News Release

Potential financial losses from a renewable energy transition are concentrated among the wealthy

Peer-Reviewed Publication

Cell Press

One common rationale against climate action is that the resulting fossil fuel investment losses could impact people’s retirement or long-term savings. However, researchers report in the journal Joule on June 22 that the loss of fossil fuel assets would have a minimal impact on the general populace. In high-income countries, most financial losses would be borne by the most affluent individuals for whom the loss makes up a small percentage of their total wealth. In contrast, the financial loss of lower-income individuals would be minimal and feasible for governments to compensate.

“There’s this big question of who’s winning and who is losing from the transition and from climate change in general,” says co-first author Lucas Chancel (@lucas_chancel), an Economics professor at Sciences Po in Paris. “Even though our results are simple, they were not present in research or public debates before. This work is one step forward in understanding the winners and losers from the point of view of the assets that might be at risk in this transition.”

This project started when Chancel read a paper from Gregor Semieniuk (@GregorSemieniuk), an Economics professor from the University of Massachusetts Amherst, that estimated the total amount of assets that would be lost, or “stranded,” if ambitious climate policies caused fossil fuel production to quickly decline. After Chancel reached out, the two economists joined forces to estimate the wealth distribution of people who own these assets.

Their results found that, in the United States, two-thirds of the financial losses from lost fossil fuel assets would affect the top ten percent of wealth holders, with half of that affecting the top one percent. Because the top one percent tend to have a diverse portfolio of investments, any losses from fossil fuel assets would make up less than one percent of this group’s net wealth. When the researchers repeated this analysis for the United Kingdom and continental European countries, they found similar results.

“Investing in a stranded asset is like buying a rotten apple,” says Chancel. “In this case, the apple is rotten because of climate change. Who owns these rotten apples? We find that the richest 10% of the population owns the vast majority of these assets.”

In contrast, 3.5 percent of financial losses would affect the poorest half of Americans. Asset losses make up a larger proportion of wealth for this group. However, because their overall net wealth (assets minus liabilities) is significantly lower, researchers estimate that these losses could be compensated for $9 billion in Europe and $12 billion in the United States. Chancel and Semieniuk detail three different potential ways governments could raise this amount of money. For example, governments could impose a carbon emissions tax. In addition, they could renegotiate their current liabilities to energy companies and use the amount that they save. A modest tax on the wealthiest individuals could also raise enough money to compensate for these groups’ losses.

“There’s this idea that it’s the general populace that should be opposed to climate policy that creates stranded assets because their pensions are at risk or their retirement savings or just their savings,” says Semieniuk. “It’s not untrue that some wealth is at risk, but in affluent countries, it’s not a reason for government inaction because it would be so cheap for governments to compensate that.”


This work was supported by the U.K. Natural Environment Research Council, United Nations Development Programme, an EU Horizon grant, the Leverhulme Research Centre and the Leverhulme Trust. The authors declare no competing interests.

Joule, Semieniuk et al. “Potential pension fund losses should not deter high-income countries from bold climate action” 

Joule (@Joule_CP), published monthly by Cell Press, is a new home for outstanding and insightful research, analysis, and ideas addressing the need for more sustainable energy. A sister journal to Cell, Joule spans all scales of energy research, from fundamental laboratory research into energy conversion and storage to impactful analysis at the global level. Visit To receive Cell Press media alerts, contact

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