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The aim of this article is to assess the exposure of economic systems to the risk of physical capital stranding following a reduction of fossil fuel production and use. We calculate crosssectoral and cross-country ‘marginal stranding multipliers’ for 43 regions, and study how supply-side capital stranding might propagate via international production networks. We show how the fossil industry has the potential of creating significant stranding cascades affecting downstream sectors and the economic system as a whole. We then focus on crosscountry stranding impacts and rank countries according to their external stranding potential and to their exposure to external stranding risk. Finally, we analyse more in depth the origins and transmission channels of the stranding links affecting the most exposed countries (US, China and Germany). Our results confirm the relevance of including multi-regional production networks and physical capital stranding into the ongoing effort to assess the macro-financial implications of a low-carbon transition.

pdf : 1.19 MB
author(s) :
Louison CAHEN-FOUROT
Emanuele CAMPIGLIO
Eric KEMP-BENEDICT
Stefan TRSEK
coordinator :
collection :
Research Papers
issn :
2492 - 2846
pages :
36
number :
204
available also in : en
1.19 MB (pdf)
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