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Debt-Fossil Fuel Trap Report

GS Paper 3

 Syllabus: Environment Conservation

 

Source: IE

 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:

RecommendationsDescription
Ambitious Debt CancellationImplement comprehensive debt cancellation for countries in need, across all creditors, without imposing economic conditions.
Transition to Clean EnergyEncourage the adoption of clean and renewable energy sources to reduce dependency on fossil fuels.
Wealthy Government SupportWealthy governments and institutions should play a role in supporting countries to exit the debt-fossil fuel trap.
Sustainable DevelopmentPromote sustainable development strategies that prioritize environmental protection and economic stability.
Ethical InvestmentEnsure that financing and investments align with environmental and social sustainability, rather than contributing to fossil fuel dependence.
Equitable FinancingOffer fair and just financing terms that do not exacerbate debt burdens or perpetuate reliance on fossil fuels.

 

Insta Links:

How can methane released in livestock belches be reduced?

 

Prelims Links: (UPSC 2022)

Among the following crops, which one is the most important anthropogenic source of both methane and nitrous oxide?

 

  1. Cotton
  2. Rice
  3. Sugarcane
  4. Wheat

 

Ans: 2