Turkey’s lack of a strategy for carbon-intensive sectors in emission mitigation carries the risk of a sudden and costly exit that would spread across the economy. Planning for a gradual exit allows these risks to be managed.

Stranded assets arise when existing economic assets lose their potential to generate intra-sectoral added value in a way that negatively impacts other sectors. Decarbonization of many different production processes, including the electricity sector, is a clear necessity if GHG emissions are to be reduced in line with global climate targets. The process of decarbonization, on the other hand, involves the decommissioning or complete abandonment of some physical capital, to a certain extent damaging the sector that uses this capital. This flow is likely to be transferred to other sectors, affecting the economy as a whole. This study examines the risks of stranded capital assets that the sectors of the Turkish economy will be exposed to during the transition to low-carbon production patterns. To this end, we use the information contained in Input-Output tables together with capital stock data to measure the effects triggered by stranded assets. Our calculations show that the mining and quarrying sector has the highest external asset depreciation multiplier in the periods analyzed. The sectors most affected by capital depreciation arising from decarbonization are manufacturing, electricity, gas, steam and air conditioning, water, sewerage and waste management activities, construction and construction works, wholesale and retail trade, repair of motor vehicles and motorcycles, and transportation and storage.

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