The Geo-Ecological Risks of Oil Investments by China and the Global South: The Right to Development Revisited

Joyeeta Gupta, Eric Chu, Kyra Bos, Tessel Kuijten

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Abstract

Addressing climate change and keeping global temperature rise within limits requires the phasing out of fossil fuels. Since four-fifths of fossil fuel resources that are currently available must remain underground (i.e., become stranded resources), nations and private investors should be cautious and strategic about investing in new sources, or else run the risk of having stranded assets. For emerging economies like China and historic or prospective oil investors in the global South (such as Nigeria and Kenya respectively), this raises an important question: What are the geo-ecological risks associated with investing in the fossil fuel industry by developing countries? This paper examines this question by drawing on theories at the nexus of climate change, the right to development, and stranded resources and assets, as well as through case studies of the transnationalization of oil politics in China, Nigeria as an OPEC country, and Kenya as a prospective oil investor. We first define and comprehensively assess the different geo-ecological risks, then argue that investing in fossil fuels today on the grounds of the right to development is akin to investing in ‘the emperor’s new clothes’ as the assets are expected to devalue quickly. Since most countries of the North will first want to divest their potentially stranded assets at the highest possible price, developing countries should be cautious about expanding and investing in these ‘hot’ assets as they may imminently bear the risks (and costs) of stranded assets.
Original languageEnglish
Title of host publicationGeopolitical Economy of Energy and Environment
Subtitle of host publicationChina and the European Union
EditorsMehdi P. Amineh, Guang Yang
Place of PublicationLeiden
PublisherBrill
Pages271
Number of pages304
ISBN (Electronic)9789004273115
ISBN (Print)9789004273108
DOIs
Publication statusPublished - 27 Jul 2017

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