Business-as-usual Could Prove Disabling for Fossil Fuel Economies 

Delaying transition to a low-carbon economy could cost Colombia more than US$88 billion – or 27% of 2019 GDP – highlighting the vulnerability of fossil fuel producing countries worldwide, a report from consultancy firm WTW has warned. Colombia aims to reach net zero by 2050, but its current economic model is highly dependent on rents from extracting coal, oil and gas. The report said that substantially reducing economic reliance on these sectors, which contributed 55% of exports in 2020, “would be no small feat”. If Colombia hopes to minimise the volatility and costs associated with a long-run decline of the global fossil fuel trade, the report said, it will need to start developing and implementing contingency plans in the current decade. Matt Huxham, Director, Sovereign Transition Risk, Climate and Resilience Hub, WTW, said: “A business-as-usual approach could prove destabilising for the Colombian economy, with potential impacts including declining corporate profits, a weakening trade balance, falling tax revenues and rising public debt. This could put pressure on Colombia’s sovereign credit rating. These effects would increase the cost of Colombia’s climate mitigation and adaptation investments and cost many thousands of jobs.” The two-year research project was funded by Agence Française de Développement (AFD). 

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