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Summary of Proceedings: 5th Stranded Assets Forum at Waddesdon Manor, 15th April 2016
Summary of Proceedings: 5th Stranded Assets Forum at Waddesdon Manor, 15th April 2016

13 October 2016 | Authors: Lucas Kruitwagen, Elizabeth Harnett, Ben Caldecott | Conference Proceedings

The University of Oxford's Smith School of Enterprise and the Environment and The Rothschild Foundation held the fifth Stranded Assets Forum at Waddesdon Manor, Buckinghamshire, on the 15th April 2016. The Forum examined ultra high-net-worth individuals (UHNWIs), the advice they receive on sustainable investment topics, and how they could shape demand for and the practice of sustainable investment. This report provides a summary of the proceedings and deliberations from the Forum. It outlines the key discussion points and issues that emerged during the sessions held.


Stranded Assets in Palm Oil Production: A case study of Indonesia
Stranded Assets in Palm Oil Production: A case study of Indonesia

8 July 2016 | Authors: Alexandra Morel, Rachel Friedman, Daniel Tulloch, Ben Caldecott | Working Paper

We identify and assess the environment-related risks facing financial, human, natural, physical, and social assets along the Indonesia palm oil value chain. This working paper also assesses the extent to which these risks are currently being addressed and reviews current ESG initiatives related to the Indonesian palm oil value chain and whether these are a suitable response. Finally, we look at the companies involved in the Indonesian oil palm oil value chain and examine the extent to which they are addressing these issues.


Stranded Assets and Thermal Coal in Japan: An analysis of environment-related risk exposure
Stranded Assets and Thermal Coal in Japan: An analysis of environment-related risk exposure

12 May 2016 | Authors: Ben Caldecott, Gerard Dericks, Daniel Tulloch, Lucas Kruitwagen, Irem Kok | Working Paper

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.

Download full report in Japanese here


Summary of Proceedings: 4th Stranded Assets Forum at Waddesdon Manor, 23rd October 2015
Summary of Proceedings: 4th Stranded Assets Forum at Waddesdon Manor, 23rd October 2015

8 March 2016 | Authors: Lucas Kruitwagen, Duncan MacDonald-Korth, Ben Caldecott | Conference Proceedings

The University of Oxford's Smith School of Enterprise and the Environment and The Rothschild Foundation held the fourth Stranded Assets Forum at Waddesdon Manor, Buckinghamshire, on the 23rd October 2015. The Forum explored how environment-related risks, such as climate change, intersect with developments in prudential regulation and financial conduct. This report provides a summary of the proceedings and deliberations from the Forum. It outlines the key discussion points and issues that emerged during the sessions held.


Stranded Assets and Thermal Coal: An analysis of environment-related risk exposure
Stranded Assets and Thermal Coal: An analysis of environment-related risk exposure

27 January 2016 | Authors: Ben Caldecott, Lucas Kruitwagen, Gerard Dericks, Daniel Tulloch, Irem Kok, James Mitchell | Report

The top 100 coal-fired utilities, top 20 thermal coal miners, and top 30 coal-to-liquids companies have been comprehensively assessed for their exposure to environment-related risks, including: water stress, air pollution concerns, climate change policy, carbon capture and storage retrofitability, future heat stress, remediation liabilities, and competition from renewables and gas. The research is designed to help investors, civil society, and company management to analyse the environmental performance of coal companies and will inform specific investor actions related to risk management, screening, voting, engagement, and disinvestment. The research also has clear implications for current disclosure processes, including the new Task Force on Climate-related Financial Disclosures.


A Framework for Protected Area Asset Management
A Framework for Protected Area Asset Management

17 December 2015 | Authors: Paul Jepson, Ben Caldecott, Harriet Milligan, Dexiang Chen | Report

Protected areas (PAs) are a large and growing asset class with unique legal and social characteristics. This report sets out a new asset framework for PAs, that involves new typologies for assets, investments, value creation, value capture, and risk management. This new framework could help PAs to generate more value, attract new investment, and better manage the risks that could strand PA assets. The new asset framework also represents a heuristic tool that can help underpin the case for new investment in PAs. In the report, we apply the framework to case studies in Brazil and Tanzania, conduct a systematic meta-analysis of the literature on PA value creation, undertake a preliminary assessment of the state of investments into PAs, and review current and emerging risks facing PAs.


Making Climate Policy More Like Monetary Policy: Calibrating Climate Policy Through Corporate Solvency
Making Climate Policy More Like Monetary Policy: Calibrating Climate Policy Through Corporate Solvency

17 November 2015 | Authors: Ben Caldecott, Gerard Dericks | Working Paper

We propose that corporate solvency metrics be used as an objective tool for policymakers to calibrate the optimal magnitude of climate policies, and thereby achieve greater emissions abatement at lower social cost. In particular, solvency metrics could calibrate the optimal severity of climate policies and/or the generosity of industrial compensation. Policymakers currently monitor and regulate certain aspects of corporate solvency for financial firms (such as capital reserve requirements) in order to reduce the risk of bankruptcy while simultaneously maintaining profitability. In a similar vein, policymakers could do likewise with respect to climate change policies which target carbon-intensive firms.


Investment Consultants and Green Investment: Risking Stranded Advice?
Investment Consultants and Green Investment: Risking Stranded Advice?

25 August 2015 | Authors: Ben Caldecott, Dane Rook | Working Paper

Investment consultants are key ‘gatekeepers’ for asset owners, such as pension funds, and are instrumental in determining whether products and services are accepted or not by the financial community. Empirical research conducted as part of this study suggests that inadequate investment consultant-asset owner relationships are hindering the development of green investment. This study investigates this problem and examines its potential causes. We make recommendations to remedy these issues, set out new criteria to assess the capabilities of investment consultants with respect to green investment, and outline a new algorithmic tool to empower asset owners.


Cognitive biases and Stranded Assets Working Paper
Cognitive Biases and Stranded Assets: Detecting Psychological Vulnerabilities within International Oil Companies

16 July 2015 | Authors: Dane Rook, Ben Caldecott | Working Paper

The trend for a larger volume of capex to be spread across a smaller number of projects increases the risk of psychological error - they become more likely as projects become larger, more complicated, and of lengthier duration. To help shareholders and companies guard against cognitive biases, we assessed and ranked the Boards of the six major international oil companies to see how susceptible they are to groupthink and salience, which can exacerbate psychological errors. We also set out diagnostic tools that can be used for this purpose.


SAP March Forum Proceedings
Summary of Proceedings: 3rd Stranded Assets Forum at Waddesdon Manor, 6th March 2015

20 April 2015 | Authors: Ben Caldecott, Dane Rook | Conference Proceedings

The University of Oxford's Smith School of Enterprise and the Environment and The Rothschild Foundation held the third Stranded Assets Forum at Waddesdon Manor, Buckinghamshire, on the 6th March 2015. The Forum explored whether the investment consultant industry is up to the job on environmental, climate, and sustainability topics and examined ways to address potential barriers. This report provides a summary of the proceedings and deliberations from the Forum. It outlines the key discussion points and issues that emerged during the sessions held.


Subcritical Coal in Australia
Subcritical Coal in Australia: Risks to Investors and Implications for Policymakers

27 March 2015 | Authors: Ben Caldecott, Gerard Dericks, James Mitchell | Working Paper

We have located subcritical coal-fired power stations in Australia and identified the ones most at risk of stranding due to their carbon intensity and local environmental impacts. The research shows which companies own these assets in Australia and ranks companies by exposure. In addition, we examine the implications of subcritical coal for Australian policymakers, in particular we look at the costs, benefits, and mechanisms for phasing out subcritical coal in Australia.


Stranded Assets and Subcritical Coal
Stranded Assets and Subcritical Coal: The Risk to Companies and Investors

13 March 2015 | Authors: Ben Caldecott, Gerard Dericks, James Mitchell | Report

We have located subcritical coal-fired power stations globally and identified the ones most at risk of stranding due to their carbon intensity and deleterious effects on local air pollution and water stress. The research shows which companies own these assets and ranks companies by exposure. Furthermore, we examine how environment-related risks facing subcritical coal assets might develop in the future.


Evaluating Capex Risk
Evaluating Capex Risk: New Metrics to Assess Extractive Industry Project Portfolios

10 February 2015 | Authors: Dane Rook, Ben Caldecott | Working Paper

This paper sets out new metrics to assess whether natural resource company capex is responsibly diversified. There is growing criticism of existing metrics for assessing the prospects of oil majors, such as Reserve-Replacement Ratios, and we have sought to address this directly by introducing two novel, and straightforward, metrics – capex density and capex evenness. The paper also includes a starter manual for how to use these new metrics and is accompanied by a capex balance calculator, which can be downloaded here.


Stranded Carbon Assets and NETS
Stranded Carbon Assets and Negative Emissions Technologies

3 February 2015 | Authors: Ben Caldecott, Guy Lomax, Mark Workman | Working Paper

Negative Emissions Technologies (NETs) have the potential to remove carbon dioxide from the atmosphere and this could reduce the impacts of ocean acidification and anthropogenic climate change. To see whether carbon budgets can be extended by NETs and if so, for how long, we quantify the ‘extra space’ that they could create and then examine the potential implications for carbon-intensive sectors.


Protected Area asset Management
Towards a Framework for Protected Area Asset Management

21 November 2014 | Authors: Ben Caldecott, Paul Jepson | Discussion Paper

Protected areas (PAs) are a large and growing asset class with unique legal and social characteristics. This discussion paper provides an update on the development of a new asset framework for PAs, that involves new typologies for investment, situated assets, forms of value, value capture, and risk. This new framework could help PAs to generate more value, attract new investment, and better manage risks that could strand PA assets.


SAP Forum Summary of Proceedings
Summary of Proceedings: 2nd Stranded Assets Forum at Waddesdon Manor, 4th September 2014

10 October 2014 | Authors: Ben Caldecott, Dane Rook, Julian Ashwin | Conference Proceedings

The University of Oxford's Smith School of Enterprise and the Environment and The Rothschild Foundation held the second Stranded Assets Forum at Waddesdon Manor, Buckinghamshire, on the 4th September 2014. The topic was fossil fuel divestment and endowments. This report provides a summary of the proceedings and deliberations from the Forum. It outlines the key discussion points and issues that emerged during the sessions held.


SAP Greening China Paper Cover
China's Financial Markets: The Risks and Opportunities of Stranded Assets

1 September 2014 | Authors: Ben Caldecott, Nick Robins | Briefing Paper

This Briefing Paper was produced to help inform an International Institute for Sustainable Development (IISD) and UNEP Inquiry collaboration with policymakers in China, particularly those from the Development Research Center of the State Council (DRC) and People's Bank of China (PBoC). The paper examines the risks and opportunities associated with stranded assets, provides five international case studies, and identifies how these issues might be relevant to Chinese policy makers.

Download Chinese Translation here


SAP UNEP Working Paper Cover
Financial Dynamics of the Environment: Risks, Impacts, and Barriers to Resilience

14 July 2014 | Authors: Ben Caldecott, Jeremy McDaniels | Working Paper for UNEP Inquiry into the Design of a Sustainable Financial System

This Working Paper does three things: first, summarises the underlying logic for why the financial sector should care about the environment and environment-related risks; second, reviews the barriers preventing the financial system from managing such issues; and third, identifies the researchers and organisations working on these topics. This is a reference guide for those concerned with both how environment-related risks could affect the financial sector and what financial institutions can do to manage such risks.


Summary Report
Summary of Proceedings from the 1st Stranded Assets Forum at Waddesdon Manor, 14-15 March 2014

25 April 2014 | Authors: Ben Caldecott, Jeremy McDaniels, Gerard Dericks | Conference Proceedings

The University of Oxford's Smith School of Enterprise and the Environment and The Rothschild Foundation held the first Stranded Assets Forum at Waddesdon Manor, Buckinghamshire, on the 14th and 15th March 2014. This report provides a summary of the proceedings and deliberations from the Forum. It outlines the key discussion points and issues that emerged during the sessions held.


Stranded Assets and Scenarios

28 January 2014 | Authors: Ben Caldecott, James Tilbury, Christian Carey | Discussion Paper

Scenarios can help investors, firms and policy makers increase the resilience of assets by making them better prepared for inherently hard to predict events. In this high-level discussion paper we review existing scenarios to determine trends and gaps in the literature and propose a general type of scenario that would be most useful for the management of stranded asset risks.


Stranded Generation Assets: Implications for European Capacity Mechanisms, Energy Markets and Climate Policy

17 January 2014 | Authors: Ben Caldecott, Jeremy McDaniels | Working Paper

An increasing number of major EU utilities have decided to mothball or prematurely close recently built, high-efficiency combined-cycle gas turbine (CCGT) power plants. This working paper examines how EU utilities are reacting, how these stranded assets are affecting firm value and strategy, and what implications may exist for energy market design, low-carbon energy and climate policy.


Stranded Down Under? Environment-related Factors Changing China's Demand for Coal and What this Means for Australian Coal Assets

16 December 2013 | Authors: Ben Caldecott, James Tilbury, Yuge Ma | Report

China's demand for coal is changing as a result of environment-related factors, including environmental regulation, developments in cleaner technologies, local pollution, improving energy efficiency, changing resource landscapes and political activism. We look at how this evolving demand picture could then translate into impacts on the coal price and then on the stranded asset risks faced by coal and coal-related assets in Australia - a country that is a large and growing coal exporter to China.


Stranded Assets and the Fossil Fuel Divestment Campaign: What Does Divestment Mean for the Valuation of Fossil Fuel Assets?

8 October 2013 | Authors: Atif Ansar, Ben Caldecott, James Tilbury | Report

The fossil fuel divestment campaign has rapidly gained traction throughout university campuses and elsewhere since its launch. As part of our research we test whether the divestment campaign could affect fossil fuel assets and if so, how, to what extent, and over which time horizons. We also look at the similarities and differences between this campaign and others, such as tobacco and apartheid.


Stranded Assets in Agriculture: Protecting Value from Environment-related Risks

9 August 2013 | Authors: Ben Caldecott, Nicholas Howarth, Patrick McSharry | Report

This report maps out environment-related risks in the agricultural supply chain and shows how they might create stranded assets over time. We have systematised the different risk factors and have completed an assessment of where and how risks might affect agricultural assets. We have also completed a high-level Value at Risk (VaR) assessment to give an indication of the magnitudes of capital exposed and to stimulate further work in this area.