concept

resource-rich developing countries

Also known as: RRDC, RRDCs, resource-rich developing country

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Energy asset stranding in resource-rich developing countries and ... frontiersin.org Frontiers Jun 10, 2024 59 facts

perspectiveThe authors of 'Energy asset stranding in resource-rich developing countries' assert that asset stranding has the potential to catalyze momentum for positive change in resource-rich developing countries, which are more significantly affected and impacted by these transitions than industrial nations.

claimEffective research on asset stranding in resource-rich developing countries requires collaboration across multiple economic disciplines, including energy economics, macroeconomics, feminist economics, development economics, ecological economics, and political economics, as well as neighboring disciplines like public administration, transition research, and ethics.

claimResearch into policy barriers for resource-rich developing countries (RRDCs) needs to address how to achieve economic diversification, how geo-economic factors like resource dependency and power relations influence climate policy, and what measures can mitigate the negative effects of these factors during the transition from fossil fuels to renewable energy.

claimEffective policy for resource-rich developing countries must provide short-term incentives for existing elites while simultaneously addressing structural deficiencies related to the resource curse and poor socio-economic conditions.

claimResource-rich developing countries (RRDC) face distinctive challenges regarding asset stranding compared to industrialized nations, including economic dependency, governance issues, and socio-economic vulnerabilities.

claimFossil asset stranding in resource-rich developing countries leads to multi-faceted implications, including economic volatility from disrupted revenue flows, job losses in the fossil energy sector, and government funding challenges.

claimThe World Bank classifies Nigeria as a 'Lower middle-income' economy, fulfilling the criteria of a resource-rich developing country (RRDC).

perspectiveThe authors aim to investigate the multifaceted implications of climate-policy-induced fossil-asset stranding in resource-rich developing countries by offering a conceptual framework to assess these implications systemically.

claimResource-rich developing countries (RRDC) are significantly exposed to decreases in fossil fuel demand induced by climate policy because oil and gas revenues contribute substantially to their Gross Domestic Product (GDP).

claimAddressing policy barriers regarding asset stranding in resource-rich developing countries requires research into understanding and mitigating the resource curse and geo-economic barriers.

claimAsset stranding in resource-rich developing countries is significantly influenced by climate policies adopted by importing industrial countries, which often implement stricter climate neutrality plans that necessitate a far-reaching phase-out of fossil energy.

claimThe resilience of public administration and governments in resource-rich developing countries can be improved by fighting the resource curse through mechanisms such as transparent budget rules and macroeconomic policies designed to reduce volatility.

claimResource-rich developing countries face a higher risk of asset stranding due to strong fossil fuel dependencies and societal consequences that extend beyond revenue disruption.

claimThe stranding of assets in resource-rich developing countries (RRDC) is a multifaceted problem influenced by sector exposure, risk drivers, national resilience, and the vulnerability and sensitivity of the population.

perspectiveThe authors argue that a single policy measure is insufficient to address the multi-faceted problem of asset stranding in resource-rich developing countries (RRDC), and instead recommend a mix of complementary measures targeting different aspects of the problem.

perspectiveInternational compensation payments for leaving fossil fuels in the ground are considered a 'silo solution' that lacks a 'silver bullet' quality for addressing asset stranding in resource-rich developing countries.

claimResource-rich developing countries (RRDC) are often characterized by weak socio-economic conditions, including low average incomes, high poverty rates, high inequality, and elevated unemployment levels, which magnify the economic and social consequences of asset stranding for their populations and increase the risk of social unrest if transition policies are implemented.

claimDesigning holistic policies for resource-rich developing countries requires a mix of sound policy instruments, including research into effective compensation payments, just hydrogen partnerships, and benefit-sharing mechanisms.

claimAsset stranding is a multi-faceted problem that particularly affects resource-rich developing countries (RRDCs) due to their heavy dependence on fossil fuels, limited prospects for economic diversification, inadequate political and social support structures, the presence of vulnerable populations, and the amplifying effects of the resource curse.

procedureAddressing fossil asset stranding in resource-rich developing countries requires a balanced policy mix that simultaneously addresses four areas: (i) reducing exposure risk, (ii) mitigating economic losses, (iii) tackling the resource curse, and (iv) reducing societal negative impact.

claimResource-rich developing countries face persistent unfavorable social and economic conditions due to factors such as the perceived benefits of fossil fuel rents, corrupt systems that benefit influential groups, and the low capacity of the population to address problems, often referred to as an 'empowerment problem' caused by low education, poor health, and violence.

referenceResource-rich developing countries face a dilemma where they acknowledge the negative aspects of relying on fossil fuel sectors but lack alternative options for revenue and jobs.

claimResource-rich developing countries often become heavily reliant on exporting natural resources like fossil fuels or minerals, leading to economies that are dependent on revenue from these exports.

claimThere is a research gap and a policy gap regarding the systematic assessment of the broader societal impact of fossil asset stranding, particularly in resource-rich developing countries.

claimThe stranding of assets in resource-rich developing countries (RRDC) is a multifaceted problem with profound and far-reaching implications.

referenceMcGlade and Ekins (2015) and Welsby et al. (2021) found that while coal reserves in industrialized and emerging economies are primarily affected by asset stranding, resource-rich developing countries will also suffer from the stranding of oil and gas assets.

claimPolicies to ramp up a renewable hydrogen economy in resource-rich developing countries (RRDCs) have the potential to address wider societal implications in line with a just transition, provided that benefit sharing is intended on three levels.

referenceMeasures to address asset stranding in resource-rich developing countries can be summarized into three categories: accelerating the phase-out of fossil energy resources, speeding up the development of alternative renewable energy industries, and explicitly considering justice issues.

claimFossil asset stranding exacerbates the vulnerability of populations and the inability of governments to mitigate consequences in countries already weakened by the resource curse, characterized by corruption and weak political institutions.

perspectiveThe proposed research agenda for asset stranding in resource-rich developing countries aims to decrease resistance against climate governance and foster a just transition that considers benefits for the population.

referenceThe authors' analysis framework for asset stranding in resource-rich developing countries categorizes problems into four sets: exposure (risk of asset stranding), transition risk (asset stranding and revenue losses), resilience of public administration and government (the resource curse), and vulnerability and sensitivity (wider societal consequences).

referenceThe authors of the study 'Energy asset stranding in resource-rich developing countries' propose ten key research questions to guide future investigations into asset stranding, societal consequences, policy design, and geo-economic barriers in resource-rich developing countries (RRDCs).

claimAsset stranding is an under-researched topic, particularly concerning resource-rich developing countries (RRDCs) and the broader societal implications within the context of the just transition and climate governance resistance.

claimResearch on understanding asset stranding in resource-rich developing countries requires new quantitation approaches for societal consequences, initial estimates of these consequences, and local case studies for countries in the Global South.

perspectiveThe authors argue that hydrogen exports and partnerships can benefit Resource-Rich Developing Countries (RRDCs) if these partnerships incorporate elements of Just Energy Transition Partnerships (JETPs) and include benefit sharing between importing industrialized nations and exporting nations.

claimClimate policies in Global North exporting countries expose resource-rich developing countries to financial risks that discourage future investments in fossil fuel projects and may create opposition to climate mitigation efforts, negatively impacting global climate governance.

claimPromoting the shift from fossil fuel to renewable energy economies is a promising policy goal to address the impacts of asset stranding in resource-rich developing countries (RRDCs), as it aligns with global South and North energy transition plans and sustainable development goals.

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.

perspectiveIndustrialized nations that have imported fossil fuels from resource-rich developing countries (RRDCs) for decades should address the negative effects of fossil asset stranding caused by climate policy-induced fossil fuel phase-outs.

claimResource-rich developing countries (RRDC) face governance and institutional challenges, including high levels of corruption, limited financial resources, and constrained capacities to respond to crises, which are related to the 'resource curse' and hinder their ability to address the economic ramifications of asset stranding.

claimThe longevity of energy assets for fossil resource production and transport amplifies the exposure of resource-rich developing countries (RRDC) to asset stranding, as these assets have long technical lifespans of multiple decades and are susceptible to future devaluation induced by climate policy.

claimThe study identifies three key research areas regarding asset stranding in resource-rich developing countries (RRDCs): understanding asset stranding, designing holistic policies, and addressing policy barriers.

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.

claimResource-rich developing countries (RRDC) are defined as nations that possess significant fossil fuel reserves or production and meet two criteria: first, their known fossil fuel reserves comprise at least 25% of their total wealth or their fossil fuel production accounts for a minimum of 10% of their GDP; second, they are classified by the World Bank as 'Middle income,' 'Low middle income,' or 'Low income,' meaning they have a Gross National Income (GNI) per capita below USD 12,736.

perspectiveThe authors of the article advocate for just energy transition partnerships to support resource-rich developing countries (RRDCs) that are facing the issue of fossil asset stranding.

claimThe stated aim of international compensation payments is to share the economic burden of climate change mitigation with resource-rich developing countries, helping them diversify their economies, invest in renewable energy, and develop sustainable industries.

claimThere is a lack of implemented policies and measures to address the severe implications of fossil asset stranding in resource-rich developing countries and to compensate for the resulting revenue losses.

claimResource-rich developing countries (RRDC) encounter greater difficulty diversifying their economies away from fossil fuels compared to industrial countries because their economies specialize in the resource sector, concentrating productive assets and human capital there, and because they often suffer from 'Dutch disease,' where currency appreciation reduces the competitiveness of non-resource sectors.

claimDevelopment economics suggests that resource-rich developing countries need to diversify their economies to mitigate the 'resource curse' and reduce sector exposure to fossil fuel asset stranding.

claimResource-rich developing countries are affected by the transition risk of fossil asset stranding in a more fundamental way than industrial countries.

claimResource-Rich Developing Countries (RRDCs) typically possess significant production potential for renewable energy and, consequently, renewable hydrogen.

claimResource-rich developing countries (RRDC) typically lack their own climate policy approaches and often have few strategies other than resisting global climate policy efforts, which creates additional risks for their domestic economies when climate policies are implemented.

claimThe research agenda for resource-rich developing countries (RRDCs) includes investigating the extent of exposure to fossil energy asset and infrastructure stranding, as well as methods to quantify the wider societal and system consequences of such stranding.

claimFuture research on hydrogen partnerships in resource-rich developing countries (RRDCs) should focus on designing policies that compensate for the societal consequences of fossil asset stranding, ensuring benefit-sharing for local populations, and establishing criteria to measure the effectiveness of these benefit-sharing mechanisms.

procedureThe authors analyze and compare three mitigation measures for asset stranding in resource-rich developing countries: compensation payments, policy mixes, and hydrogen partnerships.

claimRevenue losses resulting from asset stranding in resource-rich developing countries can be compensated through climate finance to support low-carbon development.

claimA climate-policy-induced decrease in fossil energy exports from resource-rich developing countries can lead to severe societal consequences, including social unrest and migration crises, which have cascading effects on industrial countries.

claimWhile some industrialized nations like Germany have voluntarily reduced coal extraction, there has been no voluntary or incentivized extraction moratorium for oil or gas, particularly in resource-rich developing countries (RRDCs).

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.