At its Fifth High-Level Meeting (HLM) held on 21 May 2019, the Members of the Governing Board invited the OECD Development Centre to “help design transformational development strategies aligned with the 2030 Agenda focusing on the sustainable transition of natural resource-rich developing countries towards a low-carbon economy and better integration into global value chains”. In response to this request the Centre published in 2022 the Equitable Framework and Finance for Extractive-based Countries in Transition (EFFECT) and launched it at COP27. EFFECT provides a toolbox with policy options for resource-rich countries to manage the “transition away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050” as called for in the COP28 Global Stocktake Decision.
This report is an output of the implementation phase of EFFECT, carried out in close collaboration with the African Development Bank (AfDB). An open, intense, and enriching multi-stakeholder consultation process with natural gas producing and consuming economies, industry, international organisations, development finance institutions and non-governmental organisations participating in the EFFECT Community of Practice on Just Transition Pathways for Oil & Gas Producing Developing Countries informed the development of the report and its recommendations. An initial draft was prepared by the Development Centre and discussed during the third call of the Community of Practice on 24 October 2023. Revised drafts were presented at the second call of the Advisory Group on EFFECT implementation on 29 November 2023 and the fourth call of the Community of Practice on 19 March 2024. An advanced draft was presented at the combined teleconference of the Community of Practice and the Advisory Group on 25 June 2024. A final draft was discussed during the sixth call of the Community of Practice on 2 October 2024.
This report provides recommendations on the design of robust regulatory frameworks on methane abatement in the upstream oil and gas sector, as a crucial component of broader efforts to achieve accelerated methane emissions reduction. It sets out the enabling conditions as well as the incentives and financing mechanisms for the deployment of cost-effective methane abatement solutions in developing countries producing oil and gas. As a result, this report supports developing countries to “accelerate and substantially reduce non-carbon-dioxide emissions globally, including in particular methane emissions by 2030”, as agreed at COP28, by fostering alignment between their development, climate, and energy agendas. This report is also intended to support engagement with developing countries producing oil and gas and upstream actors in the natural gas value chain for the operationalisation of emerging international initiatives – such as the European Union’s Methane Abatement Partnership Roadmap and the Coalition for LNG Emission Abatement toward Net-zero (“CLEAN”) initiative, spearheaded by Japan and Korea – to clean up the value chain of internationally traded fossil fuels and move from voluntary commitments to action to drive down methane emissions. Lastly, this report supports G7 efforts “to work with non G7 producing countries to reduce the methane emission intensity of imported fuels”, by offering options “for regulatory approaches and market-based instruments to support methane emission reduction actions” as called for in the 2024 G7 Climate, Energy and Environment Ministers’ Meeting Communiqué.