Beyond Fossil Fuels: Fiscal transition in BRICS

This report analyzes the fiscal implications of the clean energy transition for the BRICS nations (Brazil, Russia, India, China, and South Africa), focusing on the reliance of government budgets on fossil fuel revenues and the impact of existing subsidies.

• In 2017, Russia had the highest reliance on fossil fuel revenues among BRICS countries, with combined production and consumption revenues accounting for 23.6 per cent of general government revenue (8 per cent of GDP). India followed with 17.8 per cent of general government revenue (3.7 per cent of GDP), while Brazil and South Africa both stood at 6.8 per cent (2 per cent and 1.9 per cent of GDP, respectively), and China had the lowest at 4.2 per cent (1.2 per cent of GDP).
• Fossil fuel subsidies in BRICS countries distort energy markets and hinder the clean energy transition. According to OECD estimates, these subsidies as a share of general government revenue were 2.4 per cent (0.7 per cent of GDP) in South Africa, 2 per cent (0.4 per cent of GDP) in India, 1.5 per cent (0.5 per cent of GDP) in Russia, 1.1 per cent (0.3 per cent of GDP) in Brazil, and 0.5 per cent (0.1 per cent of GDP) in China.
• The clean energy transition poses a risk of 'asset stranding'—the devaluation of high-carbon assets—which primarily affects governments in BRICS as they are often the owners of state-owned enterprises (SOEs) or participants in production-sharing agreements. In India, approximately 40 GW of coal-fired power plant capacity (about 21 per cent of total installed capacity at the end of 2018) has been identified as "non-performing," with 12 per cent of that being wholly or partly government owned.
• BRICS countries face varying degrees of economic exposure to fossil fuels. Russia is identified as being afflicted by the "resource curse" at a national level due to the high contribution of fossil fuel extraction to its GDP. At a subnational level, this is also noted in the oil-producing State of Rio de Janeiro in Brazil and coal-mining provinces in Western China, specifically Inner Mongolia, Shanxi, and Shaanxi.
• The report recommends a "fossil fuel to clean energy subsidy swap," where governments redirect support from fossil fuels to clean energy. It suggests that revenues from fossil fuels and emerging carbon pricing should serve as a temporary bridge to fund transition costs rather than a long-term tax base strategy.
• To ensure a "just transition," BRICS governments must implement targeted support for vulnerable populations and workers dependent on fossil fuels. An example is China’s 13th Five-Year Plan (2016–2020), which established an Industrial Special Fund of CNY 100 billion (USD 14.5 billion) for employment restructuring in coal areas.
• Public finance institutions and SOEs are identified as key vehicles for diversification. The BRICS New Development Bank has already lent USD 8 billion to 30 projects as of March 2019, with a potential increase to USD 40 billion by 2021. Additionally, India's Coal India Limited plans to increase solar capacity by 20,000 MW over 10 years, and China's Shenhua merged with Guodian to form the China Energy Investment Corporation.

APA

International Institute for Sustainable Development (n.d.). Beyond Fossil Fuels: Fiscal transition in BRICS. https://www.iisd.org/system/files/publications/beyond-fossil-fuels-brics.pdf

Chicago

International Institute for Sustainable Development. Beyond Fossil Fuels: Fiscal transition in BRICS. n.d. https://www.iisd.org/system/files/publications/beyond-fossil-fuels-brics.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Beyond Fossil Fuels: Fiscal transition in BRICS |url=https://www.iisd.org/system/files/publications/beyond-fossil-fuels-brics.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndbeyond, author = {{International Institute for Sustainable Development}}, title = {{Beyond Fossil Fuels: Fiscal transition in BRICS}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/beyond-fossil-fuels-brics.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }