Are Stranded Assets an Unexploded Bomb?

Many assets will be uneconomic in a low carbon world, but sectors as diverse as commercial property and tobacco may be seriously unprepared for the financial impact

Cherry Reynard 19 October, 2021 | 10:27AM
Facebook Twitter LinkedIn

man in a boat stranded on a rock

Around two-thirds of the world’s GDP is now under a net zero target, with COP26 potentially ushering in even more ambitious carbon goals. To achieve existing goals, finds a recent study from University College London, 90% of coal reserves must stay in the ground, along with nearly 60% of oil and gas reserves.

This will once again raise investor disquiet over “stranded assets” for oil and gas companies. For the International Energy Agency, these are “investments which have already been made but which, at some time prior to the end of their economic life, are no longer able to earn an economic return”.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Cherry Reynard

Cherry Reynard  is a financial journalist writing for Morningstar.co.uk.