Stranded Assets and Stranded resources: Implications for Climate Change Mitigation and Global Sustainable Development

  • Citation: Bos, Kyra, and Joyeeta Gupta. “Stranded Assets and Stranded Resources: Implications for Climate Change Mitigation and Global Sustainable Development.” Energy Research & Social Science 56 (2019): 101215.
    • Topics:
    • Global Development
    • Keywords:
    • climate change
    • Global Sustainable Development
    • technology
    • economy
    • carbon leakage
    • first comer-late comer
    • North-South
    • stranded assets
    • stranded resources
    • Sustainable Development Goals

The Paris Agreement’s 2 °C objective requires that more than 80% of all proven fossil fuel reserves become stranded resources, and investments in such resources may become stranded assets for industrialized and developing countries. The literature scarcely covers the implications of stranded assets and resources for ‘latecomers’ to development. Hence, we address the question: What does a literature review of stranded resources and stranded assets in a diversity of fields imply for latecomers to development in the fields of climate change and global sustainable development? We find seven dimensions in the literature: (i) Spatial: where first comers use their own resources and resources of other countries for their own development leaving little environmental utilization space for latecomers to develop; (ii) Technological: when first comers ‘dump’ older technologies (stranded assets) on latecomers; (iii) Economic: when first comers avoid paying compensation for damage caused to latecomers or for the stranding of resources in latecomer countries; and first comers may potentially also indirectly transfer their soon to be worthless shares on latecomers; (iv) Ecological: when knowledge from first comers may prevent latecomers from using their resources/ or may accelerate the rate at which their resources and assets become stranded; (v) Political: when first comers refuse to take environmental action claiming that latecomers are not doing so; while latecomers may claim that first comers should take action first; (vi) Legal/Policy: when investments in resources and assets in a globalizing world involve long-term contracts protected under private law may cause policy freezing and liabilities in latecomers; and (vii) Social: when latecomers adopt different notions on development than first comers. Latecomers need to be sensible in deciding which resources to develop to avoid carbon lock-in and whether phasing-in renewables could avoid creating stranded assets in the first place.

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