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Low Carbon Transition

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The OECD Development Centre assists resource-rich countries transition to a low-carbon future, as they are those most exposed and less prepared to manage transition risk.

A two-track approach is proposed:

whereby any fossil fuel production that will be part of the domestic energy mix will need to become carbon neutral (through emission abatement or sequestration, supported by technology transfer and innovative public-private partnerships);

While, at the same time, putting in place the enabling conditions to accelerate the process of shifting away from fossil fuels and achieving systemic change, including by re-investing revenues from time-bound fossil fuel investments into renewable energy generation and broader decarbonisation efforts.

Key deliverable: Equitable Framework for Extractive-based Economies in Transition (EFFECT):

A blueprint for action to assist policy makers in designing comprehensive strategies to advance the low-carbon transition, avoid high-carbon lock-in and leave no-one behind in a global low-carbon economy (while accounting for potential adverse impacts on workers and communities). The Framework is structured around three Pillars:

1. Decarbonisation of extractives (through technological innovation and collaborative approaches for technology transfer; enabling measures and incentives; and financing)
2. Just transition plans and sustainable fossil fuel exit strategies
3. Systemic decarbonisation of resource-rich economies.

Learn more about EFFECT and its governance structure

Shared Value Creation

Participating countries and stakeholders in the consultation process have collectively developed a Framework for Extractive Projects on Collaborative Strategies for In-Country Shared Value Creation to use extractives to build competitive and diversified economies Country Reviews on Shared Resource-based Value Creation are also used to assess the constraints and opportunities for in-country value creation and better integration of the extractive sector with the rest of the economy. Click here to consult the Framework's workstream.

A Compendium of Practices is being developed to provide further guidance for operationalising the Framework, inform improved policy making and support the implementation of the 2030 Agenda for Sustainable Development by showing how public-private collaboration can work in practice.

Integrating renewables in mining: Review of business models and policy implications  

The report focuses on the mining sector's energy transition based on a review of over 30 existing renewable energy projects in mines worldwide. It analyses the key drivers for, and obstacles to, renewable energy integration in mining operations, in order to reduce energy-related costs and associated  footprint, thereby contributing to the achievement of the SDGs and the Paris Agreement.

Revenue Management and Spending

The Role of Sovereign and Strategic Investment Funds in the Low-carbon Transition : Sovereign wealth funds manage a large share of the world’s invested capital. The action or inaction of these funds on climate finance is of crucial importance to the world’s ability to reach the goals of the Paris Agreement, and restrain global warming to below 2 degrees Celsius. However, sovereign wealth funds have so far played a very limited role in climate finance. This report provides guidance on how governments can support their sovereign wealth funds in becoming climate-aligned commercial investors. The establishment of synergies between sovereign wealth funds and strategic investment funds can help scale up investments in clean-energy infrastructure.

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Using Extractive Revenues for Sustainable Development - Policy Guidance for Resource-rich Countries - Transforming natural finite assets into human, social and physical capital is a key challenge for natural resource-rich countries. This report distils related lessons from the OECD Policy Dialogue on Natural Resource-based Development on natural resource revenue management and spending for sustainable development. This includes a guide on how natural resource-rich countries can ensure budget sustainability to support consistent spending over time. Further analysis focuses on the management of spending versus saving and the effectiveness of different spending mechanisms for sustainable development, making recommendations to address current challenges.

Getting Better Deals

Investment contracts are key tools, defining investor-state relationships, determining the distribution of risks, costs and benefits as well as the level of public revenues to be expected from investment projects.  The process has led to the development of Guidance to Assemble and Manage Multidisciplinary Teams for Extractive Contract Negotiations to engage effectively in extractive contract negotiations. Annexed to the Guidance is a Terms of Reference Template that governments may use to recruit and to monitor external advisers. 

Since the pricing of transactions between related parties in the extractive industries is an issue of particular relevance to many developing countries, a toolkit on mineral product pricing, which  has been the subject of extensive consultation within the Policy Dialogue, has been released to help address the information gaps on prices of minerals sold in an intermediate form (such as concentrates).

Participating countries and stakeholders in the consultation process have collectively developed the Guiding Principles for Durable Extractive Contractsthat host governments and investors can use as a common reference to build mutual trust during contract negotiations, and structure extractive contracts for the long term. The Guiding Principles were endorsed by the Governing Board of the OECD Development Centre on 10 February 2020. 

Learn more about the Guiding Principles,  watch the launching event and video contributions from stakeholders.

Domestic Resource Mobilisation (tackling BEPS, corruption and commodity trading transparency)

Corruption in Extractives

Participating countries and stakeholders in the consultation process have collectively developed a Typology of Risks, Mitigation Measures and Incentives. This work is intended to contribute to the 2030 Agenda for Sustainable Development and other international processes, including on-going efforts by the G-20 Anti-Corruption Working Group to prevent and address corruption in high-risk  areas.

The Typology can be used as a benchmarking tool by stakeholders or integrated into existing methodological tools to carry out sector-specific integrity scans or peer-reviews, such as the African Peer Review Mechanisms. 

How was the Typology developed? 

Thematic Dialogue on Commodity Trading Transparency

The Thematic Dialogue on Commodity Trading Transparency was launched in response to the call received from the 2016 London Anti-Corruption Summit and the high-level mandate received from the OECD Development Centre’s Governing Board on 3 October 2017, to provide a multi-stakeholder dialogue platform for collaboration on how the global and multifaceted challenges of corruption in commodity trading can be addressed from both the supply and demand side. The Thematic Dialogue is co-chaired by Nigeria and the United Kingdom.

The Thematic Dialogue has developed five complementary and mutually supportive tools that home countries, trading companies and producing countries, including state-owned enterprises, can use to reduce drivers of corruption and articulate complementary interventions in both producing countries and trading hubs. These tools have been developed as a package in order to address the multi-faceted dimensions of corruption in commodity trading, and in recognition of the roles that the different actors can play in reducing the drivers of corruption, increasing transparency and ultimately improving accountability in commodity trading.

The Typology of Corruption Risks in Commodity Trading Transactions maps out corruption risks of cross-cutting relevance that can arise at several points in commodity sales transactions in order to improve understanding and enhance awareness of corruption red flags and evolving corruption patterns in commodity trading. Building on the identification of those corruption risks, a report on Options for Operationalising Transparency in Commodity Trading Transactions sets out a number of measures that can be undertaken either at the international level, by home governments, SOEs, trading hubs, commodity exchanges and industry associations to operationalise transparency and reporting requirements by commodity trading companies. This report is accompanied by an Online Stocktake of company reporting requirements applicable in different trading hubs which demonstrates that despite the existence of several legislative instruments and regulations that set out limited reporting requirements applicable to commodity trading transactions, there are currently no requirements in these key trading hubs for disclosing payments made by companies to governments for the purchase of publicly-owned oil, gas and minerals.

Alongside the tools above that focus on the role of buyers in commodity trading transactions, the Thematic Dialogue has also sought to shine a spotlight on the important role played by sellers of publicly-owned commodities. The Online Mapping Tool of State-Owned Enterprises and their Subsidiaries was originally conceived to support buyers in determining whether the seller they are dealing with is an SOE. However, this tool now covers not just subsidiaries selling oil, gas and minerals, but all subsidiaries of selected SOEs in order to increase the utility of the tool for a wider number of potential end-users, including civil society organisations and citizens seeking information about state ownership. Lastly, in recognition that transparency is necessary, but not sufficient to deliver improved governance in commodity trading, the Thematic Dialogue has developed specific guidance for SOEs on how to select buyers of oil, gas and minerals (How to Select Buyers of Oil, Gas and Minerals: Guidance for State-Owned Enterprises). This guidance explains how SOEs can set up transparent and competitive buyer selection procedures that reduce discretion and close opportunities for corruption.

How to Select Buyers of Oil, Gas and Minerals - Guidance for State-Owned Enterprises

The sale of publicly-owned oil, gas and minerals can have a significant impact on the development trajectory of resource-rich developing and emerging economies due to the large volume of commodities sold and the amount of money involved. Therefore, getting the buyer selection process right is a crucial step to prevent potential public revenue losses that can arise through sub-optimal allocation and corruption. "How to Select Buyers of Oil, Gas and Minerals: Guidance for State-Owned Enterprises" is intended to strengthen state-owned enterprises (SOEs)’ capacity to market commodities and optimise the value of resources sold. It explains how SOEs can set up transparent and competitive buyer selection procedures that reduce discretion, close opportunities for favouritism and corruption, ultimately leading to increased revenues for improved development outcomes.

Online Stocktake of company reporting requirements applicable in different trading hubs

This online Stocktake of company reporting requirements applicable in different trading hubs is intended to take stock of current transparency, reporting and anti-corruption requirements across key global trading hubs. The main purpose of this exercise is to determine whether payments to governments for the purchase of publicly-owned commodities are subject to transparency requirements or reporting obligations in any of the key global trading hubs.

Typology of Corruption Risks in Commodity Trading Transactions

Commodity trading presents specific and heightened risks of corruption due to the large amount of money involved in commodity trading transactions, which are source of important revenues for developing countries, and due to the sophisticated mechanisms used to channel corrupt payments. These include complex and opaque corporate structures, the use of off-shore entities, that render the identification of beneficial owners more difficult, the use of intermediaries (including briefcase or shell companies) and joint ventures with politically exposed persons (PEPs).

This report maps out corruption risks of cross-cutting relevance for the sales of oil, gas and minerals that can arise at several points in commodity trading transactions. It contributes to advancing the global transparency and accountability agenda in commodity trading, by improving understanding and raising awareness of corruption red flags and evolving corruption patterns across a wide range of stakeholders, including home jurisdictions of commodity trading companies, trading hubs, host governments, state-owned enterprises and commodity trading companies.

Options for Operationalising Transparency in Commodity Trading Transactions

Given their sheer magnitude, the payments made by companies for the purchase of oil, gas and minerals from governments or state-owned enterprises are of significant public interest. However, only a few commodity trading companies regularly publicly disclose information in respect of their payments to governments for the purchase of these publicly-owned commodities. This report makes a case for the development of a common global standard on transparency of payments that trading hubs, home governments and industry associations can use to ensure consistency, comparability and usability of data, building on the 2019 EITI Standard. Complementary measures by host governments and SOEs are necessary to set shared expectations across jurisdictions, including in producing countries. These include the adoption of disclosure policies as well as the inclusion of disclosure obligations in commodity sales contracts to set clear expectations on transparency of payments, and avoid potential conflicting requirements and bilateral negotiations.

Online Mapping Tool of State-Owned Enterprises and their Subsidiaries

Companies involved in commodity trading face challenges in determining whether the seller they are dealing with is an SOE, despite undertaking an extensive and resource-intensive due diligence process. The Online Mapping Tool of State-Owned Enterprises and their Subsidiaries was conceived to support buyers in determining whether the seller they are dealing with is an SOE, however, the scope has been widened to all subsidiaries of selected SOEs to increase the utility of the tool for a wider number of potential end-users. The Pilot project of this tool maps ten SOEs and their subsidiaries from a variety of OECD and non-OECD countries, including: Colombia, People’s Republic of China, Kazakhstan, Indonesia, Brazil, South Africa, Thailand and Republic of the Congo.

Tackling BEPS

The OECD and the Intergovernmental Forum on Mining, Minerals and Metals and Sustainable Development (IGF) are addressing high- priority tax base erosion issues facing many developing countries in raising revenue from their mining sectors, including excessive interest deductions; the design and use of tax incentives for mining investment; mineral product pricing for products with opaque markets; strengthening mineral testing and verification practices; and the use of stabilisation clauses in investment treaties.