Subcritical coal in Australia: risks to investors and implications for policymakers

This paper locates 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 the costs, benefits, and mechanisms for phasing out subcritical coal in Australia

Stranded Assets: A Climate Risk Challenge, Executive Summary

Over the last few years, the topic of "stranded assets" resulting from environment-related risk factors has loomed larger. These factors include the effects of physical climate change as well as societal and regulatory responses to climate change. Despite the increasing prominence of these stranded assets as a topic of significant interest to academics, governments, financial institutions, and corporations, there has been little work specifically looking at this issue in Latin America and the Caribbean (LAC). This is a significant omission, given the region's exposure to environment-related risk factors, the presence of extensive fossil fuel resources that may become "unburnable" given carbon budget constraints, and the particular challenges and opportunities facing lower-income and emerging economies in LAC. This report includes an extensive literature review, reviews of case studies, in-depth interviews, extensive informal consultation, and a survey instrument to identify gaps in the stranded asset literature. The report builds on work undertaken in 2015 by the Inter-American Development Bank (IDB) on the issue of stranded assets. It aims to provide a deeper understanding of the issue and the existing literature about it, as well as highlight opportunities for future work, especially in LAC

Spatial finance:practical and theoretical contributions to financial analysis

We introduce and define a new concept, ‘Spatial Finance’, as the integration of geospatial data and analysis into financial theory and practice, and describe how developments in earth observation, particularly as the result of new satellite constellations, combined with new artificial intelligence methods and cloud computing, create a plethora of potential applications for Spatial Finance. We argue that Spatial Finance will become a core future competency for financial analysis, and this will have significant implications for information markets, risk modelling and management, valuation modelling, and the identification of investment opportunities. The paper reviews the characteristics of geospatial data and related technology developments, some current and future applications of Spatial Finance, and its potential impact on financial theory and practice

Empirical calibration of climate policy using corporate solvency: a case study of the UK's carbon price support

Emission reductions improve the chances that dangerous anthropogenic climate change will be averted, but could also cause some firms financial distress. Corporate failures, especially if they are unnecessary, add to the social cost of abatement. Social value can be permanently destroyed by the dissolution of organizational capital, deadweight losses paid to liquidators, and unemployment. This article proposes using measures of corporate solvency as an objective tool for policy makers to calibrate the optimal stringency of climate change policies, so that they can deliver the least loss of corporate solvency for a given level of emission reductions. They could also be used to determine the generosity of any compensation to address losses to corporate solvency. We demonstrate this approach using a case study of the UK’s Carbon Price Support (a carbon tax)

Bank green lending and credit risk: an empirical analysis of China's Green Credit Policy

This study empirically investigates the relationship between banks' green lending and their credit risk, and how Chinese green finance regulations contribute to the solvency of individual banks and the resilience of the financial system. Analysing a sample of 41 Chinese banks from 2007 to 2018, we find that the association between a bank's (relative) green lending as a proportion of its overall loan portfolio, and its credit risk, depends critically on the size and structure of state ownership. While the implementation of China's Green Credit Policy reduces credit risk for the major state-controlled banks, it increases credit risk for the city and regional commercial banks. This performance difference appears largely due to information and expertise asymmetries, with the city and regional commercial banks having less access to information and expertise necessary to evaluate the credit risk of green lending. Understanding this phenomenon can help policymakers tailor green finance policies according to banks' characteristics. It also suggests that mechanisms and platforms for the city/regional commercial banks to learn from the major state-controlled banks could be beneficial

Revealing Robust Oil and Gas Company Macro-Strategies using Deep Multi-Agent Reinforcement Learning

The energy transition potentially poses an existential risk for major international oil companies (IOCs) if they fail to adapt to low-carbon business models. Projections of energy futures, however, are met with diverging assumptions on its scale and pace, causing disagreement among IOC decision-makers and their stakeholders over what the business model of an incumbent fossil fuel company should be. In this work, we used deep multi-agent reinforcement learning to solve an energy systems wargame wherein players simulate IOC decision-making, including hydrocarbon and low-carbon investments decisions, dividend policies, and capital structure measures, through an uncertain energy transition to explore critical and non-linear governance questions, from leveraged transitions to reserve replacements. Adversarial play facilitated by state-of-the-art algorithms revealed decision-making strategies robust to energy transition uncertainty and against multiple IOCs. In all games, robust strategies emerged in the form of low-carbon business models as a result of early transition-oriented movement. IOCs adopting such strategies outperformed business-as-usual and delayed transition strategies regardless of hydrocarbon demand projections. In addition to maximizing value, these strategies benefit greater society by contributing substantial amounts of capital necessary to accelerate the global low-carbon energy transition. Our findings point towards the need for lenders and investors to effectively mobilize transition-oriented finance and engage with IOCs to ensure responsible reallocation of capital towards low-carbon business models that would enable the emergence of fossil fuel incumbents as future low-carbon leaders

SUMO-Targeted Ubiquitin Ligase, Rad60, and Nse2 SUMO Ligase Suppress Spontaneous Top1–Mediated DNA Damage and Genome Instability

Through as yet undefined proteins and pathways, the SUMO-targeted ubiquitin ligase (STUbL) suppresses genomic instability by ubiquitinating SUMO conjugated proteins and driving their proteasomal destruction. Here, we identify a critical function for fission yeast STUbL in suppressing spontaneous and chemically induced topoisomerase I (Top1)–mediated DNA damage. Strikingly, cells with reduced STUbL activity are dependent on tyrosyl–DNA phosphodiesterase 1 (Tdp1). This is notable, as cells lacking Tdp1 are largely aphenotypic in the vegetative cell cycle due to the existence of alternative pathways for the removal of covalent Top1–DNA adducts (Top1cc). We further identify Rad60, a SUMO mimetic and STUbL-interacting protein, and the SUMO E3 ligase Nse2 as critical Top1cc repair factors in cells lacking Tdp1. Detection of Top1ccs using chromatin immunoprecipitation and quantitative PCR shows that they are elevated in cells lacking Tdp1 and STUbL, Rad60, or Nse2 SUMO ligase activity. These unrepaired Top1ccs are shown to cause DNA damage, hyper-recombination, and checkpoint-mediated cell cycle arrest. We further determine that Tdp1 and the nucleotide excision repair endonuclease Rad16-Swi10 initiate the major Top1cc repair pathways of fission yeast. Tdp1-based repair is the predominant activity outside S phase, likely acting on transcription-coupled Top1cc. Epistasis analyses suggest that STUbL, Rad60, and Nse2 facilitate the Rad16-Swi10 pathway, parallel to Tdp1. Collectively, these results reveal a unified role for STUbL, Rad60, and Nse2 in protecting genome stability against spontaneous Top1-mediated DNA damage

Climate Change: Directors at Risk Conference 2017: Opening Remarks and Canada’s Unique Challenges and Responsibilities

Ben Caldecott, Director, Sustainable Finance Programme, Smith School for Enterprise and the Environment, University of Oxford : Climate Risk and Stranded Assets: Implications for Canada

Climate Change: Directors at Risk Conference 2017: Opening Remarks and Canada’s Unique Challenges and Responsibilities

Ben Caldecott, Director, Sustainable Finance Programme, Smith School for Enterprise and the Environment, University of Oxford : Climate Risk and Stranded Assets: Implications for Canada

Australia's most polluting power stations pose risks to economy and environment: research

New research from Oxford University has named Australia\u27s most polluting coal fired power stations and warns of the risks they pose to the economy and the environment. The report\u27s author, Ben Caldecott, has been openly critical of the Australian Government\u27s record on climate change and says the country should be leading by example. Australia has 22 coal-fired power stations, which account for around a quarter of the nation\u27s carbon emissions. David Taylor spoke with Ben Caldecot