Decarbonizing capital: Investment, divestment and the qualification of carbon assets

Abstract

Private investment capital is now widely regarded as strategically significant to the governance of climate change. A dedicated and dynamic carbon finance sector has emerged that features techniques and practices for decarbonizing capital, facilitating investment in low-carbon projects and enterprises or enabling divestment from high-carbon firms and sectors. We bring together and develop the concepts of ‘qualification’ and ‘assetization’ to analyse how decarbonizing capital is proceeding. With specific reference to green bonds and the equities of fossil fuel corporations, we show how investment and divestment entail the qualification of things as assets with more-or-less specific carbon properties. But the qualification of assets as ‘low-’ or ‘high-carbon’ is also shown to be contingent, contested and compromised, featuring contrasting modalities of qualification that are decarbonizing capital in uncertain and incomplete ways.

Keywords:

• decarbonization
• investment
• divestment
• qualification
• assetization

Acknowledgements

The authors would like to thank the various agents of carbon finance and multiple representatives of a European company who kindly agreed to be interviewed for our research. Generous comments from three anonymous reviewers and the journal editors were greatly helpful for revising and finalizing this paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Fieldwork comprised: 15 semi-structured interviews with various agents of carbon finance, conducted between March 2018 and March 2019 at multiple sites in Europe; and, participant observations at industry workshops and conferences during 2018, including the Climate Bonds Annual Conference, and the UN Environment Programme (UNEP) Finance Initiative Global Roundtable. The research formed part of REINVENT (Realising Innovation in Transitions for Decarbonisation), a wider project funded by the European Union’s Horizon 2020 Research and Innovation Programme (https://www.reinvent-project.eu). The project also included a further set of case study interviews with multiple representatives of a European company that issued green bonds to finance a transformation of its production facilities.

Additional information

Funding

This research is part of REINVENT (Realising Innovation in Transitions for Decarbonisation), a project supported by the EU Horizon 2020 Research and Innovation Programme [grant number 730053].

Notes on contributors

Paul Langley

Paul Langley is Professor of Economic Geography at Durham University. His publications include Liquidity lost (Oxford University Press, 2015) and The everyday life of global finance (Oxford University Press, 2008).

Gavin Bridge

Gavin Bridge is Professor of Human Geography at Durham University. His publications include Energy and society: A critical perspective (Routledge, 2018) and Oil (Polity, 2017).

Harriet Bulkeley

Harriet Bulkeley is Professor of Human Geography at Durham University. Her publications include Accomplishing climate governance (Cambridge University Press, 2015) and An urban politics of climate change (Routledge, 2014).

Bregje van Veelen

Bregje van Veelen is Researcher at Uppsala University, Sweden. Her publications include ‘Caught in the middle? Creating and contesting intermediary spaces in low-carbon transitions’ (Environment and Planning C: Politics and Space, 2020), and she currently holds a Formas Mobility Grant for the project ‘Post-carbon: Imaging the future to unmake the present’.