Stranded asset risk in coal intensive South Africa

As renewable energy prices continue to fall below conventional electricity prices, the future demand for fossil fuels is dwindling. Investors around the world are limiting investments in that industry. Experts have estimated that fossil fuel assets worth between 1 and 4 trillion dollars may be stranded, depending on the stringency of the global climate action. South Africa, a coal intensive economy, is particularly at risk in the context of this impending global transition. This risk arises not just because of its coal export revenues but also because of its continued investments in domestic fossil fuel capacities. With the domestic imperative to shift to a low carbon economy, existing assets worth 31.2 billion dollars are at risk of being stranded. Studies estimate that planned future investments will put further assets worth 25 billion dollars at risk. Countries can avoid such risks through long term climate planning.

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Macroeconomic impact of stranded fossil fuel assets

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