Stranded assets and sustainable energy transition: A systematic and critical review of incumbents' response

Abstract

Climate-related stranded assets have been a popular research topic of many studies over the last decade. Past studies have mostly focused on estimations of stranded assets and mitigation options. While the studies consider energy transitions, the influential factors behind the choice of options have not been investigated in-depth. Because such choices may have path dependency, affecting the direction and speed of subsequent changes, it is critical to understand stranded asset risk and its relations to choices and the transition more comprehensively. To do so, we conduct a systematic literature review to explore the impacts of stranded asset risk on incumbents' decision-making and energy transitions. Our findings demonstrate that stranded asset risk, coupled with transition costs, energy security and sustainability concerns determine the pathway of energy transitions. Higher perceived stranded assets will pave the transition toward a renewable energy-based system, but high concerns about transition costs, energy security, and sustainability would retard the transition or direct the system toward different pathways. Abrupt policy change intensifies regime resistance and energy injustice, but slow change strengthens lock-ins into traditional systems.