GS Paper 3
Syllabus: Environment Conservation
Context: Poor countries burdened with heavy debts are compelled to rely on fossil fuels to generate revenue for repaying loans from richer nations, highlights the Debt-Fossil Fuel Trap report.
- The Debt-Fossil Fuel Trap report has been released by the anti-debt campaigner’s Debt Justice and partners in affected countries.
Findings of the Report “The Debt-Fossil Fuel Trap”:
- Fossil fuel extraction is seen as a means to generate revenue and alleviate debt for countries in the global south
- Example of Suriname: Resource-Based Loans: Creditors are entitled to 30% of oil revenue until 2050, incentivizing continued oil exploitation.
- Argentina supports fracking in Vaca Muerta (Northern Patagonia) to ease the debt crisis.
- Revenues from fossil fuel projects often fall short of expectations, leading to further debt.
- External debt payments for global south countries have risen by 150% between 2011 and 2023, reaching a 25-year high
- 54 countries in a debt crisis, cutting public spending during the pandemic to repay loans
- Extreme weather events force countries to borrow more money for adaptation and mitigation efforts.
- For instance, Dominica’s debt as a percentage of GDP rose from 68% to 78% after Hurricane Maria hit the island in 2017.
The report recommends the following actions to address the issues highlighted:
|Ambitious Debt Cancellation
|Implement comprehensive debt cancellation for countries in need, across all creditors, without imposing economic conditions.
|Transition to Clean Energy
|Encourage the adoption of clean and renewable energy sources to reduce dependency on fossil fuels.
|Wealthy Government Support
|Wealthy governments and institutions should play a role in supporting countries to exit the debt-fossil fuel trap.
|Promote sustainable development strategies that prioritize environmental protection and economic stability.
|Ensure that financing and investments align with environmental and social sustainability, rather than contributing to fossil fuel dependence.
|Offer fair and just financing terms that do not exacerbate debt burdens or perpetuate reliance on fossil fuels.
Prelims Links: (UPSC 2022)