Assets suffering unanticipated write-downs or conversion to liabilities due to the low-carbon transition, notably in fossil fuels.
A stranded asset is an asset that suffers premature depreciation, value loss or transformation into a liability as a result of the transition to a low-carbon economy. The concept typically targets hydrocarbon reserves unexploitable under a constrained carbon budget, thermal plants rendered unprofitable by carbon pricing, or infrastructure incompatible with new standards. For the insurer and institutional investor, stranding risk is a central component of transition risk: it threatens both the value of investments and the solvency of exposed insureds. The timing of stranding is uncertain and depends on regulatory, technological or market shocks that can occur abruptly. It is precisely this discontinuity, rather than gradual degradation, that makes the risk hard to reserve for and feeds climate stress test exercises.
An oil company whose reserves become partly unexploitable under a 1.5 degree scenario sees those reserves reclassified as stranded assets, with a direct effect on its valuation.
stranded assets, actifs bloqués, actifs dépréciés climat