Trade-offs between decarbonization and economic output

There is growing pressure from developed countries to step up efforts to mitigate climate change in developing countries. However, the economies of some of these countries are heavily dependent on fossil fuels. Mitigating climate change, for example by decarbonising their economies, could therefore threaten economic development and potentially increase poverty levels. Notably, this applies only to some mitigation measures, and the socio-economic impacts of these measures on developing countries are still poorly understood.

Nº 72
some attempts made
past case
Region-1
Region-2
Region-3
Region-4
ongoing case
no attempts made

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Trade-offs between decarbonization and economic output

There is growing pressure from developed countries to step up efforts to mitigate climate change in developing countries. However, the economies of some of these countries are heavily dependent on fossil fuels. Mitigating climate change, for example by decarbonising their economies, could therefore threaten economic development and potentially increase poverty levels. Notably, this applies only to some mitigation measures, and the socio-economic impacts of these measures on developing countries are still poorly understood.

Countries in the Middle East, known for their abundant natural resources, rely heavily on the export of these resources, particularly oil, as a major contributor to their economic output. The transition to a greener economy poses significant challenges for these countries, including significant up-front costs and the potential reduction of established sources of national revenue. In addition, domestic energy security is often closely linked to the fossil fuels available in these regions. The transition to a green economy can therefore have negative economic consequences. Failure to phase out fossil fuels could lead to the risk of stranded assets. In addition, the Middle East has considerable potential for harnessing solar energy through photovoltaic systems, which could be a strategic pathway to a sustainable future.

Ansari, D., & Holz, F. (2020). Between stranded assets and green transformation: Fossil-fuel-producing developing countries towards 2055. World Development, 130, 104947.

Ansari, D., & Holz, F. (2020). Between stranded assets and green transformation: Fossil-fuel-producing developing countries towards 2055. World Development, 130, 104947.