Nations Investing $400Bln In Energy Projects Banking On Failure Of Climate Pledges - Study

Nations Investing $400Bln in Energy Projects Banking on Failure of Climate Pledges - Study

Planned high-risk investments of state-owned national oil companies in the coming years may negate global climate commitments or incur huge losses at public cost, a study published Tuesday found

MOSCOW (Pakistan Point News / Sputnik - 09th February, 2021) Planned high-risk investments of state-owned national oil companies in the coming years may negate global climate commitments or incur huge losses at public cost, a study published Tuesday found.

According to the independent Natural Resource Governance Institute (NRGI) think tank, if national oil companies follow their current course, they will invest more than $400 billion over the next decade in costly oil and gas projects that will only break even if humanity fails to meet its climate commitments.

"A huge amount of state investments in oil projects will likely only yield returns if global oil consumption is so high that the world exceeds its carbon emission targets," Patrick Heller, an NRGI advisor and one of the report's co-authors, said in a press release for the report.

The report indicates that many of the investments were drawn up by national oil corporations in lower-income countries, such as Algeria, Mexico, Azerbaijan and others. Should those projects fail to break even, or if they are checked by international bodies on environmental grounds, that would translate hundreds of billions in losses of public money. These funds could better be directed at alleviating poverty and help diversify economies away from oil dependence.

"State oil companies' expenditures are a highly uncertain gamble ... They could pay off, or they could pave the way for economic crises across the emerging and developing world and necessitate future bailouts that cost the public dearly," David Manley, NRGI senior economic analyst and report co-author, said.

Manley added that as international, publicly traded companies respond to pressure from their stakeholders and divest from developing oil and gas projects, state actors may be tempted to step in and fill the gap to exploit proven hydrocarbon reserves.

International companies are regularly scrutinized by a myriad of regulatory bodies while national oil companies are answerable only to their state and ministries.

The report highlights the Nigeria National Petroleum Corporation, where almost half of the earmarked funds for future projects risk being wasted because they may not be needed by the time they are readied if the world stays on track with current climate commitments. Similar projects were singled out in Colombia, Mozambique, Angola and other nations in dire need of government investment in social welfare.

The much-anticipated, pandemic-delayed COP26 is set to be held this November in Glasgow. The conference is expected to feature reviews of each nation's Paris Agreement commitment and garner renewed and more ambitious commitments.