MSC THESIS SUMMARIES

The Climate Policy Landscape and Fossil Fuel Phase-out in South Africa.

The burning of fossil fuels causes climate change. The most effective way of addressing climate change is through leaving fossil fuels underground. This thesis studies the scarcely addressed the 1) challenges with leaving fossil fuel underground for emerging economies like South Africa from an inclusive development perspective and 2) role of states, investors, and shareholders of fossil fuel firms in climate policy implementation through stranded assets and foreign fossil-investments. Following a multi-method research design with a literature review, qualitative content analysis of policy documents, and interviews involving experts, a case study on fossil fuels and a sub-case study on oil and gas in South Africa was conducted to determine how the climate policy landscape governs an inclusive fossil fuel phase-out in emerging economies in general and South Africa in particular, paying specific attention to stranded assets and foreign investments in oil and gas in a North-South context. National policies reveal that South Africa promotes hydrocarbon development and thus seemingly welcomes foreign hydrocarbon finance and does not inclusively govern stranded assets because of a) a marginal focus on social and human stranded assets and b) no focus on natural, physical, and financial stranded assets. Sustainability reports reveal that investors and shareholders do not prohibit hydrocarbon finance in emerging economies and do not inclusively govern stranded assets because of a) a focus on their own and clients’ financial transition risk and b) no focus on natural, physical, social, human, financial stranded assets for emerging economies. Hence, the climate policy landscape hinders inclusively LFFU in emerging economies like South Africa. The author recommends that banks and investment management firms must take a bigger responsibility for leaving fossil fuels underground in emerging economies by a) stopping hydrocarbon finance, b) setting LFFU-conditions in client engagement, c) directing finance to justice elements and stranded assets.

Governing the power: The possibility of establishing an inclusive German energy system.

An energy system that is affordable, secure, and environmentally sustainable. Those are the goals of the German government, as they set them out in 2010. This research analyzes how institutional forms of governance shape the possibility of creating an inclusive German energy system, within the CLIFF research project focused on leaving fossil fuels underground. Within the field of energy transitions, the urgency for western countries, and the necessity of a fossil fuel phase-out, are underdeveloped. By employing the inclusive development framework, this analysis is capable of analyzing in how far the three goals of energy governance are able to be achieved, and how they affect each other. By employing a mixed method approach, the multidimensional realities of inclusive development can be fully explored. A secondary data analysis helps establish how entrenched fossil fuels are in the German energy system. Semi-structured interviews focus on the oil industry’s interest in geothermal energy. An extensive and comprehensive policy analysis of all 315 publications made by two federal ministries, between 2014 and now, allows for a complete view of the mechanisms through which the German government hopes to achieve the goals of the Energiewende. Fossil fuels are proven to be heavily embedded into the German energy system, both in institutional logics and the governance system. These realities make the possibility of achieving an inclusive energy system impossible, and the mechanisms the government employs are not capable of tackling the deeply entrenched nature of fossil fuel energy production, and implicate tradeoffs in the pursuit of different dimensions of inclusive development. The lack of adaptive capacity creates limited possibilities of this prospect changing. This research sets up further questions into why these limited policy mechanisms are employed, and what must be done to change these prospects. 

No reason to stay is a good reason to go: The Energy Charter Treaty influencing the fossil fuel phase-out.

This decade is decisive for climate change action (IPCC, 2022). As governments take increasingly bold steps, regulatory changes are likely to have a major impact on fossil fuels protected under the Energy Charter Treaty (ECT). The influence of the ECT as a multilateral investment agreement on the phasing- out of fossil fuels has been insufficiently addressed in current literature. Therefore, this thesis explores whether the Energy Charter Treaty promotes or hinders a smooth low-carbon transition away from fossil fuels among its parties, and how its modernisation process impacts its role in supporting this transition. A mixed-methods approach identified seven reasons why the ECT is hindering the fossil fuel phase-out. 1) ECT enables investors to sue states for regulating in the public and environmental interest by influencing profits, limiting states’ regulatory space and energy sovereignty. The threat of disputes can directly discourage measures (threat chill) or indirectly (internalisation chill) by the general awareness of ISDS-threats postponing phase-out deadlines. 2) ECT is designed to protect the status- quo and encourages new fossil fuel-investments. It pressures states to postpone or withdraw the cancellation of licences or permits for new projects. At least 61 coal-fired-power-plants are protected under the ECT, the total protected fossil fuel infrastructure exceeds €345 billion. 3) Its Investor-State- Dispute-Settlement-mechanism (ISDS) conflicts with EU and domestic law systems. Consequently, three key issues with ISDS under the ECT were found: a) a lack of uniformity in the system, b) arbitrators have freedom of provision-interpretation and tend to rule investor-friendly, c) compensation appraisal includes future profit protection. ISDS-claims amount to $35 billion: more than Africa’s annual costs for climate adaptation to reach the Paris Agreement goals and more than the annual investment required to provide energy access to everyone around the world that currently has not. 4) If agreement in the modernisation process is reached, the most climate-friendly outcome protects existing fossil fuel investments for at least ten years. 5) ECT-accession locks countries into fossil fuel-dependent futures – the Sunset-clause keeps countries liable for ECT-breaches twenty years after their withdrawal – and undermines recent domestic transparency and independence reform. 6) There is no evidence for the ECT’s promised investment attraction and contribution to energy poverty reduction. It could even worsen energy poverty by allowing investors to sue states for restraining energy profits and lowering energy prices. Lastly, 7) by awarding investors for not adapting their business model in a timely and responsible manner public money is diverted from climate change measures benefiting the fossil fuel phase-out. 

Fossil fuels in an evolving energy landscape: leapfrogging development or developing stranded assets?

Climate change is forcing societies to mitigate as well as adapt to its consequences. In 2015, the Paris Agreement was reached. Tied to this notion are nationally determined commitments, whereby tributaries to the Paris Agreement operationalise their mitigation and adaptation plans based on their national needs. Kenya contributes 0.1% of total CO2 emissions worldwide, yet it has over the past decade made significant oil and gas discoveries. This thesis explores how the evolving availability of fossil fuels in Kenya influencess Kenya’s vision for development and an inclusive energy transition towards renewable energies, particularly oil & LNG and what are the implications for North- South relations. The study made use of inclusive development as a theory, whereby concepts such as politics of aspiration, stranded assets, resource curse and middle-income trap were examined. The objective of this research is to analyse the evolving availability of fossil fuel resources in the region, in turn determining its effect on an inclusive energy transition for Kenya and its ramifications in a North-South context. This research employs qualitative data analysis as its main methodological framework, characterised with the use of semi-structured interviews and content analysis of seminal policy documents Fundamentally, Kenya is leapfrogging its peers by deploying its energy grid to renewables (nearly 90%), despite political commitments to develop its oil and mineral resources sector to further garner growth. Therefore, Kenya is at cross-roads between sustainability and profitability, moreover, it is at risk of a potential middle-income trap, while stranded assets pose future liabilities whereas a resource curse was discarded due to the relative size of the fossil fuel resources. Although Kenya has made large discoveries of oil and gas, it is rapidly expanding its renewables. Nevertheless, access and affordability remain the key drivers to Kenya’s energy transition with a ‘least- cost’ approach setting the political agenda. Internationally, these endeavours have direct connotations for geopolitical energy tensions. Africa constitutes a natural partner for future EU-Africa collaboration.

A Carbon Lock-In is in the Pipeline: An analysis of how carbon lock-in caused by fossil fuel dependency influences an inclusive energy transition away from fossil fuels in a North-South context through a case study of Argentina.

Current development trajectories are heavily reliant on fossil fuels and in order to mitigate the negative effects of climate change, curtailing of fossil fuel production is needed. While developing countries are locking themselves into a carbon economy, there lies an opportunity for developing countries to ‘leapfrog’ carbon intensive pathways. This research aims to fill the gap in knowledge on the implications of a carbon lock-in for an inclusive transition by identifying how a carbon lock-in influences an inclusive transition away from fossil fuels to achieve inclusive development, paying special attention to shale fracking in a North-South context. A case study of Argentina was conducted through an academic literature review, semi-structured interviews with experts, an analysis of secondary data sources and a content analysis of reports and policies. Findings suggest that carbon lock-in is most likely hampering an inclusive transition away from fossil fuels in Argentina for three reasons: (1) Argentina is locked-in with carbon in the three dimensions—through an established FF dependency, normative views influenced by the industry and ‘systemic failure’. This includes increasing public debt, hyperinflation and increasing poverty that the government unsuccessfully tries to overcome by spending money on the development of fossil fuels through huge amounts of subsidies. (2) Argentina’s transition strategy is focused on gas as a bridge fuel, which implies a prolonged dependency on fossil fuels for its energy supply, exclusive development pathways and an increased risk of forthcoming stranded assets. And (3) Argentina’s regulatory framework is not inclusive, which suggests that it does not protect the natural environment, does not generate wellbeing, includes unequal decision making and contradicts itself. In order to move towards an inclusive form of development, Argentina should reconsider its development strategy focused on the exploitation of the large shale oil and gas field Vaca Muerta since it is associated with ‘capital flight’ and foreign exchange debt. 

Time To Walk the Talk: Analysing the Contextual Conditions that Enable and/or Hamper an Inclusive Just Energy Transition from a Fossil-Intensive Economy to a Low-Carbon Economy.

To mitigate the imminent effects of climate change, fossil duel dependent economies are required to phase out of their fossil fuel industries and transition to renewable energy sectors. In order to address the effects of climate change the Paris Agreement was developed in 2015 to hold all countries accountable to reduce global emissions and limit the average global temperature increase to 2 degrees Celsius, preferably 1.5 degrees Celsius by 2030. Studies have shown that developing countries are falling behind on energy efficiency targets due to Common but Differentiated Responsibilities and Respective Capabilities. This thesis analyzes the global energy transition discourse and the role of Leaving Fossil Fuels Underground in that phase out of fossil-intensive economies. It looks at the contextual conditions that influence the inclusiveness of the Just Energy Transitions in developing countries and in what ways the government addresses or rejects them in climate policies developed. Through a case study of the coal industry in South Africa, 13 non-governmental stakeholders of the energy transition were interviewed and 15 climate policy reports and documents have been analyzed. It was found that the main barriers affecting the inclusiveness of the Just Energy transition in South Africa are; (i) lack of accessibility to up-to-date data to spread awareness on climate change, (ii) issues of trust in South African government, (iii) lack of urgency displayed by the South African government, and (iv) Eskom’s current debt crisis restricting financial capacity to phase out of carbon intensive economy. Due to the complex interaction between highly globalized value chain actors and interests of local incumbent actors in the South African coal industry, the South African government demonstrates high resistance to an inclusive phase out of the coal industry. As a result, this research suggests that the current energy transition trajectories remain too focused macro level approaches to take the vulnerable workers into account and thus do not enable an inclusive Just Energy Transition in South Africa. In doing so, this thesis aims to contribute to the academic knowledge whereby developing countries can build the institutional capacity to sustainably address contextual barriers inhibiting an inclusive Just Energy Transition, using the coal industry of South Africa as an example

Working in Oil and Gas, at What Price? The Challenges International Organizations Face in Implementing an Inclusive Just Energy Transition Away from Fossil Fuels and its Impacts on Migrant Labour.

As seen through the last IPCC report (2022), the climate crisis needs to be tackled urgently and energy is the first factor to look at. However, the global economy is dependent on Fossil Fuel industries and a majority of employment relies on it for survival. Today, 12.6 million people work in the Fossil Fuel industry. Phasing-out thus implies a loss of jobs estimated around 9.5 million, that international organizations need to consider in their policy-making especially in relation to migrant labour but the current literature does not address it. This study thus attempts to understand what challenges persist in driving an inclusive phase out of Fossil Fuels led by international organizations with special reference to migrant labour. It pairs an inclusive development lens as a solution to counter power imbalances between the Global North and South with what Smith calls “uneven development” lens to evaluate labourers situations. This concept shows that Fossil Fuel industries influence migrant labour flows: labour will come to the industry’s location which strategically and systematically under develops labourers home-countries. Semi-structured interviews with labourers in the oil and gas industry were conducted during fieldwork in Dammam, Saudi Arabia. Content analysis of policy documents and reports also revealed that Saudi Arabia is not ready for a transition. Although they are implementing greener plans, their main income source will stay bound to oil and gas. In-depth analysis of data shows that Just Transition and Decent Work are mostly unknown concepts for multinational companies, and policies on handling unemployment are not yet being developed. The ILO misses data from Saudi Arabia, which questions policy-makers agencies in creating meaningful inclusive policies. Climate Change knowledge is challenges individuals’ investment to mitigate it, and migrant labour will be more impacted than non- migrant labour by the Fossil Fuels phase out. This research recommends a more thorough understanding by organizations of Middle Eastern countries. They are some of the biggest actors in the Fossil Fuel industry and if inclusive development or Just Transition policies are to be meaningful, the ILO has to demand more transparency from its Member States, to protect migrant workers.

Unlocking the Carbon lock-in in the Netherlands: A case study on the challenges and conditions for phasing out fossil fuels.

To limit global temperature rise, greenhouse gas (GHG) emissions should be massively reduced. However, many countries are locked-into fossil fuel use. This means that market systems and policies will give an advantage to fossil fuel technologies and disadvantage alternatives, perpetuating fossil fuel usage. Hardly any research has applied the carbon lock-in to a specific case. This thesis thus explores the challenges that European Union (EU) Member State (MS) the Netherlands faces, and the conditions under which it would likely be able to phase out fossil fuels. Using the theories on carbon lock-in and transitions, I examined 28 policy documents and conducted 5 interviews. The results of the analysis shows that, over the years, Dutch climate and energy policies enabled a continuation of the carbon lock-in, because (a) the policies focused on energy security, (b) the potential income generated by using gas, and (c) poor design that counteracted and obstructed other policies in the long-term. To generate emission reductions, the Dutch government mainly provided (i) subsidies for renewable energy, and (ii) tax schemes that should influence energy consumption. These measures were chosen as they were cost-effective, served social ends, and helped maintain the competitiveness of the Dutch economy by not being ahead of European or international policy. In doing so the use of fossil fuels in the Netherlands since 1990 went up until 2010, after which it did not fall below the 1990 level until 2019. All in all, the main challenges to phase out fossil fuels are the availability of fossil fuels and its structurally low prices, resulting in a strong institutional lock-in that enhances the perceived imortance of competitiveness for the economy and energy security in policy decisions. As energy-intensive sectors and households benefited from the availability of cheap energy, and the Dutch State was able to derive income from its presence and use. Conditions under which the Netherlands is likely to phase out are continuously and gradually rising fossil fuel prices and higher internationally legally binding targets, as both push the Netherlands to reduce its emissions. 

Purposeful Deception on the Verge of Delusion: Addressing the fossil fuels industry’s narratives causing the impasse within the energy transition.

In order to meet the targets set by the Paris Agreement, fossil fuels need to be left underground. Despite being aware of their environmental impact, fossil fuels companies have purposefully hindered climate action and the energy transition in two different ways: at first denying the relevance of the climate crisis, and, most recently, representing themselves as the leaders of climate mitigation. There is a fundamental socio-psychological component within the current impasse caused by the fossil fuels industry, and it is significantly under-researched. As a part of the CLIFF project, this study explores how the shift of narrative adopted by the fossil fuels industry has influenced European climate perception and hindered the energy transition while avoiding any form of accountability. Through the analysis of existing literature, critical content and discourse analysis of Shell’s sustainability reports, the analysis of Shell’s social media ads, a survey distributed in various European countries, and semi-structured interviews with leading scholars and activists, this study reached the following conclusions: a) the misleading strategies identified are traditional forms of climate denial (undermining science, spreading doubt, and lobbying), as well as new forms of climate denial (greenwashing, techno-optimism, and strategic blame placement), which acknowledge the climate crisis, but equally reject and delay climate action; b) the fossil fuels industry is both the perpetuator and the victim of this new form of denial; c) their purposeful deception is mostly targeted towards young males, which reveals the fossil fuels industry’s intention of maintaining a patriarchal status quo, deepening the correlation between fossil fuels and masculinity (Petro-masculinity); d) most Europeans are unhappy to support this industry as consumers; e) fossil fuels executives should be held morally and legally accountable for their role within the climate crisis and purposeful delay of the energy transition that could save humankind from extinction.

Leaving Fossil Fuels Underground: The Social Justice Implications Related to the Distribution of Fossil Fuels.

With the collective aim of limiting global warming to well below 2°C above pre-industrial levels, the pressure to diminish carbon emissions increases. Leaving Fossil Fuels Underground (LFFU) seems to be the most viable and equitable direction in this transition. LFFU means the elimination of the world’s dependency on fossil fuels and therefore enormous losses in infrastructure, investments, and untouched fossil fuel reserves which will lead to economic losses. Based on the Right to Development, global climate policy cannot justifiably ask countries in the Global South to forgo their ambitions regarding development and poverty reduction. Nevertheless, the world needs to take action to phase-out fossil fuels in an equitable and just way. The focus of this thesis is how the distribution of fossil fuels affects social justice in the context of the need to phase-out fossil fuels rapidly. Methods used were academic literature review, mapping, and semi-structured interviews. The research reveals that the majority of proved fossil fuel reserves are situated in the Global South. Extensive remaining fossil fuel reserves are located in nations that are dependent on fossil fuels for their export. Due to their undiversified economies based on fossil fuel export, phasing out fossil fuels will affect ordinary citizens. In the Global South, fossil fuels are owned and controlled by the sovereign state and are concentrated in regions where overwhelmingly National Oil Companies (NOCs) control the resources and industry. NOCs make large fiscal contributions to their governments which has caused governments with undiversified economies to become fiscally dependent on fossil fuel export. The presence of vast fossil fuel reserves and NOCs in undiversified economies exacerbates the social justice implications of phasing out fossil fuels. These nations are economically dependent on fossil fuel export and have large percentages of their populations employed in the industry. Phasing out fossil fuels without improving their comparative advantage will increase unemployment, (energy) poverty, and lead to political instability. This study recommends international assistance for nations economically dependent on fossil fuels as it is imperative to mitigate climate change justly. It may seem counterintuitive to assist wealthy fossil fuel-rich states that have contributed to climate change but phasing-out fossil fuels will affect citizens in these nations disproportionately. 

The Energy Transition and Divestment of Fossil Fuel Assets.

Limiting global temperature rise to 1.5 degrees Celsius will require a rapid transition away from fossil fuels. News sources declare that climate change mitigation pressures are increasing divestment of fossil fuel assets toward stakeholders with less transparency obligations, thereby hindering the realization of international climate goals. However, academic literature on divestment of physical fossil fuel assets in a climate-context is scarce. The current research is an explorative desk-study, aiming to investigate the relation between asset divestment and a just energy transition. The study employed a qualitative research approach, consisting of a news article content analysis, and analysis of 12 semi-structured interviews. The analyses provide supporting evidence for the proposed divestment trend: fossil fuel companies are motivated through climate related reasons to divest assets. This may increasingly shift asset ownership from IOCs toward private companies, private equity firms, and NOCs. The findings also support the notion that this divestment decreases overall transparency about operations and (future) greenhouse gas emissions from fossil fuel companies. Additionally, divestment may increase the risk of carbon leakage. Taken together, these findings indicate that current divestment trends have a negative impact on a just energy transition, specifically affecting distributional and restorative justice.