Fossil fuel prices rose sharply in 2021, with major implications for citizens and businesses around the world. Russia's invasion of Ukraine has exacerbated high prices, and led to a renewed focus on energy security in many countries. This new briefing for the Climate Compatible Growth programme explores the implications of high fossil fuel prices for low- and middle-income countries (LMICs). Whilst direct dependence on Russian oil and gas is very low in LMICs, the potential effects on them are very significant. The briefing shows that countries that have a high dependence on substantial fossil fuel imports and are highly indebted are particularly vulnerable to the macroeconomic impacts of high prices. It also highlights the possibility of negative impacts on efforts to achieve universal energy access by 2030, partly because high prices come on top of the effects of the COVID-19 pandemic.
Professor Jim Watson said:
High fossil fuel prices will have significant negative impacts on low and middle-income countries, especially those that depend heavily on imports and have high levels of debt. This could provide a further impetus for them to shift away from fossil fuels towards low carbon energy. The macroeconomic impacts of high prices and the COVID-19 pandemic have made this shift more difficult in some countries. Action by governments and donors is required to mitigate these impacts."
Authors
- Jim Watson, Director, UCL Institute for Sustainable Resources;
- Sam Fankhauser, University of Oxford;
- Karla Cervantes Barron, University of Cambridge
- Funder: Foreign, Commonwealth and Development Office (FCDO)
Photo by Joshua Oluwagbemiga on Unsplash
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