In 2021, we at NRGI will leverage our unique expertise to help resource-rich countries to navigate the challenges wrought by the global pandemic and the accelerating climate crisis.
The ties that bind: Addressing fossil fuel dependency amid the energy transition
The pandemic starkly reminds government officials and citizens of the risks of betting on a long-term future based on oil production. Yet, oil-producing countries are sinking billions in public money, usually via national oil companies, back into the industry. (Learn more next month when NRGI launches our new report, Risky Bet: National Oil Companies in the Energy Transition.) From Uganda to Mexico and the Middle East, we will explore how these actors are affecting the ability of oil- and gas-rich countries to participate in the energy transition. Working closely with local partners, we will help fossil fuel-rich countries to make extractives sector policy, investment and governance choices that allow them to benefit from greater use of solar and wind power and avoid the dangers of over-investing in hydrocarbons. Beginning with a flagship initiative in Nigeria, we will seek new strategies challenging orthodoxy and narratives that foster dependency.
Hype or hope: Supporting countries to meet increased demand for critical minerals
Demand for the “critical minerals” needed for energy transition technology is generating excitement in many countries, but there are still questions about where real economic opportunities may lie. NRGI will support countries in Latin America and Africa to secure the best terms for any extraction of such minerals. But we will also help countries avoid overhyped narratives about the potential of critical minerals, addressing information asymmetries between investors and governments and supporting countries to pool information and intelligence. NRGI will also help civil society partners in critical mineral source countries connect with global initiatives on responsible mineral supply chain due diligence, including those from China, U.S. and the OECD.
We are mindful of the risks should actors across the world lock up reserves of critical minerals in bad deals concluded without due diligence. NRGI will support regional leaders to collaborate on Africa’s role in the supply of critical minerals, positioning the region as influencers in the global market—not just resource suppliers. In Latin America, we are mobilizing a cross-regional group of civil society actors, connected to supply chain initiatives from the U.S. to China.
A new contagion: Tackling resource-related debt
Across many resource-rich developing countries, rising debt levels were already of major concern before the pandemic. The drop in government revenues including from the oil price crash and commodity price fluctuations, increase in spending needs and greater uncertainty necessitate a strong focus on debt sustainability, relief and transparency. NRGI will leverage its expertise spanning the “presource curse” and Africa’s prospective oil producers, national oil company debt and resource-backed loans, seeking to influence key players on global debt issues and loans from commodity traders specifically. We will focus support with our partners on state-owned enterprises in Mongolia and Ghana; resource-backed lending in Guinea and Ghana; budget analysis in Nigeria; and economic diversification in Colombia.
Desperate times, desperate measures: Defending and advancing governance, environmental and social standards
The implications of the economic downturn and global energy transition have changed what it means to “get a good deal” from extraction. We will help countries to review specific proposals, drawing on disclosed license and contract information as well as project-level data. We will also work with civil society partners to monitor and mitigate “race to the bottom” risks—the possibility that investment-hungry governments may agree to bad short-term deals and unwarranted industry incentives, or that they will lower standards and practices on oversight, transparency, consultation, and environmental and social protections.
Later this year we will release the newest edition of the Resource Governance Index, providing a strong evidence base for policy advocacy and reform. The 2021 index will cover 18 countries across Asia-Pacific, Eurasia, Latin America, the Middle East and North Africa and sub-Saharan Africa. We will draw on our research and analysis to push private creditors to use their financial leverage to advocate for improved sector governance in the resource rich-countries where they invest, as well as better corporate practices. We are developing tools to support Extractive Industries Transparency Initiative multi-stakeholder groups, anticorruption commissions and other country-level actors to conduct evidence-based and inclusive assessments of extractive sector corruption risks, and propose actions to rein them in. At the global level, we will support international actors to mitigate corruption risks associated with oil, gas and mining state-owned enterprises.
Unprecedented opportunities created by recent events will not last and should not be squandered. In 2020, we did the hard and necessary groundwork to respond to seismic change, in both substance and our ways of working. We at NRGI now look ahead with optimism and ambition to 2021 as we work to build a sustainable future for resource-rich countries.
Suneeta Kaimal is the interim president and CEO of the Natural Resource Governance Institute.
Wind turbine photo by Ian Berry for Magnum; gold photo by Minzayar Oo for NRGI
The ties that bind: Addressing fossil fuel dependency amid the energy transition
The pandemic starkly reminds government officials and citizens of the risks of betting on a long-term future based on oil production. Yet, oil-producing countries are sinking billions in public money, usually via national oil companies, back into the industry. (Learn more next month when NRGI launches our new report, Risky Bet: National Oil Companies in the Energy Transition.) From Uganda to Mexico and the Middle East, we will explore how these actors are affecting the ability of oil- and gas-rich countries to participate in the energy transition. Working closely with local partners, we will help fossil fuel-rich countries to make extractives sector policy, investment and governance choices that allow them to benefit from greater use of solar and wind power and avoid the dangers of over-investing in hydrocarbons. Beginning with a flagship initiative in Nigeria, we will seek new strategies challenging orthodoxy and narratives that foster dependency.
Hype or hope: Supporting countries to meet increased demand for critical minerals
Demand for the “critical minerals” needed for energy transition technology is generating excitement in many countries, but there are still questions about where real economic opportunities may lie. NRGI will support countries in Latin America and Africa to secure the best terms for any extraction of such minerals. But we will also help countries avoid overhyped narratives about the potential of critical minerals, addressing information asymmetries between investors and governments and supporting countries to pool information and intelligence. NRGI will also help civil society partners in critical mineral source countries connect with global initiatives on responsible mineral supply chain due diligence, including those from China, U.S. and the OECD.
We are mindful of the risks should actors across the world lock up reserves of critical minerals in bad deals concluded without due diligence. NRGI will support regional leaders to collaborate on Africa’s role in the supply of critical minerals, positioning the region as influencers in the global market—not just resource suppliers. In Latin America, we are mobilizing a cross-regional group of civil society actors, connected to supply chain initiatives from the U.S. to China.
A new contagion: Tackling resource-related debt
Across many resource-rich developing countries, rising debt levels were already of major concern before the pandemic. The drop in government revenues including from the oil price crash and commodity price fluctuations, increase in spending needs and greater uncertainty necessitate a strong focus on debt sustainability, relief and transparency. NRGI will leverage its expertise spanning the “presource curse” and Africa’s prospective oil producers, national oil company debt and resource-backed loans, seeking to influence key players on global debt issues and loans from commodity traders specifically. We will focus support with our partners on state-owned enterprises in Mongolia and Ghana; resource-backed lending in Guinea and Ghana; budget analysis in Nigeria; and economic diversification in Colombia.
Desperate times, desperate measures: Defending and advancing governance, environmental and social standards
The implications of the economic downturn and global energy transition have changed what it means to “get a good deal” from extraction. We will help countries to review specific proposals, drawing on disclosed license and contract information as well as project-level data. We will also work with civil society partners to monitor and mitigate “race to the bottom” risks—the possibility that investment-hungry governments may agree to bad short-term deals and unwarranted industry incentives, or that they will lower standards and practices on oversight, transparency, consultation, and environmental and social protections.
Later this year we will release the newest edition of the Resource Governance Index, providing a strong evidence base for policy advocacy and reform. The 2021 index will cover 18 countries across Asia-Pacific, Eurasia, Latin America, the Middle East and North Africa and sub-Saharan Africa. We will draw on our research and analysis to push private creditors to use their financial leverage to advocate for improved sector governance in the resource rich-countries where they invest, as well as better corporate practices. We are developing tools to support Extractive Industries Transparency Initiative multi-stakeholder groups, anticorruption commissions and other country-level actors to conduct evidence-based and inclusive assessments of extractive sector corruption risks, and propose actions to rein them in. At the global level, we will support international actors to mitigate corruption risks associated with oil, gas and mining state-owned enterprises.
Unprecedented opportunities created by recent events will not last and should not be squandered. In 2020, we did the hard and necessary groundwork to respond to seismic change, in both substance and our ways of working. We at NRGI now look ahead with optimism and ambition to 2021 as we work to build a sustainable future for resource-rich countries.
Suneeta Kaimal is the interim president and CEO of the Natural Resource Governance Institute.
Wind turbine photo by Ian Berry for Magnum; gold photo by Minzayar Oo for NRGI