Deflating a ‘Carbon Bubble’: State-organized devaluation and the socialization of decarbonization risk

Authors: Sarah Knuth*, Department of Geography, Durham University
Topics: Energy, Economic Geography, Cultural and Political Ecology
Keywords: Climate change, financialization, risk, fossil energy, property
Session Type: Paper
Day: 4/12/2018
Start / End Time: 1:20 PM / 3:00 PM
Room: Bacchus, Sheraton, 8th Floor
Presentation File: No File Uploaded

Emerging investor discourses of a ‘carbon bubble’ frame the fossil energy industry’s current and planned property holdings – proven resource reserves; extraction, processing, and distribution infrastructures; concessions and other intangible assets – as a massive financial threat in the making. Invoking memories of the 2008 financial collapse, they warn that the ‘stranding’ and devaluation of trillions of dollars worth of fossil assets globally rendered ‘unburnable’ by climate change represents a systemic economic and political risk. In this paper, I argue that imagining large-scale carbon unsettling thus requires theorizing capitalist states’ (uneven) historical power to manipulate value and manage devaluation. Drawing on scholarship in cultural and political economy and energy/socio-technical transitions, I explore how in practices such as accelerated depreciation and revisions to accounting standards, states have sought to ease the pain of regulatory/technological transformation and crisis for powerful sectors – often by socializing their costs and risks. These practices suggest both opportunities and important redistributive justice questions for the decarbonization project. I consider their potential contours through two recent state-organized devaluations in the United States: 1) accelerated asset depreciation procedures implemented to facilitate electric utility deregulation in the 1990s, and 2) alterations to accounting techniques and distressed asset acquisitions after the 2008 financial collapse.

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