This article summarises “Ownership of power plants stranded by climate mitigation” by Robert Fofrich Navarro, Lauren Liebermann, Frances C. Moore, Christine Shearer and Steven J. Davis. The full article is published on Nature Sustainability.
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A new paper in Nature Sustainability*puts numbers on a long-discussed reality: keeping global warming near 2°C (and certainly 1.5°C) means a large share of today’s fossil-fuel power plants must close early or be retrofitted.
That gap between an asset’s expected life and its climate-compatible life is what financiers call “stranding” - investments that can no longer earn a viable return because policy and technology changed the rules.
The headline number: $770 billion - held by just 25 owners
Looking at the 100 companies with the most stranded assets by value, the authors find the biggest exposures sit with state-owned giants. The top 25 companies alone hold more than $770 billion in stranded assets under a 1.5°C pathway - and more than $224 billion under 2.0°C.
In other words: the financial pain of “doing climate policy” in the power sector is not evenly distributed across thousands of utilities. It piles up in a relatively small group of owners with the most to lose - and the most incentive to slow, shape, or seek compensation for decarbonisation.
A global bill measured in trillions
The study models carbon prices aligned with warming targets and asks what that does to operating costs and operating income for 16,438 fossil-fired generators worldwide.
Under a 1.5°C-consistent scenario, total “added costs” to operators rise to around $18.9 trillion (median estimate), with coal responsible for about 75% of that burden.
Utilities don’t simply swallow those costs. The authors assume companies can pass 90% of carbon costs through to electricity consumers - but even then, the portion that remains becomes stranded assets on corporate books. Under that pass-through assumption, stranded assets total about $1.9 trillion in a 1.5°C scenario (and about $0.5 trillion under 2°C).
And the estimate is highly sensitive to how much companies can pass on: under the 1.5°C case, stranded assets range from roughly $0.9 trillion to $2.8 trillion when pass-through varies from 95% to 85%.
Where the exposure sits: coal, China - and a handful of owners
The geography is as concentrated as the ownership.
More than half of the added costs fall on China, with meaningful shares in India (9.6%), the US (7.3%), and Indonesia (2.0%).
At the company level, the concentration is extreme: 10 companies account for 24% of total added costs, and the next 90 account for another 33.7%.
Among coal owners, the study highlights China’s five largest power producers - Huaneng, Datang, Huadian, State Power Investment, and China Energy Investment - alongside India’s NTPC, South Korea’s Korea Electric Power, Indonesia’s Perusahaan Listrik Negara, and India’s Adani group holdings.
A key reason the exposure is so large in China and India is simple and uncomfortable: many plants are still young. The paper notes coal fleets there have capacity-averaged ages of under 15 years, meaning there is still plenty of “expected lifetime” left to strand.
Why this matters? Tocco's Read
Long story short: If climate policy gets serious (via carbon prices aligned with 1.5°C–2.6°C pathways), a lot of today’s fossil power plants become less profitable - and the paper shows which owners take the biggest hit, because the risk is heavily concentrated in a small set of companies.
- The global exposure is huge (and sensitive to assumptions): With a 90% pass-through assumption, they find stranded assets total US$1.9T (1.5°C), US$0.5T (2.0°C), US$0.4T (2.2°C), US$0.16T (2.6°C).
- They show that China is projected to lose ~US$1T and just ten companies could collectively lose ~US$0.5T under a 1.5°C scenario (again, under their pass-through assumption).
- They also quantify concentration directly: 10 companies bear 24.0% of added costs; the next 90 bear 33.7%; the remainder is split across 4,851 companies.
- They say stranded assets rise most for companies whose fleets have an average operational life under 20 years, “most of which are owned and operated by China’s big five energy-generating companies.”
- They explicitly call out that costs to state-owned generators become a public policy problem and may be redistributed across the population. They also explicitly note that potential losses can create incentives to “resist more stringent climate policy.”
If you remember only one thing
This paper is basically a risk map: if carbon pricing consistent with climate targets is implemented, the lost-profit hit is big - and it lands disproportionately on a small set of owners (notably large coal-heavy owners, especially in China).
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