Think Tank Carbon Tracker Examines Financial Impact of Reducing Global Fossil Fuel Consumption.
A special report says some countries could lose at least 40% of total government revenues.
The cumulative total loss of profits for all oil producing countries is estimated to be $ 13 trillion by 2040.
This comes as efforts to combat global warming are driving the decarbonisation of energy..
Carbon Tracker describes its report as a wake-up call for oil producing countries and politicians. The agency warns that demand will be forced to fall to meet climate targets, and oil prices will be lower than producers expect.
The report also examines what will happen to government revenues if the world’s average temperature rises by 1.65 degrees Celsius..
The report focuses on a group of forty oil-producing countries that will be heavily impacted by the loss of oil revenues.
The projected damage to public finances in these countries is enormous, on average they lose 46% of oil and gas revenues.
80% of the revenues of Equatorial Guinea and Iraq are provided by the oil and gas sector. For another seven countries, including Saudi Arabia, this figure is more than 60%.
Some authorities face very large losses of total income. For seven states, including Angola and Azerbaijan, the projected losses are at least 40%. Another 12 countries, such as Nigeria and Algeria, range from 20% to 40%.
For a number of people in the Middle East and North Africa, this trend may turn out to be good luck, as their low production costs would allow them to play a more prominent role in the global supply of oil and gas..
There is also concern about what the report calls «new petrostats». We are talking about the loss of potential income from oil fields, the development of which is planned for the coming years.. Ghana, Uganda and Guyana are among the countries facing this risk.
The report says diversifying government revenues and national economies is an urgent task. This has to be tailored to the needs of each individual country, but there are also universal actions.
These include investing in education, improving governance and improving the business climate.. Capital that is not invested in oil and gas can be used instead to invest in industries that are more resilient to the energy transition.
The report also says the rest of the world has good reason to support this transition.. The moral factor should play mainly here, since the above reforms will have a positive effect on the affairs of poor countries..