Global powers will suffer financially in the move away from fossil fuels

At the same time, oil-rich countries that rely on the export of fossil fuels, such as Saudi Arabia, can reduce negative impact on their own economies from decreased global demand for fossil fuels by preemptively flooding the market at a reduced cost. 

Countries like the US, Canada and Russia are regarded as “large uncompetitive exporters” and stand to lose the most from continued reliance on fossil fuels. In a market flooded by exports from other oil-rich countries, these large exporters would be unable to compete. Stranded oil assets combined with lack of investment in new technology could lead to industrial decline as certain economic activity and job sectors dependent on the fossil fuel industry become obsolete. Redirecting efforts toward the creation of new low-carbon technology would help to mitigate the negative economic impact.

A man walks past a advertising in relation with the UN Climate Change Conference (COP 26) where world leaders discuss how to tackle climate change on a global scale, near the conference area in Glasgow Scotland, Britain October 30, 2021. (credit: REUTERS/YVES HERMAN)

“As the economy transforms, if you do not decarbonise, you are shooting yourself in the foot.” Professor Jorge Viñuales, of the University of Cambridge and co-author of the study, said. “The key question is how to do it in the specific conditions of your country.”

“The disruptive nature of the low-carbon transition makes untenable a macroeconomic strategy based on ‘business-as-usual,” said Dr. Pablo Salas, from the University of Cambridge Institute for Sustainability Leadership (CISL).
“Supporting low-carbon innovation is the only way to maintain long-term competitiveness in a decarbonizing economy.”