust of the earth, cuts exploitation investment, and induces an earlier onset of the carbon-free era. For a given carbon budget...

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Publication status:
Published

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Publisher:
University of Oxford
Series:
OxCarre Papers
Publication date:
2018-03-01
Paper number:
206

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