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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  

Ben Caldecott

University of Oxford - Smith School of Enterprise and the Environment

Gerard Dericks

University of Oxford - Smith School of Enterprise and the Environment

Daniel J. Tulloch

University of Oxford - Smith School of Enterprise and the Environment

Lucas Kruitwagen

University of Oxford - Smith School of Enterprise and the Environment

Irem Kok

University of Oxford, Students

Date Written: May 12, 2016

Abstract

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

Suggested Citation

Caldecott, Ben and Dericks, Gerard and Tulloch, Daniel J. and Kruitwagen, Lucas and Kok, Irem, Stranded Assets and Thermal Coal in Japan: An Analysis of Environment-Related Risk Exposure (May 12, 2016). Stranded Assets Programme, SSEE, University of Oxford, 2016. Available at SSRN: https://ssrn.com/abstract=2779580

Ben Caldecott (Contact Author)

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Gerard Dericks

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Daniel Tulloch

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom
1865614934 (Phone)

Lucas Kruitwagen

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Irem Kok

University of Oxford, Students ( email )

Oxford
United Kingdom

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