If so, we could expect higher and more volatile energy prices during the transition to a more renewables-based energy supply. In this context, it is interesting to compare the investment response in Australia to the current boom in the terms of trade with that of a decade ago (Graph 8).
These factors can leave carbon intensive assets vulnerable to value reassessments by financial markets. This can happen very abruptly, or could even render these assets ‘stranded’. Financial institutions with balance sheet exposures to the fossil fuel and utility sectors could particularly be affected. 4  Fout! Onbekende naam voor documenteigenschap.