Government representatives discussed various challenges, opportunities and priorities in their countries. Specific challenges highlighted included: dependence on fossil fuels for state revenues and foreign exchange earnings; a lack of diversification alternatives, such as a lack of water for agriculture; debts related to the oil and gas industry; low electrification rates; access to affordable energy; job losses in the fossil fuel industry including indirect jobs (hospitality, logistics, transport, etc.); impacts of climate change particularly in coastal areas; refugee issues due to security problems in neighbouring countries; high cost of capital for fossil fuel dependent countries; the concentration of fossil economies in specific subnational regions; the environmental and social cost of extracting raw minerals, including water use and land grabbing; and the structure of public revenues and taxation systems between different levels of government. In general, the challenge was highlighted that no other industry brings as much revenue as oil and gas.
Opportunities highlighted included green economy, including monetising natural capital for industries such as pharmaceuticals and food; clean cooking; methane reduction in the oil and gas sector; carbon credits for e.g. forest projects; electrification; natural gas as a transition fuel including for export; green hydrogen; and the presence of critical minerals, uranium and gold. The main priority expressed by developing country representatives was development.
Theme 1 recommendations
- Fossil fuel producing countries have the opportunity to develop resilient diversification plans that bring together energy transition and industrial policy, identifying strategic sectors, connecting industries to international value chains, and bringing together horizontal and vertical industrial policies. Countries should also integrate TAFF into existing plans.
- In the short term, all countries should consider making their fossil fuel subsidies transparent, through inventories, mappings, or other transparency mechanisms, identifying which subsidies are inefficient. They should consider reforming inefficient fossil fuel subsidies in the longer term.
- Fossil fuel producing governments have the opportunity to improve domestic revenue mobilisation, such as taxing fossil fuel exports, to pay for economic diversification. They also have the opportunity to strengthen domestic governance and coordination to improve transition readiness.
- Governments that need to diversify their economies should explore new ways to build new industries and attract international investment.
- Donors should explore ways to provide additional support for country-specific challenges, moving beyond talking only about climate to talking more broadly about industrial planning and new growth sectors.
- The Brazil COP30 Presidency TAFF roadmap should not be prescriptive for countries, but rather recognise the need for differentiation and enable countries to place themselves among archetypes.