Stranded asset

Companies extracting fossil fuels (fossil oil, coal) face the threat that, due to their contribution towards global warming, consumers could switch to emissionless alternative fuels instead (i.e. hydrogen, biofuels, ...). In addition, some oil companies have stated that the changing energy landscape coupled with the economic toll of the COVID-19 pandemic means that the global crude demand will never again surpass 2019's average. BP is already attempting to move from being an international oil company into becoming an integrated energy company that will focus on low-carbon technologies while also setting a target to reduce its overall oil and gas production by 40% by 2030.[8]

If consumers indeed completely switch to emissionless fuels for powering their vehicles, then this would reduce profitability of their fossil fuel extracting installations (as less large amounts of their fossil fuels are sold). To reduce or eliminate this threat, several possibilities exist:

Some installations, such as oil platforms for instance can be repurposed to pump CO2 into rocks below the seabed.

Natural gas still still has a place in the hydrogen economy, assuming however if it is converted to hydrogen for use in fossil fuel power plants and if the carbon that is separated off during this process is captured and stored (see Natural gas-fired power station conversion to hydrogen).

Companies owning coal-fired fossil-fuel power stations may choose to convert their fossil power plant to run on less polluting fuels (biofuels, ...) or change it to a grid-based energy storage system. Carbon capture and storage systems also exist for these types of power plants.

Coal is generally retrieved from coal mines. Mines (lower shafts) also often contain water and geothermal heat. These products may or may not be extractable and sellable. [9][10] In addition, old mine shafts in mines can be repurposed for grid energy storage.[11]

Some cities have low emission zones in place, which put limits on the allowed exhaust gas emissions. Not all combustion engine vehicles may reach these emission limits and vehicle owners may decide to convert their vehicle to run on a different fuel because of it (which is emissionless). Possibilities include conversion of their existing vehicle to electric propulsion (see electric vehicle conversion), conversion of their existing vehicle to hydrogen (see hydrogen internal combustion engine vehicle), ethanol, biobutanol, biodiesel, bioether, ... (see alternative fuel vehicle). Availability of biofuel fuel stations differ per region, but for hydrogen for instance, hydrogen stations exist that can generate hydrogen in-situ and are suitable for home use, and many countries are also working on converting their natural gas pipeline system (see hydrogen economy).

In agriculture and forestry, the risk of the stranding of assets is significant.[12][13]

Assets are at risk of becoming stranded due to technological advances in agriculture, changes in environmental regulations and policies and natural disasters (i.e. flooding, storms, drought, ...). Crops may be damaged or destroyed by flooding of fields, hailstorms and drought. Livestock may suffer or die due to lack of water or vegetation (grass in meadows). Also, due to climate change, weather variability has increased (see effects of climate change) and natural disasters occur more frequently, increasing the risk further.[14]

The Coller FAIRR Protein Producer Index has been created which has compiled a list of protein producing companies, giving some insight into the likeliness of some agricultural companies of being stranded. It has ranked many companies in the meat, fish and dairy sector as performing poorly.[15] [16]

The keeping of livestock typically requires a lot of space (see food vs. feed, land use) and isn't isn't very efficient (see agricultural productivity, food vs. feed, feed conversion ratio).[17][18] There is currently a move towards agricultural systems that don't take up much space (i.e. vertical farms) and are ideally also located near the consumer, to minimize issues in logistics (see local food, Farm-to-table, urban farming, vertical farm).

Meadows (required for cattle to graze on) also aren't effective carbon sinks compared to forests[19] (which are projected to increase, see below). The livestock itself also generates huge carbon emissions (see environmental impact of meat production).

In the Netherlands, a transition to a circular agriculture system is underway, which will close the fodder-manure cycle, reuse waste streams, and reduce the use of artificial fertilizers. It also provides the opportunity to agricultural entrepreneurs to sign an agreement with the Staatsbosbeheer ("State forest management") to have it use the lands they lease for natuurinclusieve landbouw ("nature-inclusive management"). This hence allows to help address the space issue (meadows taking up space for forest-based carbon sinks/biosequestration zones). Silvopasture is another solution in this regard.

In some countries, such as Ireland and the Netherlands, there is a discussion ongoing on shrinking the amount of livestock kept in the country (by in some cases, up to 50%).[20][21]

Other options are also being explored to reduce the impact of livestock on the environment such as genetic selection[22][23] introduction of methanotrophic bacteria into the rumen,[24][25] diet modification and grazing management.[26][27][28]

Some farmers have started to adopting move towards less meat production (smaller herds), but which is higher in quality (taste) and thus also in price (i.e. by feeding their livestock exclusively or predominantly with grass, ...). See organic farming and ecolabel for details on this mechanism. By using only or predominantly grass, emissions are also typically somewhat lower and taste can be improved.[29][30]

Regardless of this, some reports still speak of a large decline of livestock at least some animals (e.g. cattle) in certain countries by 2030.[17][18] The book The End of Animal Farming argues that all animal husbandry will end by 2100.[31]

Milk substitutes, clean meat, meat analogues and single cell protein could then help to address the void created by such a decline of some livestock species. Also, non-ruminant livestock (e.g. poultry) generates far fewer emissions then ruminant livestock.(see environmental impact of meat production)[32]

First-generation biofuels are fuels made from food crops grown on arable land. There has already been a freeze on first-generation biofuels. Also some oils which are used as first-generation biofuels (such as palm oil) are criticized for their impact on the natural environment,[33][34] including deforestation, loss of natural habitats,[35] and greenhouse gas emissions[36][37] which have threatened critically endangered species, such as the orangutan[38] and Sumatran tiger.[39]

Regarding forestry, there is currently much interest into reforestation due to the biosequestration potential. The Trillion Tree Campaign aims to replant 1 trillion trees and repair damaged ecosystems. The protecting of areas is also seen as a mechanism that can help boost the carbon sequestration capacity.[40][41][42] The European Union, through the EU Biodiversity Strategy for 2030 targets to protect 30% of the sea territory and 30% of the land territory by 2030. Also, Campaign for Nature's 30x30 for Nature Petition tries to let governments agree to the same goal during the Convention on Biodiversity COP15 Summit.[43] has the same target. The One Earth Climate Model advises a protection of 50% of our lands and oceans. It also stresses the importance of rewilding,[44] like other reports.[45][46] The reason being that predators keep the population of herbivores in check (which reduce the biomass of vegetation), and also impact their feeding behaviour.[45]

Technology change may cause other stranded assets. For example, moving to mobility as a service (shared cars) may mean that much car manufacturing capacity, and associated insurance capacity, becomes stranded.[47]