Barclays PLC dropped a bombshell white paper last week titled ‘Transition Realism: A Stranded Asset Perspective on the Energy Transition’. The report pulls no punches in flipping the script on the climate establishment’s favourite bogeyman. For years, we’ve been lectured that fossil fuels are the quintessential stranded assets — trillions in oil, gas and coal reserves doomed to remain unused underground as the world races to Net Zero. The term “stranded assets” – investments that suffer unanticipated or premature write-downs, devaluations or conversion to liabilities – became a fixture of climate-policy discourse.
Yet, as the Barclays analysts point out, the real risks now lurk in the renewable sector. “Stranded-asset risk is becoming system wide,” the paper warns. “Historically, stranding meant coal plants. Today, renewables facing multi-year interconnection queues, curtailment and congestion risks are increasingly likely to be impaired.”
In an era of geopolitical upheaval, energy insecurity, persistent inflation and AI’s insatiable power hunger, renewables — once the darlings of ESG portfolios — are emerging as the new buggy whips in an age of automobiles. The Barclays paper couldn’t be more timely. It argues – nothing original about this observation – that energy transitions are “additive, not substitutive” with new sources like wind and solar stacking atop fossil fuels rather than displacing them, as global primary energy consumption hits record highs.
The Barclays study revamps the old ‘energy trilemma’ into a stark hierarchy: security of supply trumps affordability, which in turn overshadows sustainability when push comes to shove — as seen in Europe’s frantic coal restarts following Russia’s invasion of Ukraine. Grid constraints emerge as the “hidden barrier”, with US grid capacity expanding at a glacial pace of 3% over the past decade, leaving renewables unable to integrate and at risk of obsolescence.
The irony in the Barclay paper is particularly striking: the very technologies touted as unstoppable are now bottlenecked by the realities of engineering, economics and geopolitics. As the report notes: “The real bottlenecks are now in grids – permitting, financing, and system integration – not in the cost of generation hardware.”
The best buggy whip you ever saw
This turnaround in the stranded assets debate evokes the classic scene from the 1991 comedy Other People’s Money, where the Danny DeVito-played character ‘Larry the Liquidator’ skewers a dying company’s sentimental defenders at a board meeting.
You know, at one time there must’ve been dozens of companies makin’ buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw. Now how would you have liked to have been a stockholder in that company? You invested in a business and this business is dead. Let’s have the intelligence, let’s have the decency to sign the death certificate, collect the insurance and invest in something with a future.
DeVito’s bombastic delivery mocks corporate nostalgia, championing profit over piety. Product excellence could not save the buggy whip: the automobile had rendered the entire industry obsolete. The speech captured a central insight of capitalism: technological progress inevitably makes stranded the assets of yesterday’s industries. Joseph Schumpeter famously described the process as “creative destruction”, whereby innovation relentlessly displaces older technologies.
The stranded assets narrative has been the climate alarmists’ weapon of choice. For nearly two decades, climate activists and financial pundits have argued that fossil fuels — coal mines, oil and gas fields, pipelines, refineries — would soon suffer the fate of the buggy whip. The energy transition, they insisted, would “strand” trillions of dollars in hydrocarbon assets as the world turned away from carbon-intensive fuels.
Among the loudest proponents of the stranded resources thesis is the Prime Minister of Canada, Mark Carney, the ‘rock star‘ ex-central banker of Canada and England, a member of the Foundation Board of the World Economic Forum and UN Special Envoy on Climate Action and Finance in 2019. Carney has spent the last few years persuading the world’s financial institutions that fossil fuels – accounting for over 80% of global primary energy supply – are ‘stranded assets’ on a one-way trajectory to zero value as the world races to ‘Net Zero by 2050’.
In his 2021 book Value(s): Building a Better World for All, Carney asserts: “To meet the 1.5°C target, more than 80% of current fossil fuel reserves (including three-quarters of coal, half of gas, one-third of oil) would need to stay in the ground, stranding these assets.”
Mark Carney’s high-profile efforts as UN climate envoy to marshal the world’s largest financial institutions to reduce carbon emissions led to the launch of the Net Zero Banking Alliance in 2021. The NZBA and other financial industry networks pledged to align billions of dollars in asset investments to the climate transition. But much has changed since then. With the counter-attack on ESG and ‘woke capitalism’ in US Republican states, the term ‘ESG’ itself became a “loathed monicker” that even BlackRock CEO Larry Fink avoided using.
In October 2025, the Net-Zero Banking Alliance ceased operations after a vote to wind up the group which had already lost many of its high-profile members like Goldman Sachs, UBS, Barclays and HSBC, amid allegations from some US lawmakers that membership breached antitrust regulations.
Carney isn’t the only illustrious professional on the ‘fossil-fuels-are-stranded-resources’ bandwagon. A short list would include former US Treasury Secretary Janet Yellen and Executive Director of the International Energy Agency Fatih Birol. They assert an ‘existential threat’ of climate change caused by the combustion of fossil fuels. These leaders in finance and public policy circles are joined in the popular media by ‘climate influencers’ such as Al Gore, Bill McKibben and King Charles who have used their bully pulpits to encourage divestment from fossil fuel companies.
Getting the buggy whip wrong
The International Energy Agency (IEA) forecast in its widely-derided 2021 ‘Net Zero by 2050’ roadmap that no new oil and gas fields were needed post-2021. It implied the immediate prospects for massive, stranded assets in the hydrocarbons industry. But reality, that stubborn thing, refused to cooperate. Far from being stranded, fossil fuels have roared back with a vengeance. By 2022, as Western sanctions on Russia ignited energy shortages, Brent crude approached $120 a barrel. ExxonMobil’s shares surged over 70% that year, reclaiming blue-chip status amid ‘structural deficits’ in oil markets. Global fossil fuel consumption – still, as noted, comprising over 80% of primary energy, with developing Asia driving 90% of energy demand growth – shattered records in 2025.
The US-Israeli attack on Iran and a de facto closure through marine insurance withdrawal of the Strait of Hormuz has cut off roughly 20% of global oil supply alongside critical volumes of jet fuel, LPG and LNG cargoes serving Asian and European markets. Crude oil prices are once again on a tear. Brent crude oil futures surged more than 10% to above $100 a barrel on Monday, after earlier rallying by as much as 29% amid production cuts from major Middle Eastern producers following disruptions in the Strait of Hormuz. With tanker traffic heavily restricted and exports backing up, several major producers have begun curbing output as storage facilities rapidly fill. Saudi Arabia has reportedly started cutting production, joining the United Arab Emirates, Kuwait and Iraq in reducing supply. Prices briefly approached $120 before retreating as leading economies from the Group of Seven (G7) considered releasing emergency oil reserves to calm markets.
Earlier this year, BP said it would write down the value of its gas and low-carbon energy division by up to $5 billion, the legacy of an ill-timed move into renewables that left it the least profitable of the major oil companies. Following the BP announcement, Wall Street Journal analysts commented that the company “is now in the early stages of a turnaround aimed at bringing the business back to its roots: drilling for oil and gas”. BP’s newly appointed CEO Meg O’Neill – considered an ‘outsider’ and a ‘fossil-fuel champion’ – intends to reverse falling profits and boost its share price, which has come under pressure after BP’s virtue-signalling missteps into low-carbon energy.
Now the shoe is on the other foot. Today renewables investors might feel like those buggy whip shareholders, shrilly clinging to increasingly unaffordable green subsidies and mandates. S&P’s Global Clean Energy Transition Index fund lost 82% of its value from its peak on January 11th, 2021 to March 6th, 2026. Over the same period, the S&P500 equity index gained over 70%.
Renewables, propped up by trillions in subsidies and mandates, face being stranded on a scale that would make coal barons chuckle. The Barclays report highlights how “as renewable penetration rises, under-connected projects are becoming the new stranded-asset class”. Grid bottlenecks are the culprit. Electricity’s share of global primary energy has inched from 13% in 1985 to just 20% today, far from the ‘electrify everything’ utopia promised just a few years ago.
In the US, multi-year interconnection queues leave wind and solar farms idle, curtailed or congested, impairing valuations. The IEA’s 2025 ‘World Energy Outlook‘ echoes this, noting renewables risk obsolescence if systems can’t absorb their output.
Cheap solar panels or wind turbines mean little without dispatchability. As Barclays puts it: “Cheap renewables don’t ensure cheap power due to dispatchability needs.” The real distortion lies in ignoring the full system-level costs and inefficiencies of integrating intermittent wind and solar power into existing grids.
This vulnerability stems from dependency on government largesse. Without renewable portfolio standards, feed-in tariffs, tax credits like the US Inflation Reduction Act’s $369 billion giveaway, or EU mandates, many if not most renewable energy projects flop. But fiscal strains from wars, uncontrolled mass migration, high debt levels and inflation could yank the rug out, stranding subsidy-dependent renewable assets overnight.
President Trump’s “drill baby drill” agenda has done much to promote infrastructure development and fast permitting for fossil fuel projects. In his recent IEA Ministerial speech, Secretary Chris Wright contrasted US energy abundance — driven by shale oil and gas — with Europe’s green policy-driven high costs that shrank its global primary energy share from 25% in 2011 to about 17% in 2025. Key developing nations such as those in the BRICS+ bloc have largely opted for cheap fossil fuels, prioritising energy security and economic growth over Net Zero.
Creative Destruction in Energy Markets
Technological innovation and market competition ultimately determine which energy sources prevail. Government policy can help or hinder certain trends, but it cannot abolish economic reality. If renewable technologies continue improving and integration challenges are resolved, they may indeed capture a larger share of global energy supply. But if their economics remain dependent on subsidies and mandates, investors eventually reassess their enthusiasm and citizens will tire of being burdened by high energy costs.
The irony is unmistakable. The stranded-asset narrative was originally deployed as a warning against fossil fuels. Yet the most vulnerable investments may be those built on the assumption that governments can permanently guarantee the economic success of politically favoured sectors.
Capitalism has a way of exposing such assumptions, alas often at great cost to the interests of ordinary people.
Dr Tilak K. Doshi is the Daily Sceptic‘s Energy Editor. He is an economist, a member of the CO2 Coalition and a former contributor to Forbes. Follow him on Substack and X.
