Stranded assets cascade threatens financial stability in transition to low-carbon economy.
Moving towards a low-carbon economy will require industries to change their production processes, which may leave some assets stranded. This could have a ripple effect on other sectors, causing financial assets to lose value. By analyzing French economic data, researchers found that the extractive sector is at the core of this network. Transitioning away from fossil fuels could lead to a cascade of stranded assets throughout the system. To understand the financial impact, a balance sheet approach is needed for analysis and modeling.