Stranded Assets: The Nexus Between Extractives, Climate, & the Circular Economy within the African Extractives Sectors
As the world moves towards a low-carbon energy transition, the potential risk of stranded assets within the extractives sectors in Africa is increasingly a reality for many fossil fuel dependent countries. The 2015 Paris Agreement aims to limit global warming to below 2°C above pre-industrial levels. Efforts to mitigate climate change are therefore a key driver of potential asset stranding, particularly the stranding of fossil fuels within the extractives industry. This potential asset stranding poses a significant risk for fossil fuel rich developing countries because of their dependence on fossil fuel revenues to build their economies and meet their developmental goals. Yet, alongside the risks, asset stranding brings opportunities within the African extractives sectors that need to be unlocked. The demand for mineral energy materials, such as cobalt and copper, is expected to rise and thus exploration and mining will continue into the foreseeable future. As the global energy transition towards renewables gains momentum, premature de-industrialisation and increasing levels of energy poverty in Africa should be addressed by African governments. Fossil fuel dependent African countries should use resources at their disposal to meet energy demands and ensure that social and development goals are prioritised while actively pursuing low-carbon development.