Managing stranded costs on the road to net zero

by Tanguy Morin, Emily Wu and Grant Dougans

Until fairly recently, energy companies and their investors could assume that their fossil-fuel assets - such as power plants, refineries, oil wells, and pipelines - would operate for as long as possible, serving steadily rising demand.

No more. The energy transition is bringing broad changes in the amounts and types of energy that homes and businesses use. As energy companies make commitments to reach net-zero in the years ahead, power generation will shift from fossil fuels to more electrification and energy from renewables, some existing energy infrastructure may have to shut down sooner than expected, leaving companies and investors to manage the risks and costs of stranded assets.