Trillions in Assets May Be Left Stranded as Companies Address Climate Change
Write-downs of power plants, auto factories and fossil-fuel reserves could cause big losses in transition to renewable energy.
At the end of 2019, GM announced a $1bn investment to produce a new generation of pickup trucks. A year later, GM said it would go all-electric by 2035. Analysts are worried that some of the new machinery could end up on the scrap heap, adding to a multi-trillion pile of assets that will lose value as the country shifts away from fossil fuels.
The losses would be caused by so-called stranded assets. These range from coal-fired power shutting down before the end of their useful lives to buildings hit with repeated floods to farmland suffering from prolonged drought. Any asset that is producing less than expected because of climate change or rules set up to limit climate change could be a candidate for a write-down.