At the core of the EITI lies a global standard for advancing transparency and accountability in the energy and mining sector. Since the EITI Standard was first introduced in 2013, the EITI’s reporting framework has been updated at regular intervals to respond to an evolving sector and stakeholder needs.
The global energy landscape has changed dramatically since the EITI was first established two decades ago. New data from the International Energy Agency shows that clean energy investment reached an all-time high of USD 1.7 trillion last year, compared to USD 1 trillion for fossil fuels. The COVID-19 pandemic and the Russian invasion of Ukraine have accelerated progress on the energy transition, giving further impetus to reducing dependence on oil and gas and improving the security of critical minerals supply chains. As the renewables sector continues to attract investment and generate revenue flows, the need for greater transparency to ensure a sustained transition to a green energy future becomes ever more critical.
A step change in EITI reporting
To remain relevant in the changing global context, the EITI Standard has been updated to include provisions related to the energy transition for the first time.
These changes build on a strategic shift that the EITI Board has undertaken over the past four years to address the energy transition in the EITI’s work. In 2020, the EITI Board developed a clearer approach to addressing the energy transition in the EITI’s strategic priorities. It recognised that the energy transition would have a transformative impact on the extractive industries, and that EITI data can inform public debate on the sector and future revenue streams, as well as identify governance risks in the face of rapid growth in demand for raw materials required for the growth in renewable energy. Several EITI implementing countries have already been reporting data on greenhouse gas (GHG) emissions and other aspects of the changing energy mix.
Furthermore, the EITI Articles of Association have been revised to acknowledge the EITI’s role in contributing to responsible energy transition in its objective. The EITI’s company constituency has also been expanded to include energy companies, reflecting the diversification of investment portfolios to incorporate renewables and adoption of net zero targets.
New provisions on the energy transition
The global shift to a low-carbon economy has an impact across the entire extractive sector value chain, from how licenses are awarded to how public revenues will be affected. It is reshaping the kinds of data, disclosures and dialogue required to support accountability and good governance of the natural resource sector.
For the first time, the EITI Standard encourages companies to disclose GHG emissions in line with leading disclosure standards, in recognition of the role of the EITI in promoting transparency and public debate on information relating to the energy transition and implications for EITI reporting.
The 2023 EITI Standard also supports disclosures and public debate on the impacts that the energy transition has on the extractive sector and national economies. Governments will be required to document their commitments, policies and plans for the energy transition, including disclosure of public subsidies, the capital and operating expenditure, carbon pricing mechanisms, carbon taxes and subsidies.
Implementing countries will also be required to document the rationale for fast-tracking of extractive licenses, helping to mitigate the risk of corrupt deals in the context of spiralling demand for critical minerals. Countries are further encouraged to disclose data on proven oil, gas and mining reserves with information required on significant exploration activities.
The energy transition will impact government revenues that are generated from both fossil fuel and minerals, particularly those needed for renewable energy technologies. Under the 2023 EITI Standard, governments will be expected to disclose their revenue forecasts from fossil fuels and minerals, as well as the assumptions that underlie these forecasts. Companies are expected to disclose information about future production plans, when requested by the multi-stakeholder group.
Transparency in transition
Ultimately, disclosures under the 2023 EITI Standard will help citizens understand whether their countries are prepared to manage the energy transition. This information will enable public debate about the sustainability of public revenues, which lies at the core of EITI reporting. By facilitating transparency and open dialogue, the 2023 EITI Standard can help pave the way for an energy transition that is equitable, sustainable and inclusive, to ensure a future where everyone can benefit from the shift towards a low-carbon world.