Association Webinars: Stranded Asset Risk and Political Uncertainty



The energy industry plays a crucial role in mitigating climate change. However, transitioning from a carbon-intensive to a net-zero economy cannot be solely the responsibility of the industry. It requires sound policies and adequate financial support to be successful. The industry faces uncertainty in climate policies, which poses one of the biggest threats as sudden changes can lead to stranded investments. This uncertainty also increases the cost of financing new green technologies and makes the transition less economically attractive. Moreover, the risk of stranded assets can spill over to the financial sector, endangering the economy's financial stability. The cost and benefits of the energy transition will be borne by society as a whole, and unfortunately, the cost may be realized by the most vulnerable groups sooner. While the transition will eventually benefit mankind, the necessary costs threaten the way of life for many people today. Policymakers must make sound decisions for climate and energy policy, considering the complex relationship between the dimensions of the transition.

The aim of this webinar is to provide an overview of the energy transition's dimensions and its consequences. We will discuss the topic from an energy economic, societal, policy, and financial perspective, with a focus on how these levels interact with each other. The panelists will provide opening statements on their research, followed by a panel discussion on stakeholder actions to avoid an unorderly transition that may result in economic and societal costs. We will conclude the webinar with a Q&A session.

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Aya Kachi is an Associate Professor for International Political Economy and Energy Policy at the University of Basel (Switzerland). She has over 10 years of experience analyzing policy processes in the energy and climate domains. To better assist policymaking on these highly politicized issues, part of her work inspects how people form policy preferences, focusing on the role of various policy-induced costs perceived by the public. Another part of her work looks at the macro-level policy landscape, analyzing why countries experience different policymaking processes and generate different policies in energy and climate domains. Here, the role of the state-market relationship and lobbying are the primary focus. Her work is based on quantitative analyses with large-N data, including observational, survey, and text data. Between 2017-2021, she led the Energy Governance work package of the SCCER-CREST, a nationwide network of interdisciplinary energy researchers in Switzerland. Until March 2023, she headed a multi-year research project on the political economy of coal policy, “COALSTAKE,” funded by the Swiss Network for International Studies.

Irene Monasterolo is Professor of Climate Finance at EDHEC Business School and Research director “Finance impact on climate mitigation and adaptation” program at EDHEC Risk Climate Impact Institute in Nice (FR). In 2017 Irene published the climate stress test of the financial system that introduced the first framework to translate climate scenarios into adjustment in financial valuation and systemic risk. It includes the Climate Policy Relevant Sectors, a science-based classification of activities’ exposure to transition risk applied by several financial supervisors including the European Central Bank (ECB). Irene’s research has also investigated under which conditions green finance policies can foster the low-carbon transition using the EIRIN model, which has been applied by the World Bank to assess compound risks, and by the ECB to assess the double materiality of climate risks. Irene’s research has been published in top journals including Science and Nature Climate Change. Irene has collaborated with leading financial institutions, including the World Bank, the Monetary Authority of Singapore, the ECB, and the European Insurance and Occupational and Pension Authority on climate financial risk disclosure and risk assessment.

Prof. Dr. Pao-Yu Oei is full professor for "Economics of Sustainable Energy Transition" at Europa Universität Flensburg (EUF), directing the study program "Industrial Engineering: Energy and Environmental Management", and head of the 30-member research group "FossilExit" at EUF, TU Berlin and DIW Berlin. He is spokesman for the Interdisciplinary Institute for Environmental, Social and Human Sciences and a member of the Center for Sustainable Energy Systems (ZNES). Part of his work is reflected in his co-ordination of the independent research hub CoalTransitions, representing more than 60 researchers from 25 research institutions based on 5 continents, examining the transition from fossil fuels towards renewable energy sources. He is head of the `Transnational Centre for Just Transitions in Energy, Climate and Sustainability (TRAJECTS)´, which is a DAAD climate centre targeting North-South-South cooperation with Colombia and South-Africa, to enhance knowledge exchange, capacity building and research on/with(in) the Global South. His research and expertise stretches from modeling techno-economic challenges to integrate 100% renewable energy in the electricity, heat and transport sectors, to other more socio-political challenges of the associated structural changes and the political economy of a fossil fuel phase-out including gender aspects (see ongoing supervised research projects).

Thomas Walther is an tenured Assistant Professor of Finance with the Utrecht School of Economics, Utrecht University. Formerly, he was Assistant Professor for Energy Finance (Non-Tenure Track) at the Institute for Operations Research and Computational Finance, School of Finance, University of St. Gallen. He is also Research Fellow for Finance at the Faculty of Business and Economics, Technische Universität Dresden from which he received a B.Sc. (2010) and M.Sc. (2013) in Industrial Engineering and Management and a PhD (2017) in Business & Economics. He has been a visiting researcher at International University HCMC, School of Business (2016) and John von Neumann Institute, HCMC (2017). His research focuses on commodity/energy/climate finance and financial econometrics with applications to risk management. His articles are published in refereed journals such as Energy Economics, Energy Journal, International Journal of Forecasting, Journal of Economic Surveys, and Journal of Forecasting. Since 2019, Thomas is Associate Editor for the journal Finance Research Letters.

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Event Date: June 7, 2023

Event Time: 10:00 - 11:00 AM Eastern Time

Topic: Stranded Asset Risk and Political Uncertainty

Speakers: Aya Kachi, Pao-Yu Oei, Irene Monasterolo, and Thomas Walther

Price: FREE

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