Connect with us

Reports

Demand from Asia is set to power the growth of the global gas industry over the next five years

MD Staff

Published

on

After another record year, global demand for natural gas is set to keep growing over the next five years, driven by strong consumption in fast-growing Asian economies and supported by the continued development of the international gas trade.

Demand for natural gas grew 4.6% in 2018, its fastest annual pace since 2010, according to the IEA’s latest annual market report, Gas 2019. Gas accounted for almost half the increase in primary energy consumption worldwide. Demand is expected to rise by more than 10% over the next five years, reaching more than 4.3 trillion cubic metres (tcm) in 2024.

“Natural gas helped to reduce air pollution and limit the rise in energy-related CO2 emissions by displacing coal and oil in power generation, heating and industrial uses,” said Dr Fatih Birol, the IEA’s Executive Director. “Natural gas can contribute to a cleaner global energy system. But it faces its own challenges, including remaining price competitive in emerging markets and reducing methane emissions along the natural gas supply chain.”

China is expected to account for more than 40% of global gas demand growth to 2024, propelled by the government’s goal of improving air quality by shifting away from coal. Chinese natural gas consumption grew 18% in 2018 but is expected to slow to an average annual rate of 8% to 2024 as a result of slower economic growth.

The IEA also sees strong growth in gas consumption in other Asian countries, particularly in South Asia. In Bangladesh, India and Pakistan, the industrial sector is the main contributor to growth, especially for fertilisers to meet the needs of growing populations.

Industrial use of natural gas, both as a fuel and a feedstock, is set to expand at an average annual rate of 3% and account for almost half of the rise in global consumption to 2024. Power generation remains the largest consumer of natural gas, in spite of slower growth due to strong competition from renewables and coal.

Gas 2019 also focuses on the role of liquefied natural gas (LNG) at sea, which is set to emerge as a fast-growing alternative fuel because of stricter rules on sulphur content that take effect in January 2020.

Supplies to meet growing global demand for natural gas will come from both new domestic production in fast-growing economies but also increasingly from major exporting countries, led by the development of abundant shale gas resources in the United States.

The strong growth in LNG export capacity will enable international trade to play a growing role in the development of natural gas markets as they move towards greater globalisation.

Investment in LNG projects have rebounded in 2018 after several years of decline, and the large number of projects due to take final investment decision in 2019 is likely to further support trade and market expansion. However, more investment will be needed in the future.

The recent convergence in market prices in major regions gives an indication of the increasing globalisation of the natural gas trade. Establishing market-driven pricing mechanisms in fast-growing economies remains a challenge, however. Recent reforms in major markets are sending encouraging signals, but more will be required to ensure the sustainable market-driven development of natural gas in these economies.

IEA

Continue Reading
Comments

Reports

Africa: Urgent action needed to mobilise domestic resources as tax revenues plateau

MD Staff

Published

on

The average tax-to-GDP ratio for the 26 countries participating in the new edition of Revenue Statistics in Africa was unchanged at 17.2% for the third consecutive year in 2017. This was lower than the averages for Latin America and the Caribbean (LAC) at 22.8% and for the OECD at 34.2%, underlining the need for urgent action to enhance domestic revenue mobilisation in Africa.

The 26 countries covered in Revenue Statistics in Africa 2019, released today in Tunis at the African Union’s 13th Session of the Committee of Directors-General of National Statistics Offices, represent nearly three-quarters of Africa’s GDP. The report shows that tax-to-GDP ratios varied widely across these countries in 2017, ranging from 5.7% in Nigeria to 31.5% in the Seychelles. This fourth edition has grown from 21 to 26 countries and includes Equatorial Guinea, Madagascar, Mauritania, Nigeria and the Seychelles for the first time.

While tax revenues plateaued as a percentage of GDP for the Africa (26) in 2017, non-tax revenues (primarily rents and royalties from natural resources, as well as grants) continued to decline and were lower than tax revenues in all but three of the 26 countries: Botswana, the Republic of the Congo and Equatorial Guinea. Between 2010 and 2017, an increase in tax revenues equivalent to 1.9% of GDP on average was offset by a decline in non-tax revenues from 7.5% of GDP to 5.7% of GDP.

African economies continue to rely heavily on taxes on goods and services, which accounted for 53.7% of total tax revenues across the 26 countries. Within this category, value-added taxes (VAT) accounted for 29.4% of total tax revenues. Meanwhile, corporate income taxes (CIT) generated 18.6% of total tax revenues – a higher proportion than in LAC and in the OECD – and were equivalent to 2.8% of GDP in 2017. This is the same level as in 2016, halting the decline in CIT as a percentage of GDP since 2013.

Overall, the tax structure across participating countries has evolved over the past decade, with VAT and personal income tax (PIT) accounting for a higher proportion of revenue generation in 2017 relative to 2008, on average. However, PIT (15.4% of total tax revenues) and social security contributions (8.1% of total tax revenues) remain low in Africa. Reforms to broaden the personal tax base, remove harmful and regressive subsidies, and expand social insurance coverage can assist in domestic resource mobilisation efforts while contributing to inclusive growth.

Enhancing the efficiency of VAT systems can also provide higher and more sustainable revenues, and improve distributional or environmental outcomes. Environmental taxes are found to represent a small but increasing share of tax revenues in Africa and can have an important role in raising revenues and encouraging the transition to a low-carbon economy. Property taxes are shown to be much lower in Africa than in LAC and in the OECD but have the potential to play a key role in funding better local services. Equally, improvements in governance and spending may also lead to higher revenues by improving tax morale and making citizens more willing to pay taxes.

A special feature assesses the potential impact of the African Continental Free Trade Area (AfCFTA) on the level and structure of tax revenues, drawing on the detailed data on these revenues in this report. While AfCFTA is likely to strengthen Africa’s economic growth and increase tax revenues in the medium-to-long term, the elimination of taxes on trade within the region will likely reduce revenues in the short term. Trade taxes accounted for 11.8% of total taxation on average in 2017 across the 26 countries in this report.  Low-income and least developed countries in the region tend to rely more on trade taxes and are more vulnerable to the short-term impact of reduced trade taxes, underlining the importance of the flexibility mechanisms envisaged by the AfCFTA.

Revenue Statistics in Africa is a joint initiative between the African Tax Administration Forum (ATAF), the African Union Commission (AUC) and the Organisation for Economic Co-operation and Development (OECD) and its Development Centre, with the technical support of the African Development Bank (AfDB), the World Customs Organisation (WCO) and the Cercle de Réflexion et d’Échange des Dirigeants des Administrations fiscales (CREDAF) and the financial support of the European Union.

Continue Reading

Reports

Brazil must immediately end threats to independence and capacity of law enforcement to fight corruption

Newsroom

Published

on

The OECD Working Group on Bribery urges Brazil, one of the founding Parties to the Anti-Bribery Convention since 1997, to preserve the full capacity and independence of law enforcement authorities to investigate and prosecute foreign bribery and corruption. Despite being recognised by the Working Group for its significant anti-corruption enforcement efforts following its previous evaluation in 2014, there are now concerns that Brazil, due to recent action taken by the legislative and judiciary branches, risks backsliding on progress achieved, that could seriously jeopardise Brazil’s ability to meet its obligations under the Anti-Bribery Convention.

The Working Group has continuously alerted Brazil since 2016 of risks posed by attempts to broaden the definition of what constitutes abuses of authority by judges and prosecutors. Despite these warnings, a Law on abuses of authority (13. 869/2019) characterised by vague concepts will enter into force in January 2020. The Working Group has also expressed concerns that, following injunctions of the Supreme Court, limitations on the use of reports by Financial Intelligence Unit, Federal Revenues and other administrative agencies in criminal investigations might seriously hamper Brazil’s ability to detect and effectively fight corruption. This, combined with other actions by the Supreme Court and the Federal Auditor’s Court that are likely to have an effect on concluded foreign bribery cases, could constitute a serious push back in Brazil’s exemplary fight against corruption.

On 12-13 November 2019, a High-Level Mission of the OECD Working Group on Bribery discussed these issues in Brasilia with Minister of the Office of the Comptroller General Wagner de Campos Rosário, Minister of Justice Sérgio Moro, Attorney General André Mendonça, Deputy Prosecutor General of the Republic Hindemburgo Chateaubriand, President of the Supreme Court José Antonio Dias Toffoli, Senator Marcos do Val, as well as with the Chair of Brazil-OECD Parliamentary Group and Leader of the Government Deputy Vitor Hugo along with members of this Group. However, the High-Level Mission could not meet as scheduled with Prosecutor General of the Republic Augusto Aras, and with the Presidents of the Commission of Constitution and Justice of both the Chamber of Deputies and the Senate.

“Despite disappointing last minute cancellations of key high level representatives, we appreciate the readiness of the Brazilian authorities to meet with us to discuss outstanding issues related to law enforcement capacity and independence in foreign bribery cases,” said Drago Kos, Chair of the Working Group on Bribery. “However, we are quite alarmed that what Brazil had managed to achieve in recent years in the fight against corruption may now be seriously jeopardised. Brazil must strive toward reinforcing its framework and legal tools to fight foreign bribery, not weaken them.”

“The OECD high-level mission is a relevant initiative, as it brings a comprehensive analysis of the landscape of the fight against corruption in the country” said Minister of the Office of the Comptroller General Wagner de Campos Rosário. “Brazil has evolved considerably in recent years in the fight against corruption. The enactment of the corporate liability law (Law 12.846/2013), the establishment of leniency agreements, and the adoption of integrity plans in federal agencies and entities are important progresses. Nonetheless, this is a continuous process of improvement and we will always be seeking to improve our controls and mechanisms to combat the evil of corruption, thereby ensuring the delivery of better quality public services to citizens.”

Continue Reading

Reports

Austria: Reforms will be necessary to uphold high well-being levels

Newsroom

Published

on

Austria stands out for its high levels of economic and social well-being. Preserving these will require reforms to improve competition in the service sector, increase access to risk capital for firms of all sizes, encourage more women and migrants into the workforce and lengthen work lives to reflect the ageing population, according to a new OECD report.

The latest OECD Economic Survey of Austria, presented in Vienna by the OECD’s Director of Country Studies Alvaro Pereira, projects GDP growth of 1.4% for 2019 and 1.3% for 2020. The 2020 projection is down from 1.6% forecast by the OECD in May, though the 2019 projection is unchanged, as recruitment bottlenecks, weakening external demand – especially from key markets Germany and Italy – and global trade tensions dampen Austria’s outlook.

The report’s key recommendations include linking the retirement age to life expectancy, which has risen steadily while Austrians are still retiring much earlier than the OECD average. The effective retirement age in Austria is notably lower than in neighbouring Germany and Switzerland. Austria’s labour participation rate is also low, especially among older women.

To increase the incentives to stay in work, the report recommends Austria do more to reduce its high levels of tax and social security on labour income, particularly for low earners, relative to most other OECD countries. This could be balanced by shifting to alternative sources of taxation such as environmental, consumption, inheritance and wealth taxes.

Reducing barriers to entry in key sectors ranging from service professions and specialist manufacturing to rail and freight transport and pharmaceutical distribution could bolster competition and economic dynamism. The small and medium-sized businesses that dominate Austria’s economy would benefit from greater access to venture capital and a better developed equity market. A reform planned by the outgoing government to address the debt-bias in the corporate tax system would help level the playing field between debt and equity financing.

The report recommends making access to quality childcare, early childhood education and all-day schooling for older children a legal entitlement throughout the country, to make it easier for new mothers to return to work and improve their career prospects. While this is a challenge given Austria’s geography, it would also contribute to more equal opportunities in the education system.

Austria has one of the highest shares of migrants in its workforce of OECD countries. This means migrants play an important role in meeting robust demand for labour yet the country also has a major challenge in trying to integrate low-skilled immigrants. Increasing the availability of language courses and adult skills training would help to address this.

The report also calls for Austria to increase its focus on environmental issues, for example by increasing carbon prices, which are low by international standards, and improving town planning to address the rising environmental impact of urban sprawl.

Continue Reading

Latest

Middle East16 mins ago

The secret behind Trump’s moves in eastern Deir ez-Zur

Trump’s desire for Syrian oil has led observers to consider it as the beginning of occupying oil wells in other...

Middle East2 hours ago

Middle Eastern protests: A tug of war over who has the longer breath

Mass anti-government protests in several Arab countries are turning into competitions to determine who has the longer breath, the protesters...

EU Politics5 hours ago

Rwanda: EU provides €10.3 million for life-saving refugee support measures

During his visit to Rwanda, Commissioner for International Cooperation and Development Neven Mimica has announced a €10.3 million support package...

South Asia7 hours ago

The era emerged from “RuwanWeliSaya”: Aftermath of Presidential Election in Sri Lanka

Authors: Punsara Amarasinghe & Eshan Jayawardane Civilizational influence in shaping national political consciousness is an indispensable factor   that one cannot...

Urban Development13 hours ago

Banking on nature: a Mexican city adapts to climate change

The Mexican city of Xalapa is surrounded by ecosystems that not only harbor stunning flora and fauna, but also provide...

Reports15 hours ago

Africa: Urgent action needed to mobilise domestic resources as tax revenues plateau

The average tax-to-GDP ratio for the 26 countries participating in the new edition of Revenue Statistics in Africa was unchanged at 17.2%...

Europe17 hours ago

U.S. President Trump to meet Bulgaria’s Prime Minister at the White House: What to expect?

Next Monday, 25 November, President Trump will welcome Bulgarian Prime Minister Borissov at the White House for a bilateral meeting....

Trending

Copyright © 2019 Modern Diplomacy