 Rwy'n fwy o gyd wedi bod y mynd i'w bwysig ddim yn oeddu'r gwasanaethau bwysigol a ddim yn digwydd gynnwys i'w gwirionedd mae'r gwahyr i'n ewch o unrhyw y byyd, mynd i'w gwerthonol i'r gyswm, yn mynd i'w gwirionedd o'r gwahyr i'u gwneud o'r gwaith mewn gwirionedd, I was thinking, as I was reading this report that Glader and Charm are going to be pronouncing, which I think most of you have already seen and possibly got a copy that Chathamhouse produced in June that stranded extractive-led growth, and amongst the many interesting things that I've found it, I started the thesis in it that development agencies have linked part of their futures and the actual support that they're providing to extractives industries, partly because those poorest countries extractives is all they've got. And apart from clearly the ethical issues that one can discuss about that, the report also made a very interesting observation that while in the last 20, 30 years in the commodities cycle, the poorest countries have gained much of their income for good or often for ill from the extractive industries. Now is the current commodities downturn in the price cycle actually creating a situation in which the countries cannot think, well, we're just going to bounce back, we're in a low price scenario forever. And therefore they actually find themselves in a situation that even if they do want to break out of natural resource dependence, they're going to find themselves having to do that in a much lower income situation. And I was reading this, and I got to thinking that I started thinking my way down the West Coast of Africa and all the old wolves who run those polities along there, and people like Denysasu and Gesu, like Shantarshan and Gola, all these men, all men who have lived their ways through two or three really bad commodities downturns, which had remarkably potentially powerful political consequences and they've lived through them, and the potential actually, that figure to Shantarshan coming to the end of his rule, the assassin and Gesu, that they're actually going to find themselves in a situation where the upturn that they've been trying to live their way through isn't going to happen. And that is a pretty explosive, speak as a political scientist, a pretty explosive outer. We've already seen violence in the elections in Gabon over the other week, which people are also linking to the oil price. Now we've got a really big panel, so I'm going to shut up. The way we're going to do it is Glada and Charm from Chatton House are going to present the paper. They have about 20 minutes. We then have Ekpen Ombudei from the Commonwealth Institute, who's going to comment over eight minutes, and we then go on from that. We truly have a good-sized panel here to two representatives of developed agencies that have been working in the natural resources. We have Nicola Barnfather from Diffie, and Pettistig Set from Norrad. So we're going to have to move at some pace. I'm going to give off the stage and hand over to Glada and to Charm on a job share. So maybe I'll just say a few words about Chatton House for those of you who don't know. Can you all hear me? Some people call it a think tank, some people call it a talk shop. I like to think that we do a lot of listening at Chatton House, and we've had a very strong energy programme since the early 80s. Obviously I wasn't involved in, but Charm and I both done a lot of work on extractives, investment, governance. There's been a long programme of discussions with producing countries, especially with exporting developing countries, looking at their interests, looking at producer-consumer dialogue, and looking at what we call depletion-led development. And I just wanted to say that the impetus for the work that we've done over the last year and the report that we've produced was really because we started to feel a growing sense of discomfort. Something was jarring in terms of us hearing from our colleagues on the climate and environment side about unburnable carbon stranded assets, this conversation starting to heat up about five years ago. And it jarred with what we were hearing in discussions with the producing countries, with professionals from the oil and gas sector, where they were both receiving encouragement and assistance from the international community in following a fossil fuel-led growth path, and also the optimism that they had about the sustainable economic development benefits that that would bring for their country. So that's my starting point. Charm is going to talk first and I'll come in later. Thank you. So I guess I'll start with exactly what the picture we saw was. There's a range of institutions, initiatives, reports up here that don't need to be introduced in this country. But to put it bluntly, there's expectations, huge expectations around extractive-led growth. There's a development pathway on one side and increasing awareness around climate and carbon risks on the other. I think it's fair to say that extractive-led growth became the dominant development strategy for advisers and for governments in low-income, resource-rich countries through the resource boom, seeing the windfalls and the massive FDI that flowed into many of these countries. And we're all familiar with the theory of change here that through export revenues you can bolster public expenditure, in some cases through domestic use of minerals. You can support access to energy and industrialisation, more so in the mining sector it has to be said. And through doing so you can raise human development, increase economic development, sustainable growth. There are three assumptions underpinning all of this. The first being that it's a potentially transformative opportunity and this is the language that donors and advisers have used. And it's something that is echoed back in governments talking about once in a lifetime transformative chances. The second assumption is that we now understand the resource curse and that we have the policy prescriptions to mitigate the worst, the negative economic and governance impacts associated with it, be it around transparency and EITI compliance or prudent fiscal management and the development of sovereign wealth funds, stabilisation funds. There was an assumption certainly that we knew how to manage this if just the capacity and the skills and the information could be built. And third of course is this assumption that there will be long term sustained demand for fossil fuel resources and that it's a case of when, not if these resources will be developed. And so we saw a rapid expansion of extractive sector advice from the World Bank to the UN agencies, the donors that are joining us here on the panel today. Also international panels, advisory bodies, the Africa Progress Panel just a few years ago, equity and extractives, Cofi Annan, stated that there was good reason to be optimistic and that African nations could defy the resource curse. And again in the private sector, IOCs, we see them describing themselves as development partners. McKinsey, resource revolution, if resource driven economies use these resources well with the right policy and governance prescriptions, there is potential to lift half of the world's poor out of poverty. So huge, huge, huge statements. Of course at the same time a very different narrative was gaining traction amongst climate scientists, investors, researchers. And in the private sector we see this manifesting itself as increasingly well developed discussion around standard assets and fiduciary duty to investors. And also some of the ethical dimensions that we discussed yesterday around fossil fuel divestment. And then at the same time norms in international financial institutions, multilaterals have begun shifting and we've seen commitments from the World Bank and others away from funding the dirtiest of fossil fuels. And the striking thing is that these two conversations have taken place with little or no reference to one another beyond maybe conversations around gas flaring and the oxymoron that is clean oil. Certainly on the advisory side there are groups advising on extractives governance, speaking to oil and gas sector stakeholders and then those same groups often have low carbon development and green growth specialists speaking to different advisers in different parts of the government. And the same is evident in countries. Certainly Glader and I in all of our discussions with oil and gas ministries, energy ministries, NOCs. Climate change has just never come up. It's dealt with by different parts of government. And to put it simply it has the concept of standard assets has very little traction when placed against urgent poverty alleviation or access to energy imperatives. And I would go as far as to say that by introducing the concept of international climate change obligations in discussions in that kind of environment, you risk blowing your credibility in your wider advice offering. So we started thinking about where do these two narratives conflict, where can they potentially support one another? Is it inherent that they're in conflict? And we approach this rather like an emerging producer in terms of what you want to do with your resource base and how it might best support your development and how you might split between export uses and domestic uses. And how your geology, your scale of resource and what that means in terms of infrastructure requirements, price implications, all of these factors and then how these emerging carbon constraints affect that picture on both sides. And the term carbon constraints is really, really critical here because obviously it can be global carbon constraints in terms of Paris climate change agreement. It can be very, very local. It's air quality. It's competitive economies. And obviously where the two converge is where you have a very, very strong argument or rationale for change and we've seen this obviously in the case of China. So if you consider first how these risks manifest themselves in terms of global export markets, obviously we have the top-down climate change mitigation commitments. But there's also a range of other areas of action increasing trends towards taxation and regulations to incorporate social and environmental damages. And also the reform of fuel price policies, so action on phasing out an efficient force of fuel subsidies and both of these hit demand. So we're looking at the broader picture of what's going on in key consumer markets and how that's going to affect long-term trajectories. And then on the other side of the coin in terms of using hydrocarbon resources to power domestic access to energy sustainable development, while there's not the same pressure, direct physical pressure on these nations to constrain emissions, there's a whole host of other factors that warrant the consideration of low carbon development alternatives. The obvious being the resource of classic resource curse impacts with the commodity price falls. But also the path dependency that is locked in when you start going down carbon and pollution intensive development pathways. To take a quick look at the first side of the puzzle, the chart here shows the top five importers of fossil fuels in 2014. It's all data from the Chatham Hall House resource trade database and it gives you a sense of the sheer weight of the decisions that a handful of importers make in the market. And obviously this picture is changing. There are some large producer importers having an increasing influence on this picture. But by all accounts, the NDCs are expected to account for a significant slowdown in demand. The IEA estimates suggested that if all our NDC commitments were implemented, we're looking at fossil fuel demand growth slowing to a relative crawl of 0.5% a year by 2030. If you look at that in terms of the timeframes that these emerging producers are discussing their development in, the massive amounts of CAPEX being slashed, exploration coming to a halt, and the fact that most of these projects are going to take a decade plus to come online, there's a very, very, very clear evolving risk picture. So for new and prospective producers, the question might be what markets can you economically serve and what investors demand can you lock in? And what is the scale of that resource and its exposure, its productive lifespan and its exposure to these dynamics? And it's also worth saying, I know we spoke a lot about scenarios and models yesterday, but it's worth restating the importance of governments and economic advisers really understanding the assumptions behind these scenarios. The scenarios that your commercial partners are using and basing their development decisions on, what world does that reflect? All the evidence suggests there's a very, very strong argument to consider downside risks. And also what declining demand for fossil fuels looks like. Is it that gradual, managed decline or is it much more disruptive change? And how do you build capacity and resilience to that and how do donors and advisers respond to that? The other side of the argument of course is at home and what threat or assistance development of a hydrocarbon sector can grant your sustainable development visions and green growth ambitions. And it's fair to say that green growth, climate resilient development has become a lot more prominent in all of these emerging hydrocarbons producers in terms of national discussions around your national vision, your long-term development plans, even if they're not being reflected in discussions with the oil and gas sector stakeholders that we're dealing with on a day-to-day basis. So how does it play into different aspects of sustainable development? We know very, very well the negative health impacts of air pollution. The critical thing here is that the choices made at the earlier stages in developing your resource base and how you want to put that to work at home has a certain path dependency in terms of industrial processes, energy systems, transport systems that locks in a certain path of development. And the problems are clear if you look at South Africa and coal-fired power and the role of an inefficient SOE and rolling blackouts and chronic local air pollution. Same for a lot of fossil fuel producers that have based developments on cheap energy imports, public health and air quality is coming under pressure. Equally accessed to energy, we now know that decentralized options, off-grid, mini-grid options are competitive with centralized power in many rural areas. It ties into promoting the sustainable use of forests where forestwood and charcoal is a staple cooking fuel, can associated gas and LPG have a role in displacing this in safeguarding forests and public health in the same breath. And equally in terms of accessing new technologies and finance, one of the greatest pull factors of low carbon pathways is around technology and finance. But how does development of the hydrocarbon sector affect your positioning in terms of those potential benefits and leapfrogging opportunities? And how does it look in relation to other sectors of the economy? We heard about fishing yesterday. But the same could be said for many other areas of entrepreneurship and new business models where hydrocarbons development, where industry crowds around perceived advantage, it can start crowding out these opportunities. The examples of more established producers and the difficulties they've had moving towards sustainable diversification have a lot of lessons for these countries at this stage of the discussion. Which brings me on to this story, the fossil fuel lead growth or depletion lead development? I kind of like the idea of saying depletion lead development because when you talk to exporting countries, who in the room by the way comes from a net fossil fuel exporting country? So there's a few people. OK, so what we find is conflicting views of the role of the fossil fuels and the economic development path. But what you do have in common, this is a picture of Ecuador, is a picture whereby the production trajectory rises and so does economic growth, and at some point the production reaches a plateau. This is much more accentuated than other models I could show you, but this is an example of how it goes. This stays at a plateau production for some time and then it declines. Now, your perfect ideal would be to, as my colleague Paul Stevens always says, not to consider the stuff below the ground as income, but rather it's an asset that you reshuffle and you swap it for sustainable economic activities and growth above ground, which hopefully outlasts your production. Now, that would be fine if you'd reached that point by the time that production plateaus, but at the same time you've got this problem of this line here, which is domestic energy consumption, which is usually growing pretty fast because the thing about fossil fuels in comparison with mining activities is that you can also use them as an input to the domestic economy and that can fuel growth too when countries want to do that and they often want to give incentives to do that by obviously keeping the prices low enough to incentivise, shall we say, a high carbon pathway of industrialisation. But the problem with that is it starts to squeeze your exports and we're not even talking about what's happening in the global market with pricing, but it begins to squeeze your exports. Even Saudi Arabia is worried about this issue, so as your production plateaus, your domestic consumption grows, your exports are squeezed, you become more and more worried about what's happening in global markets and you so become more concerned about potentially your spending on subsidies domestically, your pollution, your competitiveness if infant industry has not grown up in time to be competitive without huge subsidy. There's a few of the issues that we here exporting countries talk about a lot, this is very much of concern how to reach a sustainable transition by the time your production plateaus. Now there are some success stories of diversification, economic diversification, say in Mexico, Malaysia, Indonesia, but I think it's important to realise that those countries have had a long experience whereby they only began that diversification process when the resource revenues began to decline and only with intensive incentives for high productivity, for technical transfer, for skills growth. Institutions obviously being key to this and that's a luxury that many low income, low capacity countries don't have. One of the most compelling examples we found when we were talking to our stakeholders was the example of Trinidad and Tobago which followed a vision for natural gas development. It really took into account that they were not going to become dependent on just selling raw material to the market and being totally dependent on the price and foreign demand for that. They were going to build a national industry, petrochemicals, steel, really building the linkages with the local economy. This is a very, very powerful story for other producers. I think the question is today that TNT in spite of its success is really in a race against time to bring down energy intensity, increase productivity, develop a knowledge economy and that's become very tough because of the industrial pathway it's chosen. So it was a good decision in the 60s and 70s, maybe 80s to travel down this path of fossil fuel less growth. Is it still the same question? Is it still valid in today's context? Just a few more examples I'll flick through. The options today look very different. We would say there are essentially four pathways on the table. In terms of the options that countries have, they do have options and the question for assistance is international assistance. Is that actually obscuring other potential development choices? Has it actually been aligning with industry interests in developing as fast as possible to maximise profits, also potentially with claptocratic elites who want to take as much money as fast as possible from the resources? So in this case we were talking around four scenarios. The potential rush to market which could be, we heard in one of our sessions where we did have someone involved in national strategy in one of the African countries say we want to use the money from fossil fuels to develop our green sustainable economy. We want to take that money. So is the best plan for them to rush to market, use that money effectively? That very much depends on the capacity to manage those revenues effectively and also the very high risk of the resource curse effects which you all know very well. Development on parallel tracks. This is something that countries like Mexico are pursuing. You can develop your fossil fuels while taking action on a low carbon development pathway at home. It does require political resolve, may require moving a bit more slowly, a lot of assistance and pushing back on public expectations I think to maximise revenue. And then we talked about pace development much slower, much more in line with your capacity to capture the economic benefits from that sector. And also in this sense the pace development model would give a country the chance to monitor the market, what's happening in the market and pace the development in line with that. Obviously very tough, would need a lot of help in political resolve. And then the focus on the non-extractive sectors, when a country has a choice to develop extractives or not or to expand a project or not to develop a new project, there is a choice not to develop. And in fact there's a very interesting example going on in DRC right now in the Varunga National Park whereby I think DFID is supporting a model which says if you don't develop the oil in the Varunga National Park we'll assist you with developing tourism, renewable energy and agriculture which will provide more jobs and give you the same benefits that the oil would have had. But there is pressure to show that those benefits from that path to society. How is low carbon development meaningful and low income context? I think Shans talked a bit about this but we did want to just point out that these are the three areas. If you look at the INDCs of countries like Ghana, Ethiopia, Kenya, Tanzania, Mozambique they focus on diversifying the energy mix. Definitely increase of renewables, obviously increasing energy access in the cleanest possible way. Forests last scale are a forestation, increasing the extended use of forests. In fact we were talking to some Ghanaians the other day and they said if only some of the oil wealth could be earmarked for our forestation from the oil wealth that would be a really good way of making the wealth sustainable for future generations for building that value. When transportation you know how to develop systems that work for both maximizing the linkages in the economy bringing goods to market but doing that in a way that does not increase pollution and lead to the health impact you're seeing now in Delhi or Beijing. We think the energy and industrial policy can really act as a bridge between these visions. We think there was a very salient report that came out by UNICA in April and it made the point that it was about greening industrialization in Africa. Decisions today will have long lasting impacts on growth and consumption so getting it right first time is vital to avoid retrofitting which is always more expensive. I think it's a really salient quote when you come to talking about industrial development and energy, what kind of power stations you want, what kind of secondary manufacturing type industries you want to build, what are you also losing at the same time and what might you need to retrofit in future. With that in mind we wanted to really talk about putting options back on the table for extractive fossil fuel producers. We wanted to think about how can new information perhaps open up narratives that have been obscured by the fossil fuel led growth or extractive led growth narratives and how can that lead to a more constructive discussion whereby the givers of assistance, the MDBs and the donors can actually reconcile their commitment to a 2 degree or 1.5 degree world and green growth and their commitment to helping countries to develop in the best way for them. I think this is really key. The questions that happened before the decision to extract in terms of the full cost and impact of extraction I think that's often lost, especially in terms of not only the pollution impacts but impacts on water use, impacts on environment biodiversity. What are the opportunities for domestic sustainable development that might be jeopardised by the oil activities? I think Neema mentioned fishing in Ghana yesterday which is a very salient example. How does the extractive sector development model interlink with the sustainable national vision? I think they are definitely pricing how you price energy domestically how it comes into the economy is extremely important. The questions after the decision to extract are for those countries already in the midst of development. There's a question of balancing between exports and domestic use of resources. The role that resources can play in sustainable energy and energy access goals. Where are the institutional regulatory checks and balances to ensure that policy is focused on the ends rather than the means. I think this is an area that assistance givers could focus on much more in the case of not locking in negative vested interest but actually locking in a positive institutional vested interest that will help us as countries in making that transition to a more sustainable pathway. Infrastructure. I think infrastructure flexibility. A lot of money goes in up front when you develop fossil fuels. There's a huge amount of capital employed. Everybody wants infrastructure to really kickstart their economy. But can this be built in a way that you don't have to retrofit 10 years later that it doesn't lock in high carbon growth? Can the development of hydropalms offer co-benefits? I think those skills and the local content conversations that we have become very relevant here. How can the power objectives be better incorporated into decision making? I think this really revolves around getting people from the national strategy areas, the ministries of environment and energy and oil and gas around the table together because they don't always speak the same language even within one country. Thank you. Thanks. Thank you very much. There's actually an interesting listing of which ministries are involved in the environmental climate change agenda. It did strike me that in the actual political structures you're looking at the weakest structures actually of the climate change agenda and the strongest ones looking at oil. I think you're going to come and make some comments on the paper and particularly I suspect about the balance of forces and carrying it ahead with development. Thank you John. Morning everyone. I missed deliberations yesterday so I had the impression that we weren't going to need slides. I have Sean and Glada to blame for that and it would have been particularly helpful at least to have something with a logo on so you could at least get the name right. It's the Commonwealth Secretariat. It's a voluntary organisation of 53 members, 53 independent states. What we try to do is articulate the political, democratic and development interests of all of these states. We comprise some of the smallest countries in the world like Nauru and some of the largest countries in the world like India. We've got a division that has spent the last three or so decades primarily focusing on some of the issues that have been raised by Glada and Sean, which is the narrative or the argument that the extractives would be a very powerful transformative solution to the economic development question. But just to contribute to this and I think I've got only eight minutes or thereabouts. Seven maybe. I'd just like to say three things. One is that in the last year, give or take two or three on top of that, the Commonwealth Secretariat has started to speak more in the language now of the SDGs, particularly if we could identify some. The seventh goal, the 12th and the 13th, and I'll elaborate on them very briefly. Go seven speaks more to access to affordable, reliable, sustainable, modern energy. Now, what we recognise is this tension, what we recognise is this potential conflict and we're trying as much as possible to infuse a lot of the sustainability into the advice that we give our member states. So, as far as access to affordable, reliable and sustainable energy is concerned, there's one very simple objective that we've got, which is to try and increase the share of renewable energy in the energy mix for our member states. Now, what we have done in this case now is to try and fit it into our existing business model, which is essentially two things from our side of the house, help with policy and help with the implementation of it. Now, on the policy level, we are looking at things for our member states such as choice of technology and then the fiscal and financial incentives, and then also trying to help on the implementation side, looking at taxation, for example, the extent to which you can go down under the bonnet, if you like, and work through accelerated depreciation just to provide incentives for such schemes. And then on the more practical side of things, we continue with our business model, which is to support with the agreements, the legislation and then where possible capacity building. So, that's Go 7. Go 12 of the SDGs, and I'm trying to speak the SDG lingo here, which is to ensure sustainable consumption and production patterns. That speaks more directly to the work that we've done over the years, helping with legislature, regulations, policies. But what we've started to do now is to infuse more sustainability, if possible, into it. And what we have started to do more recently, which interestingly seems to tie in with the scenario we've got, but we've just got a slight variation to it, is we've started to look at for our small island development states, blue growth ocean governance scenarios. And we've started, I can't call it a pilot project, but we've started with the Government of the Seychelles, and we've said to them, look, there are four possible scenarios that you can start to look at critically now. One is to leave things as they are. The other is a sort of slow and steady development, which will start leading towards gradual decarbonisation. One which they seem to fancy is true transformation, which would then look at scenarios such as taking hydrocarbon revenues and then investing them in climate change mitigation activity. And then the final one is where you can reach a stage where you are confident enough to make a policy choice. Leave it in the ground and focus on more sustainable activity. The big year for us, especially in light of things that have happened in Paris last year, is Go 13, taking urgent action to combat climate change and its impacts. Now this is an important component of our work, especially from the advocacy standpoint. And there are two initiatives that we've started to develop. One is a proposal for a multilateral debt swap for climate action. To try and put it as simply as possible, basically what we're trying to achieve here is to get especially small member states who are burdened with debt to have through relationships with climate finance providers such as GTF, to have some of their debt either written down or paid off completely, and then the debt stock that was meant to be repaid would then be invested in climate mitigation activities. Now the mechanics of it can prove tricky, some would even argue, bordering reality. The other initiative that we've recently launched last year, the Commonwealth Heads of Government meeting, was to establish a Commonwealth climate finance access hub. Basically again to fit into our business model of trying to help our member states do some of the more practical things. So here we're trying to assist our member states with navigating the existing climate funds, with preparing proposals, complying with the legibility criteria. It will be hosted, my understanding is, in Mauritius, and the idea is to have in country a number of climate finance advisers who would handhold many of these countries through these activities. And so far, and it will lead to the second point that I'm going to make here, it's taken a bit of interest with about 13 of our member states, four from the Pacific, six from the Caribbean, and three from Africa. And three from Africa are quite interesting in terms of the profile of size and where the countries are. It's Mauritius, it's the Kingdom of Swaziland, and it's Namibia that have generated this interest. What it leads to the second point that I was going to make here, which is the kind of support that our member states are currently asking for, even given all of what's going on. And this is where things start to get a little bit awkward, because I'll just reel to you a summary of some of the requests that we get for assistance, especially with this side of work that we do. In the last year, we've gotten requests to help with negotiations with IOCs. We've gotten requests to help with the development of southern wealth funds and other revenue management mechanisms. We've gotten requests to review or develop petroleum and mining legislation, regulation contracts and the like. We've gotten requests for the review of petroleum and mining policy. More recently, we've started to get requests for ocean governance policy and blue economy strategy, speaking to what I said earlier about what we're doing with the seychelles. And then we assist our member states with the delimitation of maritime boundaries and extension of continental shelf submissions. So none of this particularly reflects the reality or the challenge of climate change. However, we try to infuse or integrate the STGs into these requests as they come. So a lot of the work that we're doing in this regard now is more at the advocacy level, because we are a request-based organisation, mind you. So we're driven by what our member states want us to do. The third point that I'm going to make is that on the basis of the kind of requests that we're given, on the basis of the interactions that we've had with our member states, it's not particularly clear to us that the countries are fully grasped the implications of these commitments that many of their seniors are making. And I'll just give an anecdote. I'm not going to mention the name of the country. Southern Africa is landlocked, so there are not many there. I was over there about two months ago trying to help them out with the development of their mining policy. And I noticed, again, I suppose it's one of the things that we encourage them to do, which is take ownership of the documents after we've done the first few drafts. I noticed that there was a marked difference between the draft that we had done in London and what I saw when I got on there. And the big difference in there was coal. So I said to them, you do realise that your president in Paris stood confidently and made commitments and specified some of the areas where there was going to be focus on climate change action. And one of the specifics was coal. Now, here you are putting your policy forward and hinging your power generation future on coal utilisation. I can't get the accent right, but what the permanent secretary said to me was, brother, we have to feed. Just to give sort of context to it. So the number of these challenges or harsh realities or awkward realities that we tend to see now, the observations that we've made is that there's definitely not that multi-stakeholder consultation or conversation intra-government about these things. There's a complete disconnect in the discussions. We've also noticed that a big factor is the fuel intensity or even some of the non-fossil fuel activity that they intend to pursue for industrialisation. The key example is mining and the power generation implications, for example, of pushing through limestone for cement and construction work. There's also the infrastructure question. Most of you have seen all of the data available. One of the ones that goes round is that. I think Sub-Saharan Africa has about 200 kilometres per thousand square kilometres of land for roads, only 25% of which is paved. Now, when you say to developing countries, especially the members that we deal with, that if you want to push through your rapid industrialisation, these are some of the implications for the use of fossil fuels. There's a tendency for some... I don't want to use the word resistance, but there is that sense that we get. Funding is an interesting challenge, which is one of the reasons why we've tried to come up with as many solutions as possible, such as the finance hub and the debt swap proposal. Just to conclude, I guess, certain points to make, there's a mismatch between the high-level intentions and the practical preparedness at country level, and then there doesn't seem to be enough of that natural incentive available to these low-income countries to take things up. I'll stop right in there. Thank you very much. So, I suppose we're here with the climate change side of things and the climate change narrative that has come on. And we're coming out of the extractive narrative, but the fact is the extractive narrative, extractive development, remains absolutely central in a lot of agencies' thinking. So let's hand over to Nicola and hear the view from Difford. Thank you very much. Good morning, everybody. I'm just going to do a very quick presentation. I was also, I crumbled yesterday, I didn't have a presentation, but I did see the kind of layout, so I've pulled together a few little slides. So I work for the Department for International Development, which is a UK government department. Just a bit of background. Difford made a commitment, well, the UK made a commitment to spend 0.7% of gross national income of the UK on overseas development. We're still the only country to have reached that challenge, and it has been a significant challenge, which is around £11 billion a year in 28 countries. We tackle the root causes of extreme poverty. That's the ultimate step by what we're trying to achieve. But we do have some conflicts within our portfolio, and as an extractive advisor, I'm probably at the sharp end of that. We work on economic development and wealth creation, but also preventing climate change and encouraging adaptation and low-carbon growth. I'll just whizz through this. We have a pretty significant extractives portfolio. We've got a central policy and regional programming team, which I sit in. That offers central funding and support to the extractives industry's transparency initiative, Natural Resources Governance Institute, the Africa Legal Support Facility around contracting support for contract negotiations and addressing those power imbalances that we see around legal discussions and a skills programme, SOGA, in East Africa, around the oil and gas sector. We're developing a new programme, Great for Partnership, which is about using UK public sector skills and partnering them with counterparts in developing countries. Part of the scoping for that was looking at the demand side in three countries in Africa, and just to say that, again, from extensive interviews, which definitely didn't lead, at no point did climate risks come out in that area for support, so it really isn't something that's on the agenda. We also have country-level programmes where extractives advisors in-country deliver significant extractives programming, which generally focus on government capacity building, civil society capacity, so that there is capacity to hold government and private sector to account and also private sector development. On the climate portfolio, we look at trying to help countries transition to climate smart future, in that white-hole position to end support for the public financing of new coal-fired power plants overseas, except in the most rare of circumstances with the poorest countries with no real alternatives, but since that policy came into position, we've never actually funded anything. The biggest challenge for us, which I think has been outlined already by the speakers today, is trying to bring these portfolios together around extractives like Grove, especially with hydrocarbons. We're talking about hydrocarbons, but also our ambitions for countries to achieve low-carbon growth pathways. Yes, we do talk as donors along the lines of this potential graduation from aid, UK taxpayers' money being spent in developing countries, and we really ultimately want countries to be able to be self-sufficient, and we see fossil fuel revenues as a way potentially for them to achieve that, but we are very, very well aware of the risks. But there is a genuine concern that there will be a significant decision, and infrastructure, once fossil fuels have been discovered. There are many countries that we work with that have got very significant ambitions around low-carbon development and green growth ambitions and commitments that they've made, but once fossil fuels have been found in significant quantities, how does that disrupt those commitments? We've seen issues in Tanzania where that potentially could be an issue with the gas finds. In terms of oil and what might that mean for their green growth commitments that have already been made. It is very disruptive once fossil fuels have been found. We do have organisational and policy silos in the UK, in terms of trying to work more closely with extractives and low-carbon emissions in one programming or policy vehicle. It's a challenge, but it's a challenge overseas as well. We need to try and at least build a narrative as a first step and for us getting in our energy policy framework to have a commitment to provide upstream advice on extraction. We've always said that the decision to extract is a sovereign decision, but actually we should be provisioning advice to help to support that decision in terms of the long-term risks, which is why we've been working closely with Chatham House and UCL to look at some of the scenarios around that. I would say that Glider and Sharn have produced a really excellent policy paper in this area, which I think you've got copies of it outside, because we really haven't had the time to go through all of the details in this quick run-through. Just some very few key findings or points for me to make as well. In terms of working with low-income countries, communications and handling around the narrative of climate change and climate risks, it really does need to be dealt with very carefully. Low-income countries want to see revenues from investments and they are regionally very, very competitive with their neighbours and they'll do whatever they can to get the deals that their neighbours made this out on. So there is a significant disadvantage in terms of them coming to the table because they desperately want these investments. That decision to extract, as I've said, from our perspective it's a sovereign decision, but we do feel that support is needed to help countries identify what those risks are and I think we've all got a part to play there with which scenarios have you used and how you need to get through those technical challenges but actually provide some really useful information. The narrative around stranding and leaving resources in the ground in country, as we've all said, I've had meetings in petroleum departments where we even start to talk about that and you really are looked at with dismay and it does reduce your credibility trying to start that conversation so we need to think about the language that we use especially around the west telling countries what they should or shouldn't do with their resources it's not the kind of narrative that I think we need to use. Obviously there are genuine risks to countries. The decision is theirs but the kinds of future risks that need highlighting are around the higher running costs which could develop from a reliance on hydrocarbons exposure to volatile markets in the future if they go down that path and many of the countries we work in are really at the sharp end of that as we all know right now. Long-term energy security issues and the work that our colleagues in Chatham House have outlined today and we're looking at embarking upon a second phase of that work which is looking at in-country outreach scenario planning with UCL as well involved very much in this south-south learning Chatham House have got an excellent new petroleum producers group where they bring established and new producers together to learn from each other so it reduces that perception that the west is really telling developing countries what they should or shouldn't do about countries learning from one another's experience and making informed decisions but we have a role to play in provisioning that advice we really want to outreach to other donors and multilateral development banks because again this narrative around the scenario planning and risks to countries going down a fossil fuel led growth pathway the narrative just isn't really there yet so we really need to try and build that together we want to incorporate some of the findings that Chatham House will be doing with UCL into our thinking on power and power infrastructure in terms really of getting the right energy mix and scenario planning around the energy mix language like that is much more favourable when we start our discussions in countries thinking about INDC power and extractives commitments it's a much easier way of coining the discussion for example Tanzania's plans for coal for coal fired power stations may well be revisited once we start thinking about the bigger picture in terms of their gas supplies and their intentions to sell LNG to an already flooded market actually they may well be better looking at their own gas for domestic consumption as opposed to export so trying to think some of these challenges through with countries and then the I can't finish without saying in our perspective as a donor you can't talk about the extractives sector or the power sector really without thinking about the political economy realities on the ground the vested interests that surround the sector are very very difficult to overcome gaining traction is very very challenging and we really need to know what's going on behind the scenes before we can really think about what our interventions are going to be they need to be very carefully planned and we do a lot of work behind the scenes with our colleagues in the foreign office going on in country the promises that get made to citizens on discovery I think some of the comments that were made yesterday were excellent big promises are made once fossil fuel finds are made and managing those expectations and actually teaching people about what the realities of the sector might be is a really really important thing to do I'll try not to to finalise my comments I think the debate needs reframing towards kind of thinking about the long-term economics the long-term sustainability of investments and choosing the most appropriate fuels for development needs and kind of let's coin things in slightly different way I hope that was quick enough I think the political economy questions and the governance questions are huge Peta, you have some comments from Norad on oil and development then please join us there we go we're suddenly surprised where everyone came up with slides you should have a slide free zone we had a discussion yesterday and Nicola discovered that I had made slides so she had to make slides they did it behind the moderators back anyway good morning everybody so I represent Norway the country that used to hunt whales and we export oil and gas that's why we concentrate on changing the rest of the world first of all thank you for very good report very interesting presentations this is the first time I attend a climate conference and it's been great there were so many things said yesterday that really raised my awareness so thank you all coming from Norway I really appreciated the guys from Australia who have talked about their coal mines larger than Manhattan yesterday somebody's worse than us and I really appreciated that so anyway I'm going to talk about the oil for development program since we actually mentioned in the report from Chatham House and I want to put a few things straight explain what the oil for development program is about the question we're faced with I think listening to the discussion yesterday is we're cooperating I'm going to come back to this but we're cooperating with 12 to 14 countries around the world developing countries and the question we're faced with is these countries are partner countries will they be stuck with stranded assets and I think the most interesting question so far is what I'm concerned is who shall be in a position to sell the last cubic foot of gas and over the last barrel of oil should it come from the barren sea or should it come from Tanzania for example so anyway oil for development we started actually 40 years ago when countries approached Norway asking for assistance with governing their petroleum resources we've been working with Mozambique for more than 35 years doing capacity building and helping them all along the way and we're still there and they still need assistance I think it's important to emphasise that the program is recipient driven it's based on requests formal requests from countries coming to Norway asking for assistance we don't promote extractive lead growth which is actually mentioned in the report I think that's quite important the program and I think I included this slide because I think it's important as well the program is governed on the Norwegian side it's actually owned by a set of ministries we have the Ministry of Water and Energy the Ministry of Petroleum and Energy we have the Ministry of Climate and Environment owning the program as well influencing the decisions and the strategic direction of the program the Ministry of Finance, the Ministry of Transport Ministry of Labour and Social Affairs we cooperate closely with the Auditor General in Norway they also have programs in more or less as we do with the Auditor Generals in the countries we coordinate with the EITI we have just signed an agreement with UNEP UNEP on climate and environment issues we expect to be working closely with them but my point here is that there is a checks and balances in the internal governance of our system of the program now the overriding um um point of the program any development aid program in Norway is of course poverty reduction which is as far as I'm concerned or we're concerned is way beyond the horizon so we have set an operational goal which is responsible management of the petroleum resources saying that if you want petroleum resources to contribute to poverty reduction a prerequisite is responsible management of the resources and competent institutions it's not sufficient there are a lot of other factors of course this is what we're concentrating on and we divided that into three sub goals we assist the countries with a political and legal framework regulatory framework petroleum policy, petroleum um laws, revenue management etc this is normally the first thing we do it takes a few years and then we have the ones that are going to govern the resources need to be competent and that's a long term thing and it's based on institutional cooperation between Norwegian civil servants working together side by side with civil servants from Ghana from Mozambique from Tanzania from Lebanon in a twinning twinning type arrangement which builds mutual respect and good cooperation that's the foundation of the whole thing and the last one is working with civil society it's what we call a third sub goal civil society journalist, media parliamentarians they are the ones that are supposed to keep the authorities accountable for the way they manage the resources in other words the whole thing is about developing an informed public and an informed informed institutions now these are the countries in which we are in at the moment altogether we have been in about 35 countries we have completed several we are in 14 countries now more or less we have requests from Somalia and we have a request from Colombia normally from the request arrives until we actually start a program it takes about 2 to 3 years we work very closely with towards the end we work very closely with the partners in the countries Somalia and Colombia is in the mapping phase it just started in the planning phase we have Kenya and Myanmar we are ready to start in Myanmar probably from early 2017 Kenya a little bit further out these are the countries where we are at the moment and there is one thing I would like to mention all of these countries except Iraq are signatories to the Paris agreement they have commitments to the to the climate change and I think two of them have also ratified which I think UK hasn't the agreement Tanzania and I have forgotten which one the other one is but so these are the countries we are working with most of them we have been in for a long time I always say to people when we talk about oil for development that if you don't like dilemmas don't work with oil for development we are absolutely faced with dilemmas absolutely all the time and the effect of that working of the program with a very clearly defined goal is that it becomes more sophisticated you learn along the way and you absolutely realise that nothing is black and white and there is nothing, never any really really simple solutions to anything so there is an ongoing debate in this large, the first slide I showed with all the institutions involved but what is the right thing to do I mean it's all from unsavory political decisions or political situations in countries to as we talked about climate issues and environment but I would like to say referring to some of the things I said yesterday if we hadn't had an oil for development program the situation in around Lake Albert would have been a lot worse than it is now I think it's a world class exploration going on in western Uganda I think the risk for the Ghanaian fishers would have been worse if we hadn't been involved basically it's all about we working on resource management environmental management, revenue management and health safety and environment so it's a very comprehensive program and I think basically you're lifting the competency up raising the competency in the organisation with whom we're working and it's all about enabling them to make informed decisions so as to the questions about I've finished now so many important points to say but anyway the thing that there is a conflict between what we're doing and the green growth or the shift, green shift I disagree with so we have a slight disagreement on that I think you have to do both life, the world is a complex system and step changes and abrupt changes I don't believe in them we have to do both and we do both other parts on the region developed by day works on hydroelectric power and things like that so yeah so much more to say but I feel the nervousness on the left hand side I'm not nervous but we can go over many years I've been asked by African officials actually particularly as they were starting to get an oil industry going what should we do and actually my standard response has actually always been called the Norwegians so we have a little bit of time the organisers have thankfully allowed us to run on just by a little bit so has anyone got any pressing questions they would like to ask on this yes it's just in the middle just over there and then we've got one right up at the top in the middle and one in the middle there and we'll do three quickly thank you I'm Michael Ross I'm a professor at UCLA and also here at the Blavatnik school I've studied this issue for a long time and done a lot of empirical work and data analysis and one thing that strikes me about what most of the analysts suggested was that we kind of know what the right policies are in order to bring about a more diversified pathway to growth and that the problem really is sort of helping persuade the governments of these countries to adopt those right policies and I'm truly not sure that we do this is an extremely rare event to see a country move towards this more diversified pathway I think this was mentioned briefly in the chat in the house presentation that it's actually almost only that observed in the cases where countries are truly in the depletion phase so I just wondered if any of you had anything that you could sort of say that would boost my confidence that in fact if countries adopt the right policies they will indeed move towards greater economic diversification less dependence on it Next one just there Thank you Harold Winter from the University of Cape Town I've been a little puzzled also yesterday this morning by the focus on the fossil fuel rich developing countries and this morning the low income countries yesterday Simon Keaney talked about that but today I would have thought the real core interests and I come from South Africa not a low income country but really in development and adaptation and I heard very little about that so could you say a little bit more about ideas about the fossil fuel industry taking responsibility for adaptation how that fits in with the agenda of this conference as well there was a core by many prominent people many others calling for a carbon levy which was expressed as a levy island global fossil fuel extraction that will ensure that the people who face the worst impacts are more compensated by those of course the problem that's on the adaptation side which I really didn't hear mentioned and mitigation is not even the way we usually think about it and I'm a mitigation researcher I didn't really hear anything about avoiding the machines not getting the missions you've used them later and that really does raise a question of who effectively pays for that so if I could hear a bit more about that we've got one up at the top and as a gentleman with a microphone here so if you want to ask first thank you me more about that Nigeria I found a number of contradictions especially when it was said that imagine hydrocarbons countries and locked into the part of low carbon development I don't agree, I would like to see the evidence for that because each of these countries are actually setting up infrastructure and doing all the and including political conflict political and other conflicts to invest in and extract fossil fuels so I have the last problem I think and then just on the side when my brother was speaking about the commonwealth secretary was wondering what do we need the commonwealth for what do we see in this colonial reminder of things such as the log gone and then God are helping people helping nations I think this is really hypocritical but finally my final point is that I do agree with Nora because I have had experience in following the oil extraction I think this in Uganda it is a very difficult situation they have it always on the rim of Lake Alba that cannot work class extraction because we have a system of build up military in the area and all the conflicts coming up I just agree that more work needs to be done and your support for the work especially with civil society is very critical in that respect certainly Lake Alba but South Pleist was on the Congo side they actually had the initial geologist we shot last question this is really a bit more of a qualitative question if you look at the demand side and supply side approaches there are problems with both the demand side probably the key issue is that economic development so closely correlated with increases in energy consumption and fossil fuel consumption and then on the supply side the big push back there is leakage so I'm just curious if anybody wants to weigh in on which issues kind of if they're equal or one overrides the other okay now we probably will only have time for that one round of questions who would like to go in first with those where shall we okay let's go okay I will jump in but on the diversification question it's a difficult one to answer and I think I can probably say that I'm not going to be best placed to answer that that I work on in my portfolio and so hopefully as we get down the down the line we might have some additional comments to make on it I just want to say that one of the comments that was made about the not believing that emerging hydrocarbon producers are also locked into low carbon development I think that was a misunderstanding it was probably my fault because I was rushing through my presentation so quickly what I was trying to say is that countries which are demonstrating really significant ambitions towards low carbon development of which we do work with quite a number of them what we're concerned about is what fossil fuel finds are actually reported that what will that do to disrupt that prior commitment towards low carbon development it's likely that that ambition towards low carbon development may actually be disrupted so that's the concern and I apologise if it was not communicated very well and on the development of adaptation and fossil fuel industry taking responsibility for adaptation again I'm not the best place to comment on that but I will say that we organised a round table with a private sector with the oil and gas industry and coal industry and also investors last year where we discussed some of these challenges around unburnable carbon and what the appropriate response should be and DFID funded it so we brought a low income country perspective to that and I must say that in our experience generally around the table the actual operators were really sitting on their hands they didn't really see what their role or responsibility could or should be in that space the investors were very interested to think about obviously the question around unburnable carbon and I think the face to a chapter house's work is a round table with the investor community that tends to be where we're getting more attraction from my perspective but I'm sure there are other players that can get more attraction given their entry points are different to mine Thanks Nick, maybe I'll actually respond to Pettith's point about the usefulness of assistance from abroad and we definitely think there is a role there because a lot of these resources will get developed anyway I mean the countries that we're talking about have choices in the market they're not just there's not a decision to be made often on whether or not to extract us or we think that ought to be better placed on the table so in our experience there is a role for living assistance it's just the questions of how to make sure that that is coordinated with the green growth goals I'll just talk from a couple of questions that I'll raise very quickly again using the same excuse that some of it is my area of expertise but I'll just speak on the basis of what our members are telling us I guess I'll start from behind and the relevance of the commonwealth is a fairly perfectly relevant question to ask it's one of the questions that we find asking ourselves also but but here's the thing we represent an interest so I think it's 2.2 billion people and very proportionate of them are desperately poor don't have any voice at the table so I think there's still room for an avenue for the articulation of the interests of these people that's one the other thing is with the kind of structure we've got on the organisation we insist on being driven by the interests of these member states the relationship or the dynamic of the relationship is not such that we tell them there's a lot of advocacy that comes out of course and advice and suggestions based on expert's advice etc but it's usually driven the other way around so that keeps us we tend to use the word trusted partner sometimes abuse it but I've actually lived it in 7 years that I've worked with the organisation there is that trust with some of the really really poor small independent small island development states which constitute about a third army worship but we can debate that further during the break on the other points that we raised concerning the contradictions I think I do see a point in there because again using Nigeria as an example I looked at the data for power generation and what shocked me was the exact volume of what's being generated is also constrained and if you speak to a number of people in the ministry at the moment now and say to them what I did because I spoke to regulators and I asked what licences have you issued for power generation and what fuel source are they looking at and everyone was thinking that I said fuel or so they're not necessarily thinking along the lines of climate action or fossil fuel reduction so there is a presentation from there is a regulatory question to answer here in terms of even how licences are granted on the diversification question I'll touch very quickly on the question shots that was given from this presentation at the end of it but that conflict does need to exist I think there is realistically you can only handle it on power ups so what we try to do is again I mentioned it earlier I'll just read to it infuse some of this and I'll give you a very practical example when you get to the development phase and you're going through you submitted a development plan one of the questions that we're trying to get on the stage so our regulators to ask the IOCs or the companies having incorporated a number of these factors into it as a condition for granted licences thank you I think we've been told we've absolutely got to close down for coffee have you done an absolutely urgent thing to say? just one comment in response to Michael's very very good point this is exactly the assumption that we know how to handle resource cuts effects when I say we I mean the donor community and advice that is exactly what I mean by the assumption that we have the policy descriptions the technical assistance the capacity building to mitigate these I think in reality the jury is still out if you look at the pain that a lot of emerging producers are going through in response to the commodities price falls it casts a lot of this into doubt most of the firm evidence around extractive support in social economic development are based on mining industries that have different value indicators which have different footprints they've been active for decades very very different infrastructure development forward backward linkages so it's not necessarily a direct parallel to the questions of new prospective producers today and the key question is how emerging carbon constraints whether it's export market risk or what you see as your vision of sustainable development at home how they act as risk multiplies to every one of these known risks and resource cuts impacts that's exactly what we hope to be exploring thank you very much I'm sorry I've had to round this up so quickly you started late there's so much to say I believe there's coffee