World governments must take immediate steps to close the fossil fuel production gap

The 2021 Production Gap Report shows that governments around the world still plan to produce 110% more fossil fuels in 2030 than would be consistent with keeping global warming below 1.5°C and 45% more than would be consistent with a 2°C limit, in stark contrast to growing announcements of more ambitious emissions reduction targets, including net-zero pledges.

The analysis by SEI and other leading research institutes in partnership with the UN Environment Programme (UNEP), updates a groundbreaking 2019 report that measured the gap between governments’ planned production of coal, oil and gas, and the global production levels consistent with the goals of the Paris Agreement.

Despite a heightened sense of urgency about the climate crisis, the 2021 report shows the production gap has barely changed in the past two years. By 2030, governments’ current plans and projections would lead to the production of 240% more coal, 57% more oil and 71% more gas than would be consistent with a 1.5°C trajectory and 120%, 14% and 15% respectively than a 2°C trajectory. By 2040, the production gaps for all three fuels would grow even wider.

“The research is clear: global coal, oil and gas production must start declining immediately and steeply to be consistent with limiting long-term warming to 1.5°C,” says Ploy Achakulwisut, a lead author on the report and SEI scientist. “However, governments continue to plan for and support levels of fossil fuel production that are vastly in excess of what we can safely burn.”

The report examines 15 major fossil fuel-producing countries, Australia, Brazil, Canada, China, Germany, India, Indonesia, Mexico, Norway, Russia, Saudi Arabia, South Africa, the United Arab Emirates, the United Kingdom and the United States, and finds that most are still actively supporting fossil fuel production.

Moreover, despite calls for a “green recovery” from the pandemic, G20 countries have pumped roughly $300 billion into fossil fuel activities since the start of the Covid-19 crisis, still more than to clean energy. In contrast, multilateral development banks and G20 development finance institutions holding more than $2 trillion in combined assets now have policies that exclude fossil fuel production from future finance.

A key challenge in closing the production gap is the paucity of verifiable, comparable information. The report calls for strengthening transparency by disclosing countries’ production plans in their nationally determined contributions, long-term low-emissions strategies and progress reports. Governments can also require fossil fuel companies to disclose their spending, project plans, emissions and climate-related financial risks in a consistent way across countries.

“Fossil-fuel-producing nations must recognize their role and responsibility in closing the production gap and steering us towards a safe climate future,” says SEI Executive Director Måns Nilsson. “As countries increasingly commit to net-zero emissions by mid-century, they also need to recognize the rapid reduction in fossil fuel production that their climate targets will require.”

Priorities for policymakers

The report identifies several measures that governments can take to ensure a “managed and equitable” decline in fossil fuel production:

• Acknowledge in their energy and climate plans the need to wind down fossil fuel production in line with the Paris Agreement’s targets to create impetus and accountability for policy action.
• Chart the course towards a rapid, just and equitable wind-down of fossil fuel production as part of overall decarbonization plans, with strategies to ensure a less disruptive transition.
• Restrict fossil fuel exploration and extraction to avoid locking in levels of fossil fuel supply that are inconsistent with climate goals.
• Phase out government subsidies and other support for fossil fuel production, exclude fossil fuels from public finance and direct greater support towards low-carbon development.
• Leverage international cooperation to ensure a more effective and equitable global wind-down of production, providing international support to countries that are highly dependent on fossil fuel production and have limited financial and institutional capacity.

Calls to action around the world

One promising step is the launch in August 2021 of a new alliance, led by Denmark and Costa Rica, with the goal of phasing out global oil and gas production.

“The 2021 Production Gap Report once again demonstrates in no uncertain terms that we need significant reductions in the production of fossil fuels if we are to reach the goals of the Paris Agreement,” said Dan Jørgensen, the Danish Minister for Climate, Energy and Utilities.

“We must cut with both hands of the scissors, addressing demand and supply of fossil fuels simultaneously,” said Andrea Meza, Costa Rica’s Minister for Environment and Energy. “That is why, together with Denmark, we are leading the creation of the Beyond Oil and Gas Alliance to put an end to the expansion of fossil fuel extraction, plan a just transition for workers and start winding down existing production in a managed way.”

Advocates for climate action around the world are urging governments to heed the report’s advice.

“We are out of time,” says Mitzi Jonelle Tan, of Youth Advocates for Climate Action Philippines. “My country is one of the most vulnerable in the world to the climate crisis and I grew up always afraid of the next storm that could wash away our home. Still, governments, even from the rich countries that have driven this crisis, want to extract even more fossil fuels, all in the middle of the Covid pandemic. I am done being afraid of the next storm, so I’m joining the storm of people demanding a just and complete phase-out from fossil fuels.”

Along with SEI, the partners in the 2021 Production Gap Report include the International Institute for Sustainable Development (IISD), ODI, E3G and UNEP. More than 40 researchers at numerous institutions contributed to the analysis and research.