Baku, Azerbaijan, Nov. 23
By Rashid Shirinov – Trend:
The changing dynamics in global energy markets are likely to put pressure on fossil fuel exporters such as Kazakhstan, reads a report by EBRD titled “The fiscal implications for Kazakhstan of worldwide transition to a greener global economy”.
The report notes that these dynamics include the development of alternative energy sources, the falling costs of cleaner energy technologies, and countries’ commitments to achieving global climate goals.
“This will mean that export revenues may fall – due both to lower exports and lower oil prices – by up to 40 percent in the next 20 years, leading to unsustainable levels of public debt in Kazakhstan,” EBRD said.
The Bank added that as oil is a major source of government revenue, this may in turn put pressure on the state budget. Therefore, good risk management on the fiscal side will be an important priority for fossil fuel-exporting countries.
The report looks at three possible scenarios: business as usual, a partial green transition and a full transition to a low-carbon economy across the globe.
“The first two scenarios would mean that the world falls far short of the goal to contain global warming to 2°C; however, this may also mean that oil demand remains buoyant in global markets, in which case Kazakhstan’s fiscal position would not be under threat,” reads the report.
However, if there is a worldwide shift to a greener economy, and oil prices settle at about $65, then over the course of the next decade this could lead to depletion of the country’s national savings from oil.
“The most significant fiscal impacts are projected to occur in the late 2020s, suggesting that there is a window of opportunity of around a decade in which Kazakhstan could take action to address these impacts,” EBRD noted.
EBRD is a leading investor in sustainable energy and green economic transition in its regions, with over 26 billion euro committed to projects in this area since 2006. The green economy is one of the Bank’s priorities in Kazakhstan.
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