Assets get stranded when unforeseen events render them valueless during their useful lives and they must be written off prematurely. New technologies and regulatory changes are common reasons for stranding and changes in climate policy are expected to see fossil fuel assets meet this fate in the years and decades ahead. Stranding is always a costly event for the owners and prudent decision-makers strive to avoid building assets at risk of getting stranded.

The exception are governments. Through direct involvement in public capital provision and indirectly through industrial policy, governments can choose to favour what they expect to be winning sectors, sometimes discovered retrospectively. They also back losers, often consciously and build stranded assets.

There is no rational reason for governments to choose losers but there is every reason for losers to choose the government and they do so time and again, with the excuse of job creation, regional development or any other convenient justification for subsidies, explicit or hidden.

Aerospace has been a prodigious money-sink for governments. The Anglo-French supersonic Concorde airliner cost over £10bn in development costs back in the 1960s, in pre-inflation money and sold just 12 units, under duress, to airlines belonging to the British and French governments.

Break-even sales volume would have been about 500 units. Concorde was a stranded asset on its maiden flight. Even before fuel costs trebled just after the airliner’s introduction, there was no likelihood of serious commercial demand and the taxpayers took the hit. The excuse was technological innovation, European leadership in world aviation and so forth and the nostalgia industry is still producing TV documentaries about the great achievement and its undeserved demise.

Ireland has fortunately been spared an aerospace industry, but successive governments have been willing to construct stranded assets at public expense, notably in the energy sector. The current example is the three peat-fired power stations in the midlands, at Lanesboro in Co Longford and at Shannonbridge and Edenderry in Co Offaly. All three stations are likely to close over the next few years with some job losses at the stations themselves and more extensive job losses at Bord na Móna. At one time, there were 10 peat-fired stations around Ireland but they had reached the end of their useful lives, a minimum of 30 or 40 years, during the 1980s and 1990s and closed one after another.

The Government had signed up for the Kyoto accords on limiting greenhouse gas emissions in 1997 and it was well understood that Ireland would face, as an EU member, binding emission targets down the road.

It was also well understood that peat-fired generation has very high carbon emissions per unit of electricity produced. The Government decided nonetheless to build three brand-new peat-fired stations. Edenderry was commissioned in 2000, Shannonbridge and Lanesboro as recently as 2004. It had been clear from ESB data for decades that the true cost of generation from peat was the highest of any fuel source, even without the additional carbon cost.

The decision to build these units was a deliberate deployment of public money to the construction of assets likely to be stranded.

Edenderry is located just 60km along the M4 west of Dublin and the AA gives the journey time by car at 64 minutes. It is for all practical purposes an outer suburb of Dublin. In the early years of the bubble, there was no imperative to spend money creating jobs in west Dublin. Shannonbridge and Lanesboro are twice as distant from Dublin, but the bubble was in full flight by the time of their commissioning in 2004 and inward labour migration was on the rise. Aside from the wasted capital, the direct and hidden subsidies arising at these three stations have been estimated by the economist John FitzGerald at the extraordinary figure of €100,000 per job per annum. FitzGerald, who chairs the Government’s climate change advisory group, has unsurprisingly been urging the phasing out of peat-fired generation for many years.

Recent planning decisions do not support what appears to have been Plan B, the importation of wood pellets from the United States as an alternative fuel. The cultivation of willow in the north midlands for combustion does not appear to be feasible either and the three plants will have to close. The last Bord na Móna voluntary severance scheme was over-subscribed and the company will be hoping for an amicable settlement with those who will be losing their jobs.

There was no coherent reason, aside from political expediency, for the construction of these three power stations – their aggregate capacity is less than that of a single modern gas-fired unit, more fuel-efficient and offering far lower carbon emissions. These assets did not get stranded due to bad luck – this was foreseeable and should have been avoided.