Fossil fuel-producer and mineral-rich developing economies have contributed least to cumulative greenhouse gas emissions. Yet, they suffer some of the worst impacts of climate change and are among the least equipped to navigate the risks arising from the low carbon transition or take advantage of the opportunities. The Equitable Framework and Finance for Extractive-based Countries in Transition (EFFECT), presented on the side-lines of COP27 in Sharm El-Sheikh, provides a toolbox for policy makers to chart just and sustainable low carbon transition pathways, in line with their development priorities.
“We need to support a transition that is effective, people-centred and fair. Every country has a different starting point for its climate action, and will meet its climate and development goals based on a mix of approaches that best suit its particular circumstances,” OECD Secretary-General Mathias Cormann said. “In this regard, EFFECT is both realistic and ambitious. It recognises the transition will be harder for developing economies that depend heavily on fossil fuels, and will support policy dialogue and peer learning, help to shape partnerships, and provide practical guidance to chart their own low carbon roadmaps.”
Fossil fuel-producer developing economies rely on cheap access to those resources for power generation and industry, and depend heavily on revenue from fossil fuels exports. Many are in the midst of severe economic downturns caused by the enduring effects of the COVID-19 pandemic and Russia’s invasion of Ukraine. These crises have created strong inflationary pressures, increased public debt to unsustainable levels and made it harder and more expensive to access international finance.
In the longer run, rapid demographic growth and urbanisation, burgeoning demand for energy, inadequate power networks, as well as significant gaps in technology, capacity and financing could lock these economies into costly high-carbon development pathways. Policy makers in fossil fuel-producer countries seeking to decarbonise their economies are thus facing a particularly complex challenge, while mineral-rich developing countries need to manage new risks and opportunities.
“As we navigate our way through the energy transition in Nigeria, EFFECT will play a key role in reducing exposure to risk, increasing resilience and helping Nigeria realise the benefits of a low carbon economy. We intend to use EFFECT as a reference tool to assess gaps, support the implementation of our national Energy Transition Plan, and advance systemic transformation in Nigeria”, said H.E. Timipre Sylva, Minister of State for Petroleum Resources of Nigeria and co-Chair of the initiative.
EFFECT provides practical guidance for those policy makers. It accounts for their need to address short-term pressures, particularly energy access, affordability and security, without losing sight of long-term structural transformation and decarbonisation objectives. Developed in close partnership with developing economies, OECD countries, international organisations, industry (including extractives), civil society, and development finance institutions, EFFECT pursues three objectives:
For more information, journalists are invited to contact the OECD Development Centre’s Press office: Bochra Kriout ([email protected] ; Tel.: +33 145 24 82 96).