Stranded Assets and Thermal Coal in Japan: An Analysis of Environment-Related Risk Exposure
Stranded Assets Programme, SSEE, University of Oxford, 2016
107 Pages Posted: 13 May 2016
Date Written: May 12, 2016
Deploying a ‘bottom up’ asset-level methodology, we analysed the exposure of all of Japan’s current and planned coal-fired power stations to environment-related risk. Planned coal capacity greatly exceeds that required for replacement - by 191%. This may result in overcapacity and combined with competition from other forms of generation capacity with lower marginal costs (e.g. nuclear and renewables), lead to significant asset stranding of coal generation assets. Stranded coal assets in Japan would affect utility returns for investors; impair the ability of utilities to service outstanding debt obligations; and create stranded assets that have to be absorbed by taxpayers and ratepayers.
Keywords: Stranded Assets, Thermal Coal, Risk Exposure, Utilities, Nuclear, Japan, Renewables
JEL Classification: L94, Q13, Q2, Q3, Q4, Q43, N75
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