Capital Accumulation, Green Paradox, and Stranded Assets: An Endogenous Growth Perspective

Abstract

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The Changing Wealth of Nations 2021: Managing Assets for the Future

“…In another study, Jin and Zhang (2019) show that under some conditions, environmental regulations, by directing investment toward clean capital, do not have to lead to any significant value loss resulting from stranded fossil fuel assets. Van der Ploeg and Rezai ( 2019) conduct another policy-driven simulation using a model of the global oil and gas extractive industry (without a macroeconomic model).…”

Stranded Assets: Environmental Drivers, Societal Challenges, and Supervisory Responses

“…If this high-carbon activity also increases the productivity of all assets, more resources are available for green investment and green capital accumulates. Climate-compatible policies may therefore exist that can drive the required clean investment without stranding high-carbon capital unnecessarily (138). Anticipation of strong near-term climate policy can also mute the green paradox effect by accelerating divestment from firms holding affected assets in the period before the policy is implemented (139).…”

Diversification and Cooperation Strategies in a Decarbonizing World

“…Van der Ploeg and Rezai (2016) applied a macroeconomic model to calculate the value of stranded assets that varies with different policy scenarios. Wei Jin and ZhongXiang Zhang (2018) showed that under some conditions, environmental regulations, through directing investment towards clean capital, do not have to lead to stranding of fossil fuel assets or the Green Paradox.…”