IDEAS home Printed from https://ideas.repec.org/a/spr/ieaple/v20y2020i2d10.1007_s10784-020-09478-4.html
   My bibliography  Save this article

Access and allocation: the role of large shareholders and investors in leaving fossil fuels underground

Author

Listed:
  • Joyeeta Gupta
  • Arthur Rempel
  • Hebe Verrest

Abstract

An under-researched story is how large shareholders (e.g. Pension Funds) and investors (e.g. Export Credit Agencies) whose investments in fossil fuels may amount to trillions of dollars are implementing the Paris Agreement on Climate Change and in particular leaving fossil fuels underground (LFFU). Hence, this paper addresses the question: What arguments are used by shareholders and investors in making their financial flows consistent with LFFU, and what do these arguments imply for: access to fulfilling needs; allocation of related resources, responsibilities and risks; and, the right to (sustainable) development? This paper identifies the different arguments used and clusters them into five investor/shareholder scenarios. It assesses these scenarios using the inclusive (access and allocation) development framework. We find that there is prima facie evidence that fossil fuels and associated infrastructure are doomed to become obsolete and hence stranded, which poses a series of risks for (potential) investors and various stakeholders. Three of the five identified scenarios indicate that Pension Funds and Export Credit Agencies may transfer their risks associated with fossil fuel resources, assets and/or related knowledge to developing countries justified by the latter’s Right to Development. Such transfers have negative access and allocation impacts—creating, inter alia, a fossil fuel infrastructure and path dependency in the South and amounting to a de facto transfer of a carbon budget along with carbon dependency and related debt to the Global South.

Suggested Citation

  • Joyeeta Gupta & Arthur Rempel & Hebe Verrest, 2020. "Access and allocation: the role of large shareholders and investors in leaving fossil fuels underground," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 20(2), pages 303-322, June.
    • Handle: RePEc:spr:ieaple:v:20:y:2020:i:2:d:10.1007_s10784-020-09478-4
    DOI: 10.1007/s10784-020-09478-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10784-020-09478-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10784-020-09478-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alex Bowen, 2011. "Raising finance to support developing country action: some economic considerations," GRI Working Papers 36, Grantham Research Institute on Climate Change and the Environment.
    2. Jagadish Thaker & Anthony Leiserowitz, 2014. "Shifting discourses of climate change in India," Climatic Change, Springer, vol. 123(2), pages 107-119, March.
    3. Nykvist, Björn, 2013. "Ten times more difficult: Quantifying the carbon capture and storage challenge," Energy Policy, Elsevier, vol. 55(C), pages 683-689.
    4. Christophe McGlade & Paul Ekins, 2015. "The geographical distribution of fossil fuels unused when limiting global warming to 2 °C," Nature, Nature, vol. 517(7533), pages 187-190, January.
    5. Alex Bowen, 2011. "Raising climate finance to support developing country action: some economic considerations," Climate Policy, Taylor & Francis Journals, vol. 11(3), pages 1020-1036, May.
    6. van der Grijp,Nicolien, 2010. "Mainstreaming Climate Change in Development Cooperation," Cambridge Books, Cambridge University Press, number 9780521197618 edited by Gupta,Joyeeta, October.
    7. Bowen, Alex, 2011. "Raising finance to support developing country action: some economic considerations," LSE Research Online Documents on Economics 37572, London School of Economics and Political Science, LSE Library.
    8. Noam Bergman, 2018. "Impacts of the Fossil Fuel Divestment Movement: Effects on Finance, Policy and Public Discourse," Sustainability, MDPI, vol. 10(7), pages 1-18, July.
    9. Madian, Alan L., 1997. "Meaningful restructuring: resolving the stranded cost dilemma," The Electricity Journal, Elsevier, vol. 10(1), pages 62-71.
    10. Johan A. M. de Kruijf & Michiel S. de Vries, 2018. "Contextualizing the trend from output to outcome measurement: the Dutch pension system," Public Money & Management, Taylor & Francis Journals, vol. 38(1), pages 65-72, January.
    11. Joyeeta Gupta & Louis Lebel, 2010. "Access and allocation in earth system governance: water and climate change compared," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 10(4), pages 377-395, December.
    12. Frank Biermann & Michele Betsill & Joyeeta Gupta & Norichika Kanie & Louis Lebel & Diana Liverman & Heike Schroeder & Bernd Siebenhüner & Ruben Zondervan, 2010. "Earth system governance: a research framework," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 10(4), pages 277-298, December.
    13. Charlery, Lindy & Walelign, Solomon Zena, 2015. "Assessing environmental dependence using asset and income measures: Evidence from Nepal," Ecological Economics, Elsevier, vol. 118(C), pages 40-48.
    14. Kyra Bos & Joyeeta Gupta, 2018. "Climate change: the risks of stranded fossil fuel assets and resources to the developing world," Third World Quarterly, Taylor & Francis Journals, vol. 39(3), pages 436-453, March.
    15. Ritchie, J. & Dowlatabadi, H., 2014. "Understanding the shadow impacts of investment and divestment decisions: Adapting economic input–output models to calculate biophysical factors of financial returns," Ecological Economics, Elsevier, vol. 106(C), pages 132-140.
    16. Rozenberg, Julie & Vogt-Schilb, Adrien & Hallegatte, Stephane, 2014. "Transition to clean capital, irreversible investment and stranded assets," Policy Research Working Paper Series 6859, The World Bank.
    17. Julie Ayling & Neil Gunningham, 2017. "Non-state governance and climate policy: the fossil fuel divestment movement," Climate Policy, Taylor & Francis Journals, vol. 17(2), pages 131-149, February.
    18. Katharina Michaelowa & Axel Michaelowa, 2012. "India as an emerging power in international climate negotiations," Climate Policy, Taylor & Francis Journals, vol. 12(5), pages 575-590, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Philipp Pattberg & Cille Kaiser & Oscar Widerberg & Johannes Stripple, 2022. "20 Years of global climate change governance research: taking stock and moving forward," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(2), pages 295-315, June.
    2. Joyeeta Gupta & Courtney Vegelin, 2023. "Inclusive development, leaving no one behind, justice and the sustainable development goals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 23(2), pages 115-121, June.
    3. Joyeeta Gupta & Aarti Gupta & Courtney Vegelin, 2022. "Equity, justice and the SDGs: lessons learnt from two decades of INEA scholarship," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(2), pages 393-409, June.
    4. Rempel, Arthur & Gupta, Joyeeta, 2021. "Fossil fuels, stranded assets and COVID-19: Imagining an inclusive & transformative recovery," World Development, Elsevier, vol. 146(C).
    5. Neil Gunningham, 2020. "A Quiet Revolution: Central Banks, Financial Regulators, and Climate Finance," Sustainability, MDPI, vol. 12(22), pages 1-22, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joyeeta Gupta & Arthur Rempel & Hebe Verrest, 0. "Access and allocation: the role of large shareholders and investors in leaving fossil fuels underground," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-20.
    2. Luis Abadie & Ibon Galarraga & Dirk Rübbelke, 2013. "An analysis of the causes of the mitigation bias in international climate finance," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(7), pages 943-955, October.
    3. Kempa, Karol & Moslener, Ulf, 2015. "Climate policy with the chequebook: Economic considerations on climate investment support," Frankfurt School - Working Paper Series 219, Frankfurt School of Finance and Management.
    4. Pickering, Jonathan & Skovgaard, Jakob & Kim, Soyeun & Roberts, J. Timmons & Rossati, David & Stadelmann, Martin & Reich, Hendrikje, 2015. "Acting on Climate Finance Pledges: Inter-Agency Dynamics and Relationships with Aid in Contributor States," World Development, Elsevier, vol. 68(C), pages 149-162.
    5. Tanya O'Garra & Susana Mourato, 2016. "Are we willing to give what it takes? Willingness to pay for climate change adaptation in developing countries," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 5(3), pages 249-264, September.
    6. Sam Fankhauser, 2017. "Adaptation to Climate Change," Annual Review of Resource Economics, Annual Reviews, vol. 9(1), pages 209-230, October.
    7. Shimbar, A., 2021. "Environment-related stranded assets: An agenda for research into value destruction within carbon-intensive sectors in response to environmental concerns," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    8. Michael Jakob & Jérôme Hilaire, 2015. "Using importers’ windfall savings from oil subsidy reform to enhance international cooperation on climate policies," Climatic Change, Springer, vol. 131(4), pages 465-472, August.
    9. Oberlack, Christoph & Eisenack, Klaus, 2012. "Overcoming barriers to urban adaptation through international cooperation? Modes and design properties under the UNFCCC," The Constitutional Economics Network Working Papers 03-2012, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
    10. Kamleshan Pillay & Jorge E. Viñuales, 2016. "“Monetary” rules for a linked system of offset credits," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(6), pages 933-951, December.
    11. Oberlack, Christoph & Neumärker, Bernhard, 2011. "Economics, institutions and adaptation to climate change," The Constitutional Economics Network Working Papers 04-2011, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
    12. Jonathan Pickering & Paul Mitchell, 2017. "What drives national support for multilateral climate finance? International and domestic influences on Australia’s shifting stance," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(1), pages 107-125, February.
    13. Daniel Rosenbloom & Adrian Rinscheid, 2020. "Deliberate decline: An emerging frontier for the study and practice of decarbonization," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 11(6), November.
    14. Fankhauser, Samuel & Jotzo, Frank, 2017. "Economic growth and development with low-carbon energy," LSE Research Online Documents on Economics 86850, London School of Economics and Political Science, LSE Library.
    15. Lamperti, Francesco & Bosetti, Valentina & Roventini, Andrea & Tavoni, Massimo & Treibich, Tania, 2021. "Three green financial policies to address climate risks," Journal of Financial Stability, Elsevier, vol. 54(C).
    16. Joyeeta Gupta & Aarti Gupta & Courtney Vegelin, 2022. "Equity, justice and the SDGs: lessons learnt from two decades of INEA scholarship," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(2), pages 393-409, June.
    17. Joyeeta Gupta & Louis Lebel, 0. "Access and allocation in earth system governance: lessons learnt in the context of the Sustainable Development Goals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-18.
    18. Benedetta Cotta, 0. "What goes around, comes around? Access and allocation problems in Global North–South waste trade," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-15.
    19. Linnenluecke, Martina K. & Smith, Tom & McKnight, Brent, 2016. "Environmental finance: A research agenda for interdisciplinary finance research," Economic Modelling, Elsevier, vol. 59(C), pages 124-130.
    20. Agni Kalfagianni & Simon Meisch, 2020. "Epistemological and ethical understandings of access and allocation in Earth System Governance: a 10-year review of the literature," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 20(2), pages 203-221, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:ieaple:v:20:y:2020:i:2:d:10.1007_s10784-020-09478-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.