About half of the world’s oil and gas is produced by “middle-income” developing countries. These countries could face a significant drop in government revenue due to the global shift away from fossil fuels. The shift away from oil and gas will also contribute to job displacement and economic insecurity for workers and communities supported by the industry. This paper advises policymakers to pursue a just transition away from the oil and gas sector while minimizing harm to workers and communities that have depended on that industry.

Key Findings:

  • Oil and gas production plays a major role in many middle-income developing countries by supporting local economies and jobs and generating sizable government revenues.
  • Periodic market volatility and mounting global pressure to achieve net-zero carbon emissions by midcentury raise questions about the sector’s stability and long-term future.
  • Although shifting away from fossil fuels is beneficial, phasing down oil and gas production over the coming decades will cause significant revenue loss for middle-income countries that produce these fossil fuels, with implications for public spending on social programs and infrastructure, public sector employment, and fossil fuel subsidies for vulnerable groups.
  • Though the oil and gas industry is not typically a major direct employer, it generates large numbers of indirect and induced jobs that are often geographically concentrated, with outsize influence on subnational governments and local communities.
  • Other characteristics of this workforce, including varying unionization rates, the presence of large numbers of contract workers, relatively high pay, and low female participation, will be essential to consider for a just energy transition.
  • The challenges of transitioning away from oil and gas can be mitigated by prioritizing place-based economic diversification to generate alternative revenue sources and new jobs, including in the clean energy economy, and developing just transition strategies to aid impacted workers, communities, and subnational governments.