Macro-Fiscal Impacts of Colombia’s Energy Transition Plan

This paper assesses the risks and opportunities of Colombia’s energy transition plan. Recognizing that a sharp fall in oil and coal production would weigh heavily on fiscal sustainability and regional economies, it emphasizes that a well-managed expansion of renewable energy would be essential to mitigate these effects through policies to reskill workers, protect vulnerable communities, and foster broad social support. Moreover, complementary domestic, financial, and export-oriented reforms would further mitigate the economic costs, underscoring the importance of diversification, productivity gains, and stronger competitiveness to ensure the transition is sustainable and growth-enhancing.