Analysis of the impact of the Kyoto Protocol on the export revenues of OPEC member states and on the oil import requirements of non-Annex I countries

Abstract

The members of the Organisation of Petroleum Exporting Countries (OPEC) continue to voice their concerns about the adverse impact of the implementation of greenhouse gas emission reduction policies on the oil exporting countries. Referring to Article 4.8 of the UNFCCC, the OPEC is of the opinion that the agreed reduction targets will lead to a significant decrease in revenue from petroleum exports, with the result that OPEC countries are unfairly affected by measures proposed to mitigate global climate change. The current study aims to provide quantitative information on the impact of global climate change abatement policies on the revenues of OPEC countries generated from the export of oil. The outcome of this study shows that OPEC countries, but also other net-oil exporting countries, will incur a substantial decline in potential oil income as a result of the implementation of the Kyoto Protocol. Depending on how OPEC reacts to a decline in oil demand of the Annex I countries, the estimated reduction in oil export revenues resulting from the implementation of Kyoto agreements will be between 15 and 30% compared to the reference scenario. The most important recommendation of the study then is to establish a sort of fund, managed by the World Bank and the IMF, which can be used to support the balance of payment (IMF) or the restructuring of the petroleum economy (World Bank) in the oil producing countries. The resources for this fund can be generated by putting a levy on oil in the Annex I countries or by making money available for this fund in some other way.