Run stress testing for provided asset type. — run_lrisk • r2dii.climate.stress.test

This function runs the transition risk stress test. It can be desirable to understand sensitivities of the scenarios, in which case the user may pass a vector of values to one (and only one) of the detail arguments. This will result in running the analysis multiple times in a row with the argument varied. NOTE: if return_results is TRUE results will not be written to output path but instead are returned.

run_lrisk(
  input_path,
  output_path,
  baseline_scenario = "WEO2021_STEPS",
  shock_scenario = "WEO2021_SDS",
  lgd = 0.45,
  risk_free_rate = 0.02,
  discount_rate = 0.07,
  growth_rate = 0.03,
  div_netprofit_prop_coef = 1,
  shock_year = 2030,
  scenario_geography = "Global",
  start_year = 2022,
  settlement_factor = 1,
  exp_share_damages_paid = 0.027,
  scc = 40L,
  return_results = FALSE
)

Arguments

input_path: String holding path to project agnostic data.
output_path: String holding path to which output files are written. NOTE: Results and logs per run are saved to a subdirectory of output_path that will be generated automatically. The name of the subdirectory is the timestamp of the run of the analysis.
baseline_scenario: Holds the name of the baseline scenario to be used in the stress test.
shock_scenario: Holds the name of the shock scenario to be used in the stress test.
lgd: Numeric, holding the loss given default, for accepted value range check stress_test_arguments.
risk_free_rate: Numeric that indicates the risk free rate of interest. For accepted range compare stress_test_arguments.
discount_rate: Numeric, that holds the discount rate of dividends per year in the DCF. For accepted range compare stress_test_arguments.
growth_rate: Numeric, that holds the terminal growth rate of profits beyond the final year in the DCF. For accepted range compare stress_test_arguments.
div_netprofit_prop_coef: Numeric. A coefficient that determines how strongly the future dividends propagate to the company value. For accepted range compare stress_test_arguments.
shock_year: Numeric, holding year the shock is applied. For accepted range compare stress_test_arguments.
scenario_geography: Character vector, indicating which geographical region(s) (concerning asset location) results shall be calculated for. For accepted values compare stress_test_arguments.
start_year: Numeric, first year in the analysis used as the starting point from which production forecasts are compared against scenario targets. Must be available in the production data and indicates the first year of the scenario data.
settlement_factor: Catch all factor (ratio) that can be used to adjust the expected payout of the settlement due to further data gaps. Set to 1 by default.
exp_share_damages_paid: Numeric. Ratio that defines the expected share of the calculated social cost of carbon that is considered in the liability. This can follow historical precedents such as the Tobacco Master Settlement that had a an expected share of 2.7% of the damages paid.
scc: Numeric. Social cost of carbon per excess ton of CO2 emitted. This is the price for each surplus ton of CO2 that goes into the calculation of the carbon liability of a company.
return_results: Boolean, indicating if results shall be exported.