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Petrostates ‘need to bridge $9 trillion gap’ in energy transition

Oil and gas producing countries face a multi-trillion dollar hole in government revenues over the next 20 years as the world decarbonises, with some needing strong international support to diversify their economies and avoid social and political instability.

That’s according to a report from Carbon Tracker, which calculates that 40 petrostates could face an average 46% drop in expected revenues from oil and gas if demand falls in line with tightening global climate policy and technological advances – a shortfall of $9 trillion.

Over 400 million people live in the 19 worst affected countries where declining fossil fuel revenues could see total government income fall by at least 20%, leading to cuts in public services and job losses. Half live in Nigeria, where a 70% drop in oil revenues would cut total government income by a third. Angola, home to 33 million, could lose over 40% of government income.

Many of the world’s biggest oil and gas producers including the US, UK, Netherlands, China, India and Brazil also face major falls in revenues but they are not a focus of the analysis because their economies are less dependent on oil and gas. Worldwide, all oil producing countries risk collectively losing $13 trillion by 2040 compared with industry expectations, a 51% drop.

Report author Mike Coffin, senior analyst oil, gas & mining said: “It’s in the interests of all nations to minimise global temperature rise and this means rapidly reducing our use of fossil fuels. But many countries are heavily reliant on oil revenues – the time to act on rebalancing their economies is now. Waiting for demand to fall will be leaving it far too late.”

Andrew Grant, head of climate, energy & industry and co-author said: “Government oil revenues will shift dramatically as the market shakes out during the energy transition. Understanding the scale of the challenge and which nations are most vulnerable will help policymakers focus their efforts. Cushioning the landing for hundreds of millions will deliver better outcomes for both climate and human development.”

Beyond Petrostates: The burning need to cut oil dependence in the energy transition calls on petrostates to act now to reduce their dependence on oil and gas revenues, by cutting public spending, raising new taxes, and restructuring their economies. It warns that continuing to invest in new oil and gas projects risks creating stranded assets and wasting capital that would be better spent on developing sustainable new industries.

Saudi Arabia unveils plans for ‘zero-carbon’ city

Saudi Arabia has announced THE LINE, a zero carbon city that it says will be a blueprint for how ‘people and planet can co-exist in harmony’.

THE LINE is a 170km belt of hyper-connected future communities, without cars and roads and built around nature, created as a direct response to some of the most pressing challenges facing humanity today such as legacy infrastructure, pollution, traffic, and human congestion.

The city is the work of NEOM, which describes itself as an accelerator of human progress and a vision of what a New Future might look like – it’s part of Saudi Arabia’s Public Investment Fund, one of the largest sovereign wealth funds in the world.

A cornerstone of Saudi Vision 2030 and an economic engine for the Kingdom, the country says it will drive its diversification and aims to contribute 380,000 jobs of the future and SAR180 billion ($48bn) to domestic GDP by 2030.

Walkability will define life on THE LINE – all essential daily services, such as schools, medical clinics, leisure facilities, as well as green spaces, will be within a five-minute walk.

Saudi says Ultra-high-speed transit and autonomous mobility solutions will make travel easier and give residents the opportunity to reclaim time to spend on health and wellbeing. It is expected no journey will be longer than 20 minutes.

THE LINE’s communities will be cognitive, powered by Artificial Intelligence (AI), continuously learning predictive ways to make life easier, creating time for both residents and businesses. An estimated 90% of available data will be harnessed to enhance infrastructure capabilities far beyond the 1% typically utilized in existing smart cities.

THE LINE will also comprise carbon-positive urban developments powered by 100% clean energy, which the state says will provide pollution-free, healthier and more sustainable environments for residents. Mixed-use communities will be built around nature, instead of over it.

NEOM’s sectors of the future, headed by global industry leaders, are already addressing some of the world’s most pressing challenges. They are pioneering a new marketplace for breakthrough innovations and creating opportunities to attract talent, investors and partners to become part of its business ecosystem.

Construction of THE LINE will commence in Q1 of 2021. THE LINE is one of the most complex and challenging infrastructure projects in the world and forms part of extensive development work already underway at NEOM.