The importance of good governance to the energy transition
As Chair of the Board of the Extractive Industries Transparency Initiative I had the pleasure to speak at this year’s Oslo Energy Forum. The forum provides a platform for dialogue on pressing issues which the energy sector is facing today. Read the full speech below.
THE SPEECH
Rt Hon Helen Clark, Chair of the Board of the Extractive Industries Transparency Initiative. Speech on “The importance of good governance to the energy transition” to the Oslo Energy Forum, 14-16 February 2023.
It is my pleasure to address the Oslo Energy Forum, which provides opportunities for constructive dialogue on pressing issues facing the energy sector and all that depends on it.
Clearly the urgent priority of climate action is impacting significantly on energy systems, economies, and societies worldwide. A new report by the International Energy Agency estimates that by 2025, renewables are set to become the largest source of global electricity generation – that’s an indication of the extent of change now occurring in the sector.
The Extractive Industries Transparency Initiative- EITI - which I chair has been promoting good governance across the oil, gas, and minerals sectors for the past two decades. We are acutely aware of the role which mining has to play in the shift to net-zero carbon emissions. Technologies needed for a sustainable energy future – such as solar panels, wind turbines, and electric vehicles – rely heavily on minerals.
The more ambitious the world is in its decarbonisation efforts, the more mining it will need. According to the International Energy Agency again, limiting global warming to below two degrees Celsius could require a fourfold increase in the supply of minerals for clean energy technologies within the next two decades. The aspiration of the Paris Agreement was to keep global warming below 1.5 degrees Celsius – requiring an even bigger lift in strategic minerals extraction.
A significant share of the minerals required is concentrated in low and middle-income countries. For example, the Democratic Republic of the Congo supplies about seventy per cent of global cobalt production, while Indonesia and the Philippines account for nearly half of the world’s nickel supply.
If managed well, a growing mining sector can bring prosperity and development opportunities to countries. Yet, past mining booms do provide a cautionary tale. Gold rushes were not smooth sailing. To achieve a global energy transition which is consistent with the principles of the 2030 Agenda for Sustainable Development, good governance needs to be at the heart of it. Without proper regulation and oversight, mismanagement, corruption, and detrimental social and environmental impacts could blight the greater levels of minerals extraction required for the energy transition.
A recent report, commissioned by the EITI and undertaken by the Sustainable Minerals Institute, outlines twenty governance risks which must be addressed from the local to the global levels.
Those risks range from regulatory shortcuts and corrupt deals to price shocks, lost revenues, and social and environmental damage. At the local level, for example, stronger demand could push mining into more environmentally and socially sensitive areas. Our research shows that eighty per cent of transition minerals projects in EITI-implementing countries are located on territories of indigenous and other land-connected communities, and fifty per cent overlap with conservation areas.
As the pressure mounts to approve new mining projects, there is a risk of government officials and companies cutting corners in due diligence checks, impact assessments, and consultation processes. These governance weaknesses, in turn, could harm local communities, their livelihoods, and the environment, disrupt the supply of minerals, and pose a serious threat to achieving net-zero targets.
The Extractive Industries Transparency Initiative sets the global standard for good governance of oil, gas, and mineral resources. It therefore has an important role to play in supporting the development of systems for responsible management of the minerals required for the energy transition.
Headquartered in Oslo, the EITI brings together a coalition of government, industry, and civil society, globally and in each of its member countries implementing the Standard, to ensure public oversight of the extractive sector and to inform evidence-based policies and debate.
As the global energy landscape changes rapidly, there is a need for resource-rich countries to act quickly and leverage multi-stakeholder dialogue to ensure that the energy transition is managed well for the overall benefit of the world’s citizens. There is a significant role for development partners to play in support of that. Together, governments and industry and civil society partners can act to ensure a successful energy transition which supports peace and development and not conflict and division.
Thank you.