Stranded Assets and Thermal Coal in Japan: An Analysis of Environment-Related Risk Exposure

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: Suggested Citation

Caldecott, Ben and Dericks, Gerard and Tulloch, Daniel James 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 or http://dx.doi.org/10.2139/ssrn.2779580