Energy and natural resources

The impact of our work – did you know?

In-house advisory services were established in the mid-1960s and since then we have supported 70% of Commonwealth countries in effective governance of their natural resources and trained thousands of government officials. This has enabled trillions of dollars of investments. These sectors now generate significant foreign exchange, jobs, government revenues and economic activity. For over 45% of members this is over 30% of GDP, more than 50% of government revenues and the largest non-government source of employment.

40

40 countries supported, including 23 small states and 11 LDCs

20+

Policies, laws and fiscal frameworks established in 20+ countries

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More than 20 countries supported in over 30 negotiations with
companies

10

More than 10 countries supported in investment promotions
and licensing rounds

Our work assists countries to ensure the good governance of natural resources and to navigate the energy transition for climate-resilient inclusive economic development and the protection of people and the planet.

The importance of natural resources to Commonwealth countries

Natural resources are critical to many Commonwealth countries. Over 40% of the Commonwealth family of nations economies are dependent on finite natural resources. In many cases they contribute over 30% of GDP, over 50% of government revenues and are the largest non-government source of employment.

Natural resources are of particular concern to many small states and Least Developed Countries (LDCs), as resource dependency is an added source of vulnerability to exogenous shocks and environmental disasters. Currently almost 30 per cent of small states and half of LDCs in the Commonwealth are resource dependent, and this is set to increase in the near future.

Our approach to supporting member countries

The Commonwealth Secretariat’s request-driven Natural Resources programme contributes to inclusive growth and sustainable development by focussing on good governance and enhancing institutional capacity in the energy and natural resource sectors.

We assist countries to optimise the socioeconomic benefits of, and effectively manage risks from, the development of natural resources, including managing the impacts of the energy transition.

We provide tailored support in mining, deep sea minerals, petroleum and energy, including:

policy and strategy: mining, petroleum, local content, renewable energy, energy transition and net-zero strategies
legal and regulatory frameworks including social, environmental and decarbonisation issues
taxation and revenue management, including sovereign wealth funds
legal drafting – laws and regulations, including agreements
capacity-enhancing programmes for government officials
convening, advocacy and partnerships, aligned with international frameworks
knowledge products and toolkits that capture best practices, share expertise and thought leadership, and provide guidance to member states.

Energy and minerals (oil, gas, mining, renewables)

If managed properly, the extractives sector is one of the few economic sectors which can, on its own, lift a country out of underdevelopment. Unfortunately, many resource-rich countries have suffered from the ‘resource-curse’ where development of the sector has been associated with poor economic and development outcomes including high levels of corruption, conflict and environmental problems. Whilst there are many contributing factors to this, it is widely acknowledged that its effects can be minimised when there are good policies, robust governance and effective institutions to ensure that the sector is developed in a sustainable manner. For over 30 years, the Commonwealth Secretariat has been assisting member countries on

Policy and Strategy: Advice on the formulation of petroleum and mineral resource development policies and strategies
Regulatory Frameworks: Legal, Fiscal, Environmental and Institutional: Drawing on international best practice, review and develop regulatory arrangements for the effective administration of the sector including the legal, fiscal, environmental and institutional mechanisms. Technical support also extends to assistance in the drafting of new laws, regulations and model agreements.
Revenue Management: Assistance in the establishment of revenue management mechanisms in view of stabilizing annual budget inflows, formulating strategies to mitigate “Dutch disease” impacts and assisting countries in balancing immediate socio-economic development needs with the necessity to provide for future generations.
In-Country Value Addition: Advice on leveraging the development of petroleum and mineral resources to capture broader economic benefits and aid in industrialization. Includes development of appropriate local content policies and legislation.
Deep Sea Mining: World leading expertise concerning the development of legislative and regulatory frameworks for the emerging deep-sea mining industry.

Governments often need advice on specific niche areas or issues rather than a full review of sector policies and regulatory arrangements – examples of such support are investment promotion and bid round preparation, negotiation and dispute resolution, and coal-bed methane frameworks. In addition, we also provide advice concerning the development of wider-energy sector policy and regulatory frameworks including implementation of renewable development strategies and programmes as well as negotiations of independent power projects.

Read the Commonwealth Sustainable Energy Transition Agenda (PDF)

Learn more about the Commonwealth Sustainable Energy Transition Agenda

Deep sea mining

We are a source of world-leading expertise concerning the development of regulatory and financial frameworks for the emerging deep-sea mining industry. Deep-sea minerals, containing metals such as copper, nickel, cobalt, gold and rare earth elements, are found in the deepest and most under-explored parts of the Earth.

Deep-sea mining is a new frontier: generating commercial and public interest, but not yet an operational industry, largely due to technical and economic constraints. It is unusual for a sector to receive so much attention before it has commenced operation, and this provides an exciting opportunity for Commonwealth member countries to put in place best-practice regulatory and fiscal policies and laws at the outset.

The Secretariat’s work aims to assist Commonwealth governments to take informed, consultative, science-based decisions about whether to engage with deep-sea mineral activities, and to manage any such future activities in accordance with progressive and high ‘good governance’ standards.

The technical assistance provided by the Secretariat’s experts in this area is grounded in sustainable development and Commonwealth Charter principles, which specifically recognise the importance of maintaining ocean health and the rights of citizens as resource owners.

The 25 resource-rich Commonwealth countries

There are 25 resource-rich countries, where mining and/or petroleum sectors are significant contributors to the economy, government revenue, foreign exchange and employment, in the Commonwealth.

*Significant oil and gas discoveries

Natural resources are crucial to all Commonwealth countries. All 21 member states in Africa are actively engaged in the petroleum and mining sectors, and more than 60 per cent are resource dependent, meaning an overspecialisation in natural resources within local economies.

Natural resources are also of particular concern to many small states and Least Developed Countries (LDCs), as resource dependency is an added source of vulnerability to exogenous shocks and environmental disasters. Currently, almost 30 per cent of small states and half of LDCs in the Commonwealth are resource dependent. 

The number of resource-dependent Commonwealth countries is set to increase within the next decade given the surge in demand for critical minerals, such as cobalt, copper, and lithium which are needed in renewable energy technologies, and the development of new oil and gas discoveries.

Introduction

Commonwealth countries rank as major producers of natural resources including gas and oil, minerals and precious metals such as gold, diamonds, platinum and copper.

Effective management is essential for limiting climate change and achieving the sustainable development goals.

Climate and environment

The mining and petroleum sectors are significant contributors to global greenhouse gas (GHG) emissions. Achieving the goals of the Paris Agreement will require acceleration of mitigation efforts given the widening emissions gap. Effective policy and regulatory frameworks governing these sectors’ GHG emissions are extremely powerful public policy tools for addressing the global climate crisis. The petroleum sector is a particular area in which, with targeted support, significant reductions can be achieved. For example, methane reductions of 70 per cent can be achieved with existing technology alone.

The large footprint and poor practices of projects can contribute to pollution, ecosystem degradation and loss of biodiversity. For example, mining is responsible for around 7 per cent of annual forest loss in developing countries. Robust regulations and enforcement is needed to minimise these impacts.

Development

In the face of compounding crises, many governments are looking to these sectors to provide foreign exchange and revenues to, for instance, finance development needs, service debt, and deal with the loss and damage of climate change. If wisely managed, natural resources can lead to economic growth and poverty reduction. However, most resource-rich countries underperform on social, environment and economic measures, and have high levels of corruption, inequality and conflict. Good governance is recognised as instrumental to avoiding this ‘resource curse’ and generating positive development outcomes. 7

Just energy transition

Each country’s energy transition pathway will reflect its national policies, circumstances and nationally determined contributions under the Paris Agreement. The global energy transition also has additional risks and opportunities for mining and petroleum producing countries. Good governance is important to ensure policy coherence, minimise economic and social disruptions, avoid stranded assets and maximise benefits from the circular economy and new value chains.

The effective and transparent management of natural resources can, in many countries, provide a cornerstone of climate-resilient, inclusive sustainable development which can improve the prosperity of all citizens.

Introduction

Natural resources have multifaceted and oversized impacts on climate, energy, environment, ecosystems and socioeconomic development.

Partnerships and collaborations

We also engage with international organisations, specialist think-tanks, and regional agencies to foster knowledge-sharing and to develop and promote international best practices and standards Some key collaborations are

New Petroleum Producers Discussion Group

Since 2012, the Commonwealth Secretariat has been working in collaboration with Chatham House and the Natural Resource Governance Institute to establish the New Producers Discussion Group. At its core the Group is a knowledge and experience sharing platform that brings together officials from countries with a new or emerging petroleum sector to discuss challenges, strategies and governance frameworks for sustainable exploration and development of their oil and gas resources.

Over 30 countries are currently involved in the group of which over half are Commonwealth member countries.

The OECD Natural Resources Policy Dialogue (NR-PD)

The Organisation for Economic Co-operation and Development (OECD) Natural Resources Policy Dialogue (NR-PD) feeds into other international processes such as the 2030 Agenda for Sustainable Development, the G20 Development Working Group and the G20 Anti-Corruption Working Group.

The NR-PD provides a platform for producer countries, private sector, development agencies, think-tanks and civil society to craft innovative collaborative solutions and share best practices in order to address the complex multidimensional challenges of the extractives industry’s contribution to the Sustainable Development Goals.

The NR-PD is framed around four Work Streams (1) shared value creation, (2) getting better deals, (3) revenue management and spending, and (4) tackling base erosion and profit shifting and corruption

Towards a Green Steel Ecosystem in the East African Community (PDF)
Roads to clean energy (PDF)
Energy and me (PDF)
Energy around us (PDF)
Message in a bottle (PDF)
Treasures of the deep (PDF)