Confirm cookie choices
Cookies are pieces of code used to track website usage and give audiences the best possible experience.
Use the buttons to confirm whether you agree with default cookie settings when using

Being Stranded with Fossil Fuel Reserves? Climate Policy Risk and the Pricing of Bank loans

By Manthos D. Delis, Kathrin de Greiff and Steven Ongena

A new EBRD Working Paper (number 231)

Do banks price the risk of stranded fossil fuel reserves? To address this question, we hand collect global data on corporate fossil fuel reserves, match it with syndicated loans, and subsequently compare the loan rate charged to fossil fuel firms — along their climate policy exposure — to non-fossil fuel firms. We find that before 2015 banks did not price climate policy exposure. After 2015, however, our results show an increase in the cost of credit by 16 basis points for a fossil fuel firm with mean proved reserves, implying an increase in the total cost of borrowing for the mean loan by USD 1.5 million. We also provide some evidence that “green banks” charge marginally higher loan rates to fossil fuel firms.

Read paper


GDPR Cookie Status