IISD Report: Shifting Away from Fossil Fuels Could Lower BRIICS Nations' Revenues

By IndraStra Global News Team

A new report by the International Institute for Sustainable Development (IISD), titled Boom and Bust: The Fiscal Implications of Fossil Fuel Phase-Out in Six Large Emerging Economies, looks at the potential financial ramifications of phasing out fossil fuels in six emerging economies — Brazil, Russia, India, Indonesia, China, and South Africa (BRIICS). They must begin adjusting their fiscal policies to account for declining fossil fuel use or risk a $278 billion revenue gap by 2030. 

These six nations collectively account for 45 percent of the world's population and carbon dioxide (CO2) emissions, 25 percent of the global gross domestic product (GDP), and a substantial portion of the world's poor. According to the report, they are especially susceptible to the budgetary effects of the energy transition because of their reliance on fossil fuel revenues. The public revenues from fossil fuel production and use make up 34 percent of total government revenues in Russia, 18 percent in India, and 16 percent in Indonesia. In Brazil, the percentage stands at 8%, South Africa at 6%, and China at 5%.

The report estimates that by 2050, total fossil fuel earnings in BRIICS nations might be as much as $570 billion less than under a business-as-usual scenario in which governments fail to phase down fossil fuels sufficiently to avoid the most severe climate impacts. 

Tara Laan, a senior associate at IISD and lead author of the report, said: “Surging energy prices and demand are generating huge revenues from fossil fuel production and consumption. These temporary, short-term windfall profits should be taxed to fund the energy transition... At the same time, governments must protect vulnerable consumers from high prices and support fossil fuel-dependent workers and communities...”

Note: The report analyzes the current reliance on earnings from fossil fuels and projects future revenues based on scenarios developed by the IEA that examine energy consumption, supply, and prices from 2030 to 2050.

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