New report reveals that Colombia's real risk is continued economic dependence on fossil fuels

Leer en comunicado en español.

  • The transition on a global scale will reduce global demand and prices for oil, gas, coal and metallurgical coke, which together accounted for 55% of Colombian exports in 2019.

  • The destabilization of the fossil industry would lead to significant job losses and would fully impact the most vulnerable populations.

  • Colombia must increase investment in low-emission technologies to avoid macroeconomic and financial impacts; diversify the economy and in particular exports; and accelerate its decarbonization to mitigate external risk.

3 August 2023 - Contrary to public discourse, the real danger lies not in the energy policies of phasing out fossil fuel production proposed by the government of Gustavo Petro, but in the expansion of oil, gas and coal production, according to a new report by the Regional Center for Sustainable Finance at the University of the Andes and Willis Towers Watson (WTW) - one of the leading multinational companies in the insurance and financial risk field.

Commissioned by the previous government, completed in October 2022 and published today, Understanding the impact of a low carbon transition on Colombia assesses the risks and opportunities of Colombia's energy transition, with the aim of "de-risking" the country's decarbonization strategy. The data and recommendations are addressed to both Colombian policy makers and the fossil industry.

Luisa Umaña, researcher at Censat Agua Viva, member of the Permanent Council for a Just Energy Transition, said: “This report refutes the industry's scare-mongering arguments that moving away from fossil fuels will harm the country's future economic growth. On the contrary, it stresses that continuing down the path of dependence impedes development and increases the cost of implementing new alternatives. If Colombia manages the risks and costs associated with fossil fuels and seeks diversification opportunities, the country could secure economic stability. The report also insists on the need for collaboration among all sectors of society, precisely what we are trying to achieve from the Permanent Council for Just Transition: to bring the expertise of civil society to the challenge of transition in Colombia."

The research warns that the transition on a global scale will reduce global demand and prices for oil, gas, coal and metallurgical coke, sectors that together made up no less than 55% of Colombian exports in 2019. It further posits that Colombian coal exports are unlikely to be competitive in the long term in Asian markets, due to distance and transportation costs. The destabilization of the fossil industry would also lead to significant job losses and would fully impact the most vulnerable populations.

Therefore, the research recommends that Colombia:

  • Increase investment in low-carbon technologies to avoid macroeconomic and financial impacts;

  • Take proactive measures to diversify the economy and in particular exports, including non-extractive sectors such as agriculture and tourism; and

  • Accelerate its decarbonization, especially in transportation and industry, in order to mitigate external risk.

Mark Campanale, founder of the Carbon Tracker initiative, stated: “The science is clear: the end of the fossil age is inevitable for climate security. But it also shows that ending oil, coal and gas production is also essential for economic stability. This report shows that a slow transition would actually be the riskiest option for Colombia, as global demand for fossil fuels will fall. By deciding to halt the delivery of new oil and gas exploration contracts, the government of Gustavo Petro is pre-empting the risks associated with the transition to a low-carbon economy in order to protect Colombia and Colombians from financial instability.”

The inevitability of the end of the fossil era is global. A recent report by the Canadian Energy Regulator shows a similar trend: under net-zero emissions scenarios, global oil and gas export markets will decline sharply as countries adopt faster energy transition and stricter climate policies. The report acknowledges that the international transition to net zero has begun and that, as a result, global demand for Canadian fossil fuels will decline, as will Colombia's. Therefore, the question on a global scale is "how" we manage that inevitable transition.

In the same vein, the WTW report stresses that if Colombia takes into account the external risks inherent in the global energy transition and implements a collaborative plan between the government, the private sector, academia and civil society, the country has the potential to avoid economic dislocation.

Alex Rafalowicz, director of the Fossil Fuel Non-Proliferation Treaty initiative, said: "The Colombian government is doing its part through its Roadmap, but industry will have to do its part by divesting from oil, gas and coal to make way for low-carbon energy. International cooperation will also play a key role for countries that are economically dependent on the fossil fuel industry, such as Colombia. The report reminds us of a key fact: the cost of the world exceeding the 1.5 degree limit would be far more devastating to humanity than the risks associated with the transition."

Read all the key findings and recommendations

Media contacts: 

Viviana Varin
Senior Communication Campaigner, Fossil Fuel Non-Proliferation Treaty
viviana@fossilfueltreaty.org

Andrés Gómez
Energy and Climate Justice professional, Censat Agua Viva
+57 319 4067968