European power companies face €114 billion ‘debt trap’ if they delay climate action

September 11, 2021

Delayed action on climate increases the amount of cashflows that needs to be reinvested to sustain the company from lost cashflows associated with stranded assets.Lost cashflows from stranded assets is estimated at €114 billion if power companies stop using fossil fuel power plants by 2040.Power companies are especially sensitive to credit ratings, the authors argue.This study quantifies the issue and offers a framework for investor and policy engagement.”Understanding the impact of stranded fossil fuel assets is particularly urgent for power companies operating within the European Union.In less ambitious European countries, rising carbon prices and cheaper renewables will accelerate the closure of fossil fuel power plants.

The source of this news is from University of Oxford