Council on Energy, Environment and Water Integrated | International | Independent
Other Publications

G20 and GDP: The Cost of Uncoupling From Fossil Fuels

Shuva Raha and Tulika Gupta
May 2023 | International Cooperation

Suggested citation: Shuva Raha and Tulika Gupta. G20 and GDP: The cost of uncoupling from fossil fuels. Global Solutions Journal, Issue No. 9 (Berlin: Global Solutions Initiative, May 2023).



This Research Paper examines the G20’s dependence on fossil fuels for revenue and energy consumption. Abruptly ceasing fossil fuel consumption will disrupt industrial output, tax-funded social programmes, and billions of livelihoods. To minimise trade-offs between economic growth and the energy transition, the G20 needs foresighted domestic planning and global collaboration. 

Key Highlights

  • The G20 accounts for 80 per cent of global GDP, and collectively consumes 85 per cent of the world’s coal, oil and natural gas annually. Many of these countries also trade fossil fuels for revenue and balance of payments.
  • The G20, with the exception of Mexico, have announced net zero goals, spread around the mid-century mark, but face a shrinking carbon budget and mounting costs. A global transition to net zero could cost up to USD 275 trillion by 2050. Many G20 countries also depend heavily on fossil fuel revenues to finance their economies, balance trade deficits, and manage currency and inflation rates. 
  • Economic modelling suggests that two levers – carbon pricing and green supply policies – could reduce the net economic impact of net zero policies to near zero. But carbon pricing lacks broad public or political support even in advanced economies, the suggested incremental steps are unlikely to lead to deep decarbonisation, and little can be achieved through carbon taxes without directed expenditure and fossil-fuel subsidy reform.
  • For a socioeconomically viable uncoupling from fossil fuels, the G20 must adopt a structured, long-term perspective to predict energy market shifts and climate risks to improve decision-making; plan unique transition pathways based on national circumstances and global imperatives; and partner with likeminded countries and organizations to help close resource, technology, finance and capacity gaps.

Sign up for the latest on our pioneering research

Explore Related Publications