Overview
As the world attempts to manage climate change, emissions from fossil fuels must be reduced. This review examines the literature on the stranding of fossil fuels, with a focus on stranding costs in Asia and equity issues. Equity is of acute importance to developing countries, which tend to lose the most from the stranding of fossil fuels. Previous reviews studied the distribution of stranded assets across countries but ignored that within countries. With a novel focus on inter-country and intra-country equity, this review assesses the literature on stranded assets through a lens of equity.
In line with previous literature, we focus on eight dimensions of the equity issue: energy provision, economic impact, employment, public revenues, community impact, corporate profits, inter-country equity, and allocation approaches. Most papers consider equity only to a limited extent: while inter-country comparison and the economic impact of stranding receive sufficient attention, intra-country distribution, energy provision, and employment have not been considered. Cost estimations vary widely due to the diversity in methodologies used and their assumptions. We argue that to develop a deeper understanding of equity-related issues, future research should focus on the stranding of labor, impacts on communities built around extraction, energy access, and inclusion of stranding in international agreements.
Key Highlights
- Equity remains a blind spot in stranded assets research. Of the 54 studies reviewed, 46% compare stranding impacts across countries, but only 7% address energy provision and 15% address distribution within countries. Nearly two-thirds (63%) of the studies address only two or fewer equity dimensions.
- Stranding cost estimates vary widely with the model and assumptions used. Assumptions on carbon capture and storage, bioenergy, baseline scenarios, and plant retirement age drive much of this spread, so robust estimates need country-specific assumptions.
- Coal-dependent Asia faces a disproportionate share of the risk. The Asia-Pacific holds 81% of the coal reserves that would need to be stranded. India, China and South-east Asia, with younger coal fleets, face the highest losses from stranding, and building new coal plants could significantly increase the stranding needed for 1.5°C.
- Managing stranding equitably requires deliberate policy. The literature points to early action on new fossil investment, predictable policy commitments, alternative employment and revenue sources for fossil-dependent regions, and recognition of asymmetric stranding risk in international climate finance discussions.
“The costs of stranded fossil fuel assets are distributed unevenly across and within countries, yet equity remains one of the least examined aspects of stranding. Accounting for impacts on workers, communities, and public finances in modelling-based stranding estimates could help policymakers design energy transitions that are both feasible and fair.”
