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In the wake of COP30 it might be a good time to ask whether the much-vaunted stranded assets and energy transition pathway is fact or fiction, or a mix of the two. On two key measures, the forecast demise of hydrocarbons seems premature:

1. UNEP’s Emissions Gap Report 2024 is still blunt: current policies put us on track for rising GHGs this decade and well above 1.5–2°C. Global CO₂ and GHG emissions are still going up, implying the fossil fuel system is far from dying.
2. In 2022 energy again ended as the top S&P 500 sector, delivering a positive total return (~+26%) in a year when the overall S&P 500 was down ~-18%. Recent 3–5-year TSR for O&G equities has been very strong vs the market, despite structural headwinds.

What “stranded assets” actually means
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In financial or climate jargon, examples of stranded assets are, potentially, oil and gas reserves/companies, power plants, pipelines etc. that don’t earn their expected return over their planned lifetime because of:

• climate policy at global, regional or national level (including carbon prices, phase-outs, divestment)
• technology (such as renewables/EVs),
• demand shifts.

Most of the stranded-asset story is forward-looking: it is about the risk that, if climate policy and new clean technologies do what many governments say they want them to do, a lot of today’s fossil assets will end up under-used or written down. 

You wouldn’t expect to see a BP or Exxon literally “stranded” today – the world is not yet on a Paris-compatible path. Most of the risk is about future under-utilisation and shortened asset lives. But timings are hard to predict and policy direction appears to many observers to be weakly supportive of stranded assets theory. Let’s explore a few questions on this topic below..

1. Evidence that the transition is real (even if too slow)
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If we look at clean energy, there are some chunky sector and structural changes:

Power sector

• The world has set new records for renewable capacity additions every year for more than a decade.
• Wind and solar make up the vast majority of new power capacity added each year.
• In many regions, new renewables are cheaper than building new coal or gas plants, and often cheaper than running existing coal.

Transport (EVs vs ICE/SUVs)

• Global EV sales are growing rapidly and now account for roughly one-fifth of new car sales worldwide, and much higher in some markets.
• In China, EVs already make up around half of new car sales; in some European markets they are the clear majority.
• This is still a minority of the global fleet, however, and SUVs and large ICE vehicles are also booming, which offsets some of the gains.
• Air travel is growing significantly; a battery powered 747 is not happening any time soon. 
• The world’s richest men seem to like burning a lot of rocket fuel…not planting trees..

Investment & finance

• Global investment in clean energy is now roughly double the investment going into fossil fuels.
• Low-carbon investment (renewables, EVs, grids, storage, etc.) is in the trillions of dollars per year.
• A large number of institutions representing tens of trillions of dollars in assets have made some form of fossil-fuel divestment or restriction commitment, even if implementation is imperfect.
• Equity indices are no longer dominated by oil and gas; tech and other sectors now carry far larger weights, and energy is a relatively small slice of major benchmarks.
• Though big tech itself is very energy hungry, meaning that we may have a demand problem not a supply problem.

2. Evidence of actual stranding so far
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We haven’t seen a wave of dead oil majors. Stranded assets today show up more subtly, and coal is where it is most visible.

Coal power

• Global coal demand recently hit record levels, with growth concentrated in emerging Asia, but demand in advanced economies is falling.
• In rich countries, many coal plants are being retired years or decades before their technical end-of-life, often because renewables plus gas are cheaper or because of regulation.
• This early closure is textbook stranding: investors don’t get the full cash flows they expected when the assets were built.

Oil & gas assets and balance sheets

• There is growing evidence of asset impairments and shortened useful lives being disclosed by oil & gas firms due to climate policy, price expectations and changing demand assumptions.
• Central banks are warning that unmanaged transition risks tied to fossil-heavy portfolios could become a financial stability issue.
• This is more about recognising longer term future risk and adjusting expectations than about sudden collapses today. As noted, what “long term” means is hard to quantify in terms of years.

3. Evidence about some “transition is fantasy” ideas…
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A quick reality check on a cluster of sub-arguments:

“Oil and gas production shows little sign of slowing down”
- Mostly true so far: oil and gas demand is at or near record levels.
- Growth in oil demand is slowing compared with the past as EVs and energy efficiency start to bite, but not yet reversing globally.
- LNG producers and major exporters are planning significant expansions on the assumption of robust demand for decades.

“Coal and LNG continue to thrive and grow”
- Coal demand is at record levels, driven by emerging Asia, while many advanced economies are phasing it down.
- LNG and gas demand is growing, particularly in emerging markets and for balancing variable renewables.
- Paris-aligned pathways require coal and unabated gas use to fall sharply, but actual policy so far delivers more of a plateau than a crash.

“SUV sales and conventional car sales outstrip EVs”
- Most car sales are still internal combustion engine (ICE); EVs are growing fast but from a smaller base.
- SUVs are booming globally and are a major driver of emissions growth.
- The picture is mixed: the status quo still dominates, but EVs are eroding ICE market share at the margin.

“No O&G company has been stranded; if anything they are more profitable”
- It may be true that big oil companies recently enjoyed record or near-record profits, especially after the 2021–22 price spikes.
- However, their weight in major equity indices is far below what you’d expect from their recent cash flows, suggesting markets see them as high-cash-flow, finite-duration businesses rather than long-term growth engines.

“Energy companies are scaling back renewables investments”
- Several European majors have dialled back renewables growth plans and re-emphasised oil & gas because upstream returns look stronger, especially after the energy crisis.
- But oil majors were never the main driver of global renewables spending; most clean-power investment comes from utilities, independent developers, Chinese manufacturers and state-owned entities.
- Big Oil being less central to the transition does not mean the transition itself is reversing.

“Major producer countries are not reducing fossil production & investment”
- Largely true: OPEC+, US shale, Gulf LNG expansions and new deepwater projects all indicate that producers are still betting on long-lived fossil fuel demand.
- This is exactly why stranded-asset risk exists in the minds of many: if climate policy ever aligns with stated temperature goals, much of that new capacity would be under-utilised.

“Investors are not divesting in any meaningful way; indices are dominated by oil majors”
- Major indices are not dominated by oil; they are dominated by tech and communication services.
- Divestment is mixed: huge volumes of AUMs are subject to some form of fossil fuel restriction, but in practice fossil-fuel companies still access capital and bank finance without punitive pricing.
- Symbolically meaningful, economically insufficient so far.

“New oil and gas fields constantly being found”
- Exploration continues and new fields are still being sanctioned.
- Exploration budgets are nonetheless below their peaks a decade ago, and companies are more selective after years of poor returns.
- Transition analysts argue that even today’s more modest tranche of new projects already overshoots demand in 1.5–2°C scenarios, which sets up future stranding risk if climate policy tightens – a big if.

“CCS is a lame duck”
- On current evidence, scepticism is warranted: CCS captures and stores a tiny fraction of global emissions.
- Many flagship projects have struggled with cost overruns and under-performance relative to the high capture rates assumed in models.
- Models rely heavily on CCS to square ambitious climate targets with ongoing fossil use; reality does not yet support that optimism.

“Growing middle classes, housing demand, conventional cars, air conditioning, undermine climate goals”
- Emerging economies now drive most of the growth in oil, gas and electricity demand, with cooling, transport, buildings and appliance uptake key contributors.
- This is the “energy addition” problem: new clean energy is only partly meeting new demand, while fossil energy is not being displaced fast enough.

So… is the energy transition and the predicted death of hydrocarbons “pie in the sky”?
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A balanced conclusion might be as follows:

Yes, it’s true that:
  - Fossil fuels still make up the vast majority of primary energy and are at record absolute consumption levels.
  - Oil & gas companies are profitable and still investing heavily.
  - Coal and LNG demand is high and, in some regions, rising.
  - SUVs, air conditioning, data centres, new buildings and the growth of middle classes in emerging markets are pushing energy demand up very significantly.

But it’s misleading to conclude from this that the transition is pure fantasy:
  - Power and road transport are undergoing measurable, structural shifts, with renewables dominating new power capacity and EVs capturing a significant and growing share of new car sales.
  - Mainstream analysts now expect fossil fuel demand to peak this decade under current stated policies.
  - Coal assets in rich countries are already being retired early, which is real-world stranding.
  - The risk of future stranding is taken seriously by regulators, central banks and many large investors, who increasingly treat long-lived fossil assets as carrying substantial duration and terminal-value risk.

In other words: the transition is real but slow and uneven. The stranded-asset story is about the growing mis-match between which assets are being built and where, and what a Paris-aligned demand pathway would actually allow. 

Much still hinges on the speed of regulation for a low carbon world. And the pace of change may be too sluggish to see stranding any time soon. But in any case investors have energy investment choices and do not have to rely on stranded asset theory…they can make that theory happen fast, if they opt for a clean energy future.

Digital integrated annual report with detailed ESG goals and performance for FY 2024–25.

The 2025 Tracking the Transition report by the Climate Policy Initiative (CPI), with research contributions from Profundo, provides an independent assessment of how private financial institutions are aligning with global climate goals. Using the Net Zero Finance Tracker, it evaluates 1,500 institutions, representing over USD 286 trillion in assets, across 17 indicators of climate ambition, implementation, and impact.

The findings show that while more institutions are setting climate and fossil fuel phase-out targets, progress remains uneven and often lacks depth. Too much private finance continues to flow into carbon-intensive sectors, even as clean energy investment accelerates.

The report underscores that transparent, data-driven tracking is essential for holding financial institutions accountable and supporting the global shift to a low-carbon, resilient economy.

This report presents the latest global assessment of the meat and dairy industry's outsized climate impacts, estimating the greenhouse gas emisions generated by 45 of the world's major meat and dairy processing companies in 2023/22.

Together, these companies emitted an estimated 1.02 billion tonnes CO₂-equivalent — making them, if treated as a single country, the ninth-largest emitter in the world, with combined emissions exceeding those reported for Saudi Arabia.

Their methane emissions alone are estimated to surpass those reported for all EU-27 countries plus the UK combined. Just five firms — JBS, Marfrig, Tyson, Minerva and Cargill — account for nearly half (47%) of the total, emitting an estimated 480 MtCO₂-eq, more than reported for Chevron, Shell or BP. JBS, identified as the highest-emitting meat company, accounts for almost one quarter (24%) of total estimated emissions across the 45 companies; previous analyses have found its methane footprint alone to exceed that reported for ExxonMobil and Shell combined.

Deforestation and Finance: Why voluntary action has failed

Forests and nature, too often treated as peripheral, have become central to the global policy agenda. In the decade since the Paris Agreement, banks have channelled over USD 439 billion into forest-risk commodities, including USD 72 billion in just the past 18 months.

re banks and investors doing enough to ensure the energy transition is fair for all?
As the global energy transition accelerates, the demand for critical minerals, such as lithium, copper, nickel, graphite and cobalt is surging. These minerals are vital for batteries, electric vehicles, renewable power systems and high-tech applications. However, this report by Fair Finance International, Oxfam and Profundo uncovers a stark contradiction: while banks and investors funnel billions into critical mineral producers, many operate without robust environmental, social and governance safeguards.

Drawing on case studies from Brazil, Peru, Mozambique and the Democratic Republic of Congo, the research reveals widespread impacts including biodiversity loss, water-contamination, labour-rights violations, and weak community consultation.

The report also focuses on eight of the largest EU-based financial institutions and examines their financing flows into critical-minerals producers, alongside regulatory frameworks like the EU Critical Raw Materials Act, Batteries Regulation and Sustainable Finance Disclosures Regulation. It finds significant gaps, from policy to implementation, and calls on financiers and policymakers alike to act: adopt transparent due-diligence policies, integrate human-rights protections into finance, set exclusion criteria for high-risk mining projects and ensure local communities benefit.

Global investments in the energy transition reached a new record of USD 2.4 trillion in 2024 – a 20% increase from the average annual levels of 2022 and 2023. Despite annual investments more than doubling since 2019, they remain concentrated in advanced economies and China, leaving most emerging and developing countries behind.

Investments also remain well below what is needed to achieve the 1.5°C Scenario in IRENA’s World energy transitions outlook 2024 and the 2025 Delivering on the UAE Consensus report.

About one-third of investment in 2024 was directed towards renewable energy technologies, pushing renewable energy investment to USD 807 billion. Despite this milestone, year-on-year growth of renewables slowed significantly, with annual investments increasing by 7.3% in 2024, compared to 32% the year before.

The report reveals that most investment is provided at market rate debt and equity, with grants accounting for less than 1%. There is therefore an urgent need to mobilise investments – particularly impact-driven capital such as low-cost debt and grants – to maintain the momentum of the energy transition whilst avoiding exacerbating debt burdens.

The oil and gas industry is on a path of managed decline, even as the International Energy Agency (IEA) resurrects an old growth scenario.   

The reintroduction of the “Current Policies Scenario” (CPS) assumes no new climate policies until 2050 and implies energy innovation stops in 2030. But real-world signals tell a different story.   

• The CPS would need capex to rise by $200-300bn/year to reach its goals. Instead, capex has stabilised at $550-600bn, ~40% below its 2014-15 peak. This is not growth, it is a shift from expansion to maintenance.  
• Companies are harvesting: rewarding shareholders with dividends and buy-backs, rather than expanding the resource base.  
• Exploration is down ~60%. Credit rating agencies are downgrading projects and consolidation is rising. These are the actions of a mature industry in strategic retreat, not one betting on growth.  
• Meanwhile, demand foundations are cracking: Electric vehicles (EVs) are displacing 4-5Mb/d by 2030. Gasoline demand is set to peak in 2025. China’s oil demand and coal generation are plateauing, signalling a structural shift in Asia’s energy mix.  
• As fossil capex stagnates, annual investment in renewables, grids, and electrification exceeds $2.2 trillion – more than double fossil fuel supply investment.    

China’s onshore labelled bond market has rebounded from its 2024 trough, with issuance reaching CNY1,014 billion (USD141 billion) in the first three quarters of 2025, already surpassing the full-year total for 2024. The recovery has been driven by falling Chinese-yuan interest rates, which have supported strong growth in financial bonds and modest gains in corporate bond issuance.