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The title of this column—“stranded assetsâ€â€”describes the financial implications of a climate truism: maintaining an environment that’s somewhat hospitable to humans means that a lot of identified fossil-fuel reserves will have to stay in the ground, thus rendering them worthless.We’re seeing a kind of partial foreshadowing of this scenario right now. Demand for oil has crashed, and prices are so low that some U.S. shale oil producers are filing for bankruptcy. But the oil and gas they planned to extract doesn’t simply disappear. Reuters reports that banks are getting ready to take on the reserves those producers once put up as collateral, creating holding companies and attempting to wait out the price war.From a climate perspective, the thing that matters most is whether or not that supply ever reaches the Earth’s surface. With shale oil currently so cheap and unloved, what if someone maybe … bought those dormant pumping operations and shut them down for good?Philanthropic foundations with large endowments and climate objectives might, conceivably, be able to do this, and buying up tracts of land to preserve them is a well-established form of environmental philanthropy. Buying and shutting down business operations is less common, but examples do exist.https://www.bloomberg.com/news/articles/2020-04-20/american-oil-is-cheap-enough-for-climate-activists-to-buy-it?srnd=premium
If the oil companies are stupid enough to sell to people like that....
