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fossil fuel assets
Also known as: fossil fuel assets, fossil energy assets, fossil assets, fossil fuel-based assets
Facts (12)
Sources
Energy asset stranding in resource-rich developing countries and ... frontiersin.org Jun 10, 2024 11 facts
claimCompensation payments alone are insufficient to adequately compensate developing countries for the stranding of fossil energy assets due to low political feasibility and unresolved implementation questions.
claimThe stranding of fossil energy assets in developing countries can disrupt economic dependence, expose nations to economic volatility, and potentially cause massive job losses and reduced economic growth.
referenceResearch investigates various asset classes and sectors regarding stranding, including global fossil assets (Mercure et al., 2021), fossil assets in industrial countries (Semieniuk et al., 2022), fossil power plants (Edwards et al., 2022), coal and gas capacities (IEA, 2021), and energy infrastructure relative to emission budgets (Tong et al., 2019).
claimResource-rich developing countries (RRDCs) are strongly exposed to asset stranding risks due to heavy dependence on fossil fuel revenues, limited diversification options, weak climate adaptation capacities, and the long lifetime of fossil assets.
claimInternational compensation payments are financial transfers from importing industrial countries to resource-rich developing countries (RRDC) intended to compensate for losses incurred when fossil fuel production assets are left unused, a process known as fossil asset stranding.
measurementFossil fuel assets account for 20% of Nigeria's total assets.
claimFossil energy asset stranding in developing countries may lead to unstable funding for social welfare, health services, education, and infrastructure, which worsens living conditions for vulnerable populations.
claimInternational compensation payments for fossil asset stranding may create a moral hazard by rewarding investments in fossil fuel assets, including those made after the 2015 Paris Agreement, which could undermine low-carbon transition efforts.
claimClimate policy will inevitably lead to the stranding of fossil energy assets, including production and transport assets for coal, oil, and natural gas.
procedureTo address the risk of asset stranding, resource-rich developing countries can refrain from investing in fossil assets and limit the licensing of new fossil projects.
measurementFossil fuel assets are estimated to be approximately 20% of Nigeria's total assets, according to Cust and Manley (2018).
Transitioning to renewable energy: Challenges and opportunities iee.psu.edu Jun 11, 2024 1 fact
perspectiveIt is crucial to ensure that communities appreciate the efforts and technologies that could potentially replace or supplement existing fossil fuel-based assets.