Stranded assets are “assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities”. … In this context, stranded assets are also defined as an asset that has become obsolete or non-performing, but must be recorded on the balance sheet as a loss of profit.” (Wikipedia)
The lack of urgency in setting new regulations to drive climate action is likely to result in a “forceful, abrupt, and disorderly” policy response from 2025 that will seriously hit the fossil-fuel industry, a new report has warned.
The report urges governments to implement policies that limit new investment in fossil fuel projects to ensure a smooth transition towards sustainability, stable prices and predictable valuations.
However, Carbon Tracker’s latest analysis warns companies that their future investments on oil and gas projects based on ‘business as usual’ government policies are likely to be in danger as tougher policies enter into force.
The study indicates that a swift in climate change policies from 2025 onwards could cause sharp changes in oil pricing, wiping out the value that was assumed beforehand.
Source: Risk of ‘stranded assets’ from 2025, new oil report warns (EU Report)