Financial Markets Already Pricing The Fossil Fuel Phaseout

Support CleanTechnica’s work through a Substack subscription or on Stripe.

There were many cringe-worthy moments during the recent COP30 conference in Brazil, beginning with the new highway bulldozed through the Amazon rainforest to provide access to the meeting site for thousands of delegates and lobbyists. Really? How tone-deaf can people be?

Most observers termed COP30 a failure because the joint communiqué at the end of the proceedings was more weak-kneed pablum designed to satiate the rabid Gewinne über alles mindset of the fossil fuel crazies. But Forbes contributor Ingmar Rentzhog, founder of We Don’t Have Time, has a different take.

In an article published on December 16, 2025, he reports that when the Morgan Stanley Institute for Sustainable Investing surveyed 950 institutional investors in North America, Europe, and Asia Pacific recently, four out of five said they expect to increase allocations to sustainable investments over the next two years.

Rentzhog claims the survey shows that capital is “already behaving as if a fossil fuel phaseout is underway — not through headlines or pledges, but through mandates, risk models, and capital allocation decisions that quietly reroute money away from assets with declining transition credibility.”

Those who responded to the survey included 201 large asset owners — defined as those having more than $50 billion in assets — and 73 large asset managers — defined as those with more than $100 billion in assets under management. He wrote, “That implies the survey is capturing decision-makers stewarding tens of trillions of dollars in aggregate, even before counting the rest of the respondents. This is how phase-outs happen in practice: not as a single political decision, but as a widening valuation gap.”

Go Your Own Way

The COP conferences are structured in a way that requires consensus. That model has its benefits, but it gives virtual veto power to any nation that has a view that is contrary to the majority. The fossil fuel producing countries take advantage of that situation to bend the outcome of every COP conference to their will, just at the US did at the first such meeting of nations in Kyoto in 1997.

But a group of 80 nations at COP30 decided to chart their own course away from dependency on fossil fuel. They plan to meet next year at a conference co-hosted by Colombia and the Netherlands.

“This matters for markets because it reduces political ambiguity,” Renthog wrote. “When a large coalition begins organizing around a phase-out timeline, investors do not need every major emitter to agree in order to start repricing risk. They need credible direction, momentum, and a pathway that can scale.”

Despite the “ESG backlash” driven primarily by the US, the Morgan Stanley survey found that large majorities of asset owners and asset managers see sustainable investing options as important in selecting and retaining managers. “This is the part many headlines miss — even where politics attacks ‘ESG,’ the investment machinery keeps turning. The survey’s strongest pro-growth signal comes from North America, the very region most often framed as the epicenter of backlash,” Rentzhog said.

A Multi-Trillion Dollar Market

The World Economic Forum this month reported the “green economy” has already scaled into a multi-trillion dollar market, with financial characteristics that look increasingly like a mainstream growth category, not a niche.

“That report makes a simple point that’s easy to miss in the COP noise. The green economy has already crossed from ‘future opportunity’ into present balance sheet reality. It is no longer a niche. The report describes a market now at roughly $5 trillion annually, with a trajectory of further expansion toward 2030, and with financial characteristics that increasingly resemble a mainstream growth category,” according to Rentzhog.

“What follows from that scale is even more important. The analysis shows green revenues growing faster than conventional revenues in many sectors, and it highlights a persistent cost of capital advantage for companies with green exposure.”

Investors are not simply adding sustainability as a label but are “now pricing transition credibility into valuations, treating regulatory durability and physical climate risk as drivers of future cash flows and the discount rates applied to them. Over time, that creates a widening valuation gap. And that is how fossil phase-outs tend to happen in practice — not as a single political decision, but as markets steadily rerouting capital toward the assets that look investable in a decarbonizing world.”

These new economic realities challenge the assumption that decarbonization is a “cost.” In fact, climate progress is now viewed by many asset managers as a marker of systems efficiency, which means better energy productivity, cleaner power, electrification, and technology learning curves that compound.

Oil On Water

This month the IEA reported there is more oil sitting in tankers on the ocean than is normal for this time of year. That is not simply a story about supplies; it is also a story about market structure, Rentzhog said.

“When storage fills, price behavior can change suddenly: In the 2008 to 2009 downturn, weak demand … incentivized traders to store oil, including in floating storage, amplifying volatility when the market turned. In 2020, the world saw how storage constraints can break pricing mechanics when demand collapses and barrels have nowhere to go, contributing to extreme dislocations. Oversupply plus constrained storage equals nonlinear price risk,” we wrote.

When fossil fuel supplies are the only forms of energy, storing them is the only option when demand drops. But Rentzhog pointed out in his Forbes piece that there are new energy storage technologies emerging and they are affecting the economic calculus on a global scale. “Battery storage is scaling fast enough to matter at the margin, and margins are where prices break,” he wrote.

“In other words, if fossil markets are becoming a storage problem, clean markets are becoming a storage solution.” This may partially explain Ford’s decision this week to re-purpose its battery factory in Kentucky from making batteries for electric cars to making batteries for energy storage products.

“COP30’s text looked weaker than the world needed, but the system is moving anyway, and the signals are increasingly measurable,” he claimed. “The next risk catalyst may come from the fossil side, not the clean side. If oil inventories keep building and ‘oil on water’ starts moving into constrained onshore storage, history suggests price dynamics can shift quickly.”

A Structural Realignment

“But the deeper shift is structural. Oil is no longer competing only with other oil. It is competing with a clean energy system that is scaling both generation and storage, and is increasingly able to absorb variability without burning anything at all. That is what it means when financial markets start pricing a phase-out, long before politics dares to say the forbidden f-word,” Rentzhog wrote.

CleanTechnica readers, who are all well above average, may take heart from this ray of sunshine because not only does it show there are market forces far removed from the glare of politics, it also portends a global embrace of electrification — which is precisely what Tony Seba and Mark Jacobson have been advocating for over the past decade.

And that means the chill that has fallen over electric cars lately — thanks in large measure to the bloviating bleating of a deranged dicktator — may indeed be a temporary setback that will be followed by a surge in EV sales.

It is difficult to predict the future, but if you have to choose between some sicko and his society of sycophants or people who manage trillions of dollars, our choice is to go with the professionals and give the others a dose of what Daniel Patrick Moynihan liked to call “benign neglect.” As between ignorance and intelligence, the latter is by far the most promising way forward.