Report: ‘Petrostates Of Decline’ Highlights The Dangers Of An Aggressive Fossil Fuel Phase-Out For The Global South
With calls for a rapid and disorderly fossil fuel phase-out making headlines as we enter into COP28, a timely research report from Carbon Tracker shows just how dangerous such a transition would be for the Global South.
Carbon Tracker, an energy transition think-tank, has today released a research report Petrostates Of Decline which finds that so-called ‘petrostates’ would see over 50 percent of expected oil and gas revenue lost under a ‘moderate-paced’ energy transition, represented by the International Energy Agency’s Announced Pledges Scenario (APS). Under such a scenario, Carbon Tracker’s analysis reveals that developing countries such as Nigeria, Chad, Angola and Equatorial Guinea are highly vulnerable from an economic standpoint, due to oil and gas revenues currently making up more than 60 percent of government revenue.
The report highlights this trend, explaining it is “particularly concerning given the [African] continent’s rapidly growing populations and existing development challenges […].”
Carbon Tracker defines a ‘petrostate’ as a country which relies on oil and gas revenue to balance fiscal budgets. Across the 40 countries analysed, of which the overwhelming majority are in the Global South, $8 trillion of expected revenue would be wiped out between now and 2040 in the IEA’s scenario. The impact of this lost revenue will further hinder the development of the Global South, compromising countries’ ability to mitigate economic challenges and deepening global inequalities when it comes to access to secure and safe energy.
As previously discussed by EID, a total phase out of fossil fuels would have a catastrophic impact on international energy security, the global economy, and local communities. A recent Washington Post analysis confirms this:
“If fossil fuel production were stopped tomorrow, the world would quickly grind to a halt.” (emphasis added)
Putting the devastating economic impact aside, a total fossil fuel phase-out would significantly reduce quality-of-life and access to safe and secure energy supply for millions of people living in the Global South. Fossil fuels are crucial to propping up underinvested grid infrastructures and act as a lifeline for off-grid communities in many areas of the world. The IEA estimates that over 700 million people globally do not have access to electricity. Many of these people rely on fossil-based fuels, such as liquid petroleum gas, for heating and cooking.
As James Rockall, the CEO of the World Liquid Petroleum Gas Association, explains:
“These off-grid communities are among those most at risk of being left behind by the energy transition. While some areas are already benefitting from renewable energy sources, it remains a distant solution for many.” (emphasis added)
Similarly, a Center for Strategic and International Studies analysis of United Nations data found that “advanced economies, or the Global North, cannot try to impose strict climate actions on the developing world that could negatively impact economic growth.”
As articulated by Ndileka Mandela, granddaughter of Nelson Mandela, in response to calls to boycott COP28:
“Campaigners and politicians are right to call out and question— but not at the expense of progress, and not at the expense of the world’s poorest nations.” (emphasis added)
Carbon Tracker’s latest analysis lays bare the striking negative economic impact that turning the taps off on fossil fuels would have on developing nations.
Bottom line: An energy transition cannot come at the expense of the world’s poorest nations. This latest analysis demonstrates that global economic and development considerations must be front-of-mind for target-setters and pledge-makers to avoid crippling developing economies and stymying progress.