Petrostates must plug $9 trillion revenue hole
The 40 leading oil and gas producing countries face losing 46% of their oil and gas revenues - a shortfall of $9 trillion - according to a new report from Carbon Tracker.
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 reads as a wake-up call to petrostates and international policymakers who have based their planning on industry and OPEC forecasts that demand for oil will increase through to 2040, and a long-term price of $60 a barrel or higher.
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. 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 rises 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," he said.
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.
Petrostates will minimise losses if there is an orderly wind down of production, with global supply falling in line with decreasing demand and falling oil prices. If they go it alone and seek to monetise their existing reserves while they can, oversupply is likely to destroy value for all, with falling prices quickly outweighing the benefit of increased production.
Many petrostates are already adopting measures to try to bridge the expected hole in their finances. Several Middle Eastern countries have introduced value-added taxes and, with countries like Nigeria, Angola and Iran, taken steps to reduce subsidies. Wealthy gulf states are investing in industries like renewable energy and tourism.
Many countries facing the biggest shortfalls are also among the poorest, have young and rapidly growing populations with least capacity to adapt their economies.
The international community can help the most vulnerable countries, for example by supporting the development of new technologies, offering technical assistance for regulatory and tax reform, and providing capital.
Protium Green Solutions targets Scotland hydrogen potential
Protium Green Solutions (Protium), a leading UK-based green hydrogen energy services company, has expanded its UK footprint with the opening of Protium Scotland, led by newly appointed Jon Clipsham as Chief Commercial Officer.
Following a year of "significant growth" for the London-based firm, Protium’s activity across the green hydrogen space continues to demonstrate the viability of green hydrogen for businesses accelerating their net zero strategies and its CAPEX totals more than £1 billion for projects across aviation, road transport, alcoholic manufacturing and food & beverage sectors.
Protium’s Scotland presence has been established to support its growing projects in the region, with three clients currently based in Scotland and additional projects in the pipeline. Clipsham will lead Protium’s client engagement team across all UK regions, further supporting existing clients’ decarbonisation efforts across its accelerating projects.
Clipsham has been hired to spearhead the Scotland-based office, bringing with him over 30 years’ experience having spent more than 25 years in the chemicals industry and more than five years in the green hydrogen space.
Previously he developed and led many of the projects which have driven the growth of the green hydrogen eco-system in Orkney, and he also plays an influential role in shaping Scotland’s hydrogen policies and regulation, as a Board member of the Scottish Hydrogen and Fuel Cell Association (SHFCA). He also holds various lecturing positions at notable Scottish universities and educational institutes (covering hydrogen and renewable energy).
Clipsham said he is fully aligned with Protium’s mission of taking action and delivering change while policy and industry catches up. "I look forward to working with the team and its clients in supporting the national energy transition and am proud to be joining forces with other experts in the field who share the same vision," he said.
Chris Jackson, CEO of Protium, said: “We can see first-hand how the appetite for green hydrogen is increasing so leveraging Jon’s expertise and technical capabilities will be instrumental in delivering the best result for our clients - I am confident we’ll be able to demonstrate how green hydrogen is an exciting solution for these organisations overhauling their decarbonisation efforts.
“As we approach the second year of the business this milestone marks an important step for Protium as our client portfolio continues to grow, government support steadily increases and as UK-brands explore sustainable energy alternatives.”
With Protium’s senior leadership team holding external decision-making roles in relevant hydrogen Associations and Institutions, together Clipsham with Jackson, and Head of Policy and Innovation, Jen Baxter, the team will play an influential role in championing hydrogen and its place in the green economy. Jackson is currently the Chairman of the UK’s Hydrogen & Fuel Cell Association and Baxter is on the Board of Industry Wales.
The Hydrogen Map lists the following projects in Scotland: Big Hit (phase 2); Acorn Aberdeenshire (Blue Hydrogen); Hydrogen Bus Project (Aberdeen); Aberdeen Exhibition and Conference Centre; and Levenmouth Community Energy project.