Boom and Bust: The fiscal implications of fossil fuel phase-out in six large emerging economies

The report analyzes the fiscal vulnerability of the BRIICS countries to the global energy transition. Using IEA scenarios, it projects significant declines in fossil fuel revenues by 2050, particularly under 1.5°C and 2°C pathways. To mitigate these risks, the authors propose a 'GSS bond support fund' to leverage near-term windfall revenues for decarbonization and suggest a broad suite of environmental fiscal reforms, including subsidy removal and the introduction of carbon pricing and road user charges.

• The BRIICS countries (Brazil, Russia, India, Indonesia, China, and South Africa) exhibit high fiscal vulnerability to the energy transition due to their reliance on fossil fuel revenues, which in 2019 ranged from 5.5% of total government revenue in South Africa to 33.7% in Russia.
• Under the IEA's Sustainable Development Scenario (SDS), which is consistent with limiting warming to 2°C, direct public fossil fuel revenues for Brazil, China, Indonesia, and Russia are projected to fall to approximately 35% of 2019 levels by 2050, while India and South Africa's revenues may fall to around 65% of 2019 levels.
• A more ambitious 1.5°C pathway (Net Zero Emissions by 2050 Scenario) would lead to a more severe decline, with fossil fuel revenues estimated to drop to roughly 10% of 2019 levels by 2050.
• The potential revenue gap between a 'business as usual' (STEPS) pathway and the SDS is estimated at USD 178 billion by 2030 and USD 216 billion by 2050 for the BRIICS countries. This gap increases to USD 278 billion by 2030 and USD 569 billion by 2050 under the NZE scenario.
• The report proposes a 'green, social, and sustainability (GSS) bond support fund' to strategically use near-term fossil fuel revenues. This mechanism would provide implicit debt guarantees to private issuers, potentially leveraging USD 10 billion in public funds to support USD 400 billion in private sector investment.
• To replace declining fossil fuel revenues, the report recommends environmental fiscal reforms, starting with the removal of fossil fuel subsidies, which totaled USD 6.0 billion in Brazil, USD 28.1 billion in China, USD 10 billion in India, USD 13.2 billion in Indonesia, USD 9.3 billion in Russia, and USD 5.3 billion in South Africa in 2020 (or 2019-21).
• The report suggests diversifying revenue streams through carbon pricing, road user charges (such as distance-based GPS tracking), vehicle registration taxes based on weight and emissions, and congestion charges to replace fuel excise taxes as electric vehicle adoption grows.

APA

Laan, T., & Maino, A. G. (2022). Boom and Bust: The fiscal implications of fossil fuel phase-out in six large emerging economies. International Institute for Sustainable Development. https://www.iisd.org/system/files/2022-07/fossil-fuel-phase-out-briics-economies.pdf

Chicago

Laan, Tara, and Andréa Giulio Maino. Boom and Bust: The fiscal implications of fossil fuel phase-out in six large emerging economies. International Institute for Sustainable Development, 2022. https://www.iisd.org/system/files/2022-07/fossil-fuel-phase-out-briics-economies.pdf.

Wikipedia

{{cite report |last1=Laan |first1=Tara |last2=Maino |first2=Andréa Giulio |title=Boom and Bust: The fiscal implications of fossil fuel phase-out in six large emerging economies |publisher=International Institute for Sustainable Development |date=July 2022 |url=https://www.iisd.org/system/files/2022-07/fossil-fuel-phase-out-briics-economies.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{laan2022boom, author = {Laan, Tara and Maino, Andréa Giulio}, title = {{Boom and Bust: The fiscal implications of fossil fuel phase-out in six large emerging economies}}, institution = {International Institute for Sustainable Development}, year = {2022}, month = jul, url = {https://www.iisd.org/system/files/2022-07/fossil-fuel-phase-out-briics-economies.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }