The global energy transition – and the shifting investment patterns and declining demand for fossil fuels that it implies – will have fiscal implications for fossil fuel producing countries. Direct impacts range from volatile and declining fossil fuel revenues over time, to potential reductions in the productive lifespan of fossil fuel and thermal power infrastructure. These trends have implications for a country’s balance of trade, budgetary space and indebtedness over time.

The impacts will vary by country, and by stage of production, type and scale of reserves, and allocation between export and domestic markets. The ability of governments to manage them (mitigating carbon risks and supporting economic transition in line with lower carbon opportunities) will be a function of their access to information and capacity to respond to it.

This policy roundtable will present the results of new modelling at the global and country levels by UCL, and a series of dialogues between country stakeholders (incl. Finance Ministries, central banks, national planners) and providers of development finance and assistance. The opening presentations, moderated panel discussion and interactive Q&A will explore these risks and potential responses to them, with a focus on: 

  • Fiscal policy – managing the fiscal impacts of dependency on a volatile export commodity, particularly where borrowing and/or additional spending proceeds ahead of production;

  • Balance of trade – trade policy and the promotion of exports, level of domestic production of goods (affecting import dependence) and monetary policy (including domestic currency management, foreign currency reserves, inflation);

  • Economic development strategies – the evolving prospects for wealth-creation from fossil fuels and low-carbon opportunities associated with rapid diversification and decarbonisation, and;   

  • National development planning – defining the appropriate role for fossil fuel revenues and flows over time that minimises carbon risk and expedites transition, as well as the managing societal expectations and political economy impacts associated with fossil fuels.