By Daniel Kaufmann, Mario Picon
For decades, the field of natural resource governance (NRG) has been focused on addressing governance challenges associated with the resource curse. For much of that time, the approach was centered around transparency reforms. However, over time, it became clear that transparency, while necessary, did not suffice. Subsequently, more emphasis was given to participatory approaches and the pursuit of accountability. This focus on bringing together elements of transparency, accountability, and participation (TAP) gave way to a “TAP troika.”
In 2020, shortly after the COVID-19 pandemic broke out, we made the case in the Leveraging Transparency to Reduce Corruption (LTRC) Initiative’s foundational paper for an approach that goes beyond TAP (“TAP-Plus”), as current TAP approaches do not necessarily consider key context dimensions. These contextual factors are shown to be determinants of success or failure but were not complementary to each other nor set up to reinforce each other.
That same year, together with the Natural Resource Governance Institute (NRGI) and the Transparency and Accountability Initiative, LTRC organized a dialogue on the key priorities for the future of NRG. For LTRC, this was an opportunity to identify specific areas for the use of TAP-Plus approaches. This effort, along with the need to understand what others in the world are working on in relation to NRG and future priorities, led us to carry out a survey of the field in 2021. Survey respondents included nearly 400 people from varying backgrounds, sectors, and countries.
While this survey took place last year, and much has happened over the last few months, its data and analyses still provide insights across time, space, types of stakeholders, sectors, generations, and genders on short- and medium-term priorities in the field.
As you will notice in the full report, the results challenge preconceived notions of the current status of the NRG field and its future direction and bring into the forefront the perspectives of individuals working outside the NRG space. What follows is a brief account of selected findings.
Cautious reticence so far.
While respondents are clear about priority areas and direction of change, they tend to be circumspect about the likelihood of priority reforms and favor a rather evolutionary and risk-averse approach to pivots in the NRG field. This is the case despite the rise in global awareness on climate change and the post-pandemic realities.
When asked about priorities ahead of 2022 and beyond, respondents emphasized climate change and democratic governance — including rule of law, corruption, and capture. As a result, governance reforms in rule of law, corruption, and state capture emerged as a top priority, closely followed by specific governance reforms to accelerate the energy transition and address climate change and environmental degradation. Yet respondents do not regard such direly needed changes as highly likely to take place, as seen in Figure 1.
This perceived “reform likelihood deficit” cannot be merely characterized as an “implementation gap” challenge, prevalent across reform areas everywhere. This is evident because in contrast with the very large “reform likelihood deficit” in the themes just mentioned, the gap between priority and likelihood is significantly smaller for areas in which the NRG field has already been working in the past. This raises the question as to whether there is still some inertia in the field that is occurring in an environment of cautious expectations, given past experiences, and/or whether participants perceive limited political will to move forward with major reforms and prefer to focus on safer lower-hanging fruits.
When asked specifically which natural resources should be prioritized in the future, respondents did concur that a dedicated focus on renewables was needed, both in the medium and longer term. This was followed by emphasis on water, land, and forestry. There was also consensus on the other side of the issue: Respondents pointed to the need to exit coal sources.
By contrast, there was a more cautious view regarding the oil, gas, and mining sectors, with many respondents taking the view that focus on the sectors should continue, even if gradually declining into the longer term (Figure 2 below). Such caution about exiting oil and gas was particularly marked in some regions, such as in Europe and Sub-Saharan Africa and in contrast with the Americas. And generally, there was support for staying committed to mining, aside from coal.
The need for audacity.
As seen above, there was a consensus on the need for broader, tougher governance reforms, despite the pessimism regarding the likelihood of such reforms taking place, even from civil society representatives. There was a cautious approach as well to the notion of a fast transition away from extractives.
The stark global context, dominated by a post-pandemic environment, military conflict, and energy security concerns, as well as the climate emergency, does pose a major challenge to overly cautious, incremental strategies in the NRG field. We propose a major infusion of audacity into a revamped NRG field. Considering a bolder strategy would entail a multi-pronged approach that answers the following questions:
What areas beyond TAP do we need to focus on? First, it is the time to enter concretely into the realm of tougher governance reform areas, well beyond what we call TAP. TAP has been the traditional focus in the field for a long time. Addressing state capture by the oil industry, as well as their colluding capture with kleptocrats, are major areas requiring further emphasis even if beyond the comfort zone for many. The massive oil rents generated by Big Oil, which, thanks to their capturing influence, continue to benefit from implicit or explicit subsidies and tax avoidance schemes at the expense of the common citizen, conspire against equitable economic progress in industrialized and emerging economies alike. They also generate perverse incentives to maintain the status quo on fossil fuels and delay addressing the climate emergency.
In fact, consistent with the cautious stance of the NRG field so far, the mention of climate emergency (or climate crisis) has often been downplayed or avoided. Addressing climate change continues to be the notion of choice. Similarly, regarding the energy matrix, the “compromise” notion that continues to be used in discussing this enormous challenge is merely “the energy transition,” a concept suggesting caution, gradualism, and evolutionary linearity.
If the actual focus and goal were a paradigmatic shift in the energy matrix, we would be focusing on an energy transformation, not merely a transition. The agenda of the NRG field in fighting the climate crisis needs to be much bolder, encompassing full and detailed transparency on fossil fuel investments, the switch to renewables, and climate risks.
All stakeholders in the NRG space will need to work with rigor and audacity in advocating for reforms to move away from fossil fuels, the centerpiece of an energy transformation. In doing so, it will be critical to present the stark choices, short-term tradeoffs, and complementarities from the transformation away from fossil fuels, energy security, and the short- and long-term socio-economic costs and benefits to citizens.
A review of current “energy transition” realities, coupled with the growing geopolitical focus on energy security, would likely conclude that it will be many years before renewables can overtake fossil fuels. The path to addressing the climate crisis would be even more gradual and damaging if glaring governance weaknesses continue to persist. Solely focusing on governance in renewables will not mitigate most of the risks; at least as important is to deepen the work on poor governance in extractives, which is slowing down the urgently needed transformation. Initiatives to reduce dirty energy consumption, including carbon taxes and subsidy elimination, to reign in the undue influence of Big Oil and to revamp national oil companies are needed more than ever.
Who are the key actors, and what is their role?
A key actor in this space is civil society. The traditional strategies and approaches of “civil society engagement” and “civic space protection” in the NRG field need a major refresh. For decades already, emphasis has been placed on public dialogue and debate, coalition-building around transparency, and raising alarms when an activist is officially harassed. These have been worthy activities in their own right but have not contributed to a very coherent strategy, have often lacked teeth, and, on the whole, have been dwarfed by the often violent crackdowns by increasingly autocratic regimes.
The current approach cannot begin to confront the massive and concrete threat to civil liberties, voice, and democratic accountability, which are particularly pronounced in resource-dependent countries with autocratic regimes. The relationships with civil society, and within these organizations to support each other, need to become much more intentional and tougher, suited to a new future where democratic institutions and human rights are in danger.
It is important to draw lessons over the past two decades from countries like Russia, a case study pointing to hydrocarbon resources as a fuel for kleptocapture and unprovoked wars. This most extreme, violent, and costly expression of the resource curse cannot simply be addressed by the traditional soft civic space or economic toolkit.
Civil society groups in natural resources, including international NGOs, need to partner closely with local organizations in holding governments (national and subnational) accountable and consider aligning themselves with stronger strategies to building democratic institutions. The latter includes collaborating with organizations outside of the NRG field with different approaches to make concrete progress.
Ultimately, it is the people working in civil society and its organizations that make the difference. The survey results were generally sobering, pointing to a measure of complacency, timidity, and risk aversion. Yet specific results from some respondents also offered ways forward. Although a minority, there were some respondents who provided bolder proposals and believed that tougher governance reforms were not merely a priority but were also likely to take place. In general, younger female respondents tended to be more optimistic about tougher reforms ahead than their older and/or male counterparts.
Civil society was not alone in terms of relative conservatism regarding change ahead. Industry is even more reticent, for obvious reasons. International financial institutions and multi-stakeholder initiatives such as the Extractive Industries Transparency Initiative (EITI) will also need to play a more decisive role in a revamped NRG field, embracing bolder change, as will also need to be the case with bilateral and private donor funders of NRG activities.
How to be audacious in the NRG space?
The provides some concrete and detailed illustrations of integrated initiatives and reforms that could be considered ahead in the field. As explained in the report, some priority reform areas may need to be tailored to regional and country realities. The approach to be taken in Africa, for instance, will need to differ from that for the industrialized world, or from Latin America and the Middle East. Further, a much bolder approach to partnerships in the field, such as cross-thematic mergers (NRG/renewables/climate) by some NGOs/think tanks could also be considered.
A concrete and ambitious initiative deserves more priority and substantial funding, where developing countries that are new to producing fossil fuels could be compensated to leave those fossil fuels unexploited. Such compensation mechanisms could also be linked to programs supporting improved governance and the transformation of the energy matrix. Audacity also means addressing head on areas generally considered taboo in the past in the NRG field, such as concretely exploring the pros and cons of the role of nuclear power in a faster transformation of the energy matrix (see Figure 2) or considering a more robust version of EITI in the future, with a recast role for industry and a concrete commitment in the initiative to address the climate crisis and kleptocapture.
Conformity is no longer an option. A delay in the revamp of the field of NRG is increasingly untenable. There are immense challenges brought about by the pandemic and its aftermath, the climate crisis, the erosion of democratic institutions in key countries around the world, and the geopolitical shifts associated with Russia’s invasion of Ukraine. These challenges also present an opportunity to move boldly. An audacious revamp of the NRG field does entail costs and risks, but these pale in comparison to those associated with the continued soft evolutionary approach.
The authors would like to thank Caroline Pitman for copyediting and fact-checking assistance on this piece. A full list of acknowledgments for the report is available here.