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Price Uncertainty Puts Carbon Wealth of Nations at Risk

New Delhi (ABC Live): Carbon Wealth of Nations : The Carbon Wealth of Nations at Risk Carbon assets—oil, gas, and coal—make up a significant share of wealth in many countries. In the Middle East and North Africa, carbon assets average almost 30 percent of total wealth, exceeding the amount of produced capital, and they average nearly 10 percent in Sub-Saharan Africa. However, carbon wealth is becoming increasingly risky because of price uncertainty.

Furthermore, large-scale attempts at global decarbonization may diminish the value of carbon assets and undermine traditional development pathways for carbon-rich nations. Carbon-rich developing nations hold a median of 45 years of reserves of carbon resources at current depletion rates.

If the international effort to hold global warming below 2° C is to be achieved, a large share of resources must remain in the ground for a far longer period (hundreds or thousands of years instead of decades).

Estimates suggest this could leave about 25 percent of Africa’s oil and 35 percent of its gas stranded, while the Middle East could see almost 40 percent of its oil stranded and more than 60 percent of its gas. Globally, the top 10 state-owned carbonresource companies account for $2.3 trillion of state-owned produced assets related to extraction and processing of fossil fuels.

Mitigating the risks they face will require diversifying the total wealth portfolio away from carbon, including belowground natural capital (oil, gas, coal) and the associated aboveground physical and human wealth.

Fossil fuel energy—carbon-based wealth (Carbon Wealth of Nations )—grew faster than any other asset, but that asset is increasingly at risk because of price uncertainty, advances in technology, and large-scale attempts at global decarbonization to slow climate change. T

hese risks may diminish the value of Carbon Wealth of Nations and undermine traditional development pathways for carbon-rich nations .

The major energy producers of the Middle East, as well as countries such as Brazil, China, Mexico, and the Russian Federation, have greater resources with which to address these risks.

However, some smaller producers—many of them low- and lower-middle-income countries in Africa—rely heavily on carbon wealth for development and have fewer resources with which to address the risks.

About Deepshikha Singh

Deepshikha Singh is pursuing her Master's degree in Climate Science and Policy and reports on Environment & Climate Change for ABC Live

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