Fossil fuels, stranded assets and COVID-19: Imagining an inclusive & transformative recovery.

ABSTRACT

The 2015 Paris Agreement on Climate Change implicitly requires phasing out fossil fuels; such a phase out may cost hundreds of trillions of dollars and induce widespread socio-ecological ramifications. The COVID-19 'pancession' (pandemic + recession) has rattled global economies, possibly accelerating the fossil fuel phase out. This raises the question What opportunities has COVID-19 presented to phase out fossil fuels, and subsequently, how can transformative recovery efforts be designed to utilize these opportunities and promote social, ecological and relational inclusiveness? We find that (a) the COVID-19 pancession provides a unique opportunity to accelerate climate action, as it has devalued financial assets, stunned fossil fuel production and paralyzed relevant infrastructure, thus easing the pathway towards stranding global fossil fuel resources and assets; (b) four possible post-pancession recovery scenarios may unravel, of which only one is ecologically, socially and relationally inclusive, transformative, and in line with the Paris Agreement and Agenda 2030; and (c) an inclusive recovery requires that political leadership channels the gargantuan state resources for recovery into prioritizing healthcare and the environment as public/merit goods, conscious investment in non-fossil fuel energy sector recovery accompanied by stringent climate policy, and equitably managing stranded assets to ensure that the burden falls on rich and capable actors, predominantly from the North.