Fossil fuel exporters will face a loss of GDP, government revenue and export earnings as a result of the transition to a lower carbon economy in the coming decades. This is stated in the new review Fitch Ratings.
According to the rating agency, among the most at-risk sovereigns are those that do not adequately prepare for the transition to a carbon-neutral economy, increasing the risk of stranded assets associated with climate change, which could lead to downgrades as the consequences become clearer , more significant and significant.
“Coal will face a faster and more complete market loss than oil and especially gas. High-cost producers will be crowded out first. Political instability and rising financial costs could exacerbate problems, ”Fitch warned, adding that the transition would be as shocking to hydrocarbon revenues as it was in 2013-2016 and 2018-2020.
Let's remind that last week the largest oil company Shell reported about huge losses after the coronavirus pandemic led to a drop in oil demand. Shell now wants to expand its biofuel, hydrogen and hydropower business as it faces growing pressure from investors and lenders.