Experts Say Green Energy Could Cost Oil States $13 Trillion By 2040

As efforts to contain the rise in global temperatures drive the decarbonization of energy supplies, new report has shown that the shift to green energy could cost oil and gas producing countries $13 Trillion by 2040.

It says some countries could lose at least 40% of total government revenue.

Carbon Tracker’s report is likened to a wake-up call to oil producing countries and international policymakers. It says they have planned on the basis that demand for oil will increase until 2040.

The agency has warned that demand will have to fall to meet climate targets, and oil prices will be lower than oil producers and the industry currently expect.

Experts look at what would happen to government revenues if the increase in global temperature is limited to 1.65C.

The $13 trillion figure for lost revenue is compared with what it calls “business as usual” expectations of continued growth. It includes countries whose economies are not dominated by oil – such as the UK, the US, India and China.

The main focus of the report, however, is a group for which the loss of oil income will be much more challenging, 40 countries it calls “petrostates”.

The dependence on oil and gas revenue is very marked for some countries – more than 80% for Iraq and Equatorial Guinea. For another seven including Saudi Arabia the figure is more than 60%.

Some countries face very large losses of total revenue. For seven countries, including Angola and Azerbaijan the predicted loss is at least 40%. For another 12, including Saudi Arabia, Nigeria and Algeria it is in the range of 20% to 40%.

For some in the Middle East and North Africa, the effect is moderated somewhat because their low production costs would give them a more prominent role in global oil and gas supply.

There is also a concern about what the report calls emerging petrostates. What they have to confront is a loss of potential revenue from oilfields where development is planned in the coming years. Ghana, Uganda and Guyana are among the countries facing this risk.

Patsy Nwogu

Reporting on data-driven featured stories and investigations.

Related post