“The likely outcome is that less climate-conscious firms will buy these carbon-intensive assets at cheap prices, motivated by the ability to secure above-average returns. So while offloading assets reduces an individual company’s carbon footprint and potentially enables it to reach net-zero by 2050, it is likely that this will not provide a net benefit to global emissions.”
[COMMENTARY] The article also says that the acquirer of the assets might have higher costs of capital and other factors that in the end make the acquired asset much less valuable. It’ll be fascinating to see how this plays out. Now, what does this mean for valuing companies with significant potential stranded assets?
Does selling ‘stranded assets’ lower global carbon levels? by Stephanie Baxter, October 30, 2020, Petroleum Economist, UK.