Five years ago this month, a remarkable show of global unity saw governments from nearly 200 countries adopt the Paris Agreement, marking a major milestone for international cooperation to tackle the climate crisis.
But the treaty also sidestepped some difficult issues. One particularly conspicuous omission is its silence on one of the main contributors to climate change: fossil fuels.
With coal, oil, and gas accounting for over three-fourths of global greenhouse gas emissions, including 90% of carbon dioxide emissions, it may seem surprising that the UN climate change process – the foremost international forum for climate action – is silent on the matter.
In part, the UN climate regime’s reticence to tackle fossil fuels head-on is a result of the process’ consensus-based approach. This has allowed a few fossil-fuel-producing and -exporting nations to keep fossil fuels off the international climate agenda.
Disconnect between climate targets and energy production plans
This silence is particularly loud when it comes to addressing fossil fuel supply. Both internationally and nationally, climate policy to date has tended to emphasise reducing the demand for fossil fuels, for instance by promoting measures to increase energy efficiency, increase the uptake of renewable energy, price carbon, and incentivize behavioural shifts.
Of course, these and other demand-side policies are crucial for a low-carbon transition. They are also intuitive: ultimately it is the use of fossil fuels that pumps unsustainable levels of greenhouse gases into the atmosphere.
At the same time, the near-exclusive focus on reducing demand for fossil fuels has enabled a deep disconnect between countries’ climate goals and their plans for energy production. Many countries express the intent to do the impossible: both meet Paris Agreement goals and increase coal, oil, and gas production to levels that are incompatible with those goals.
Countries set to produce twice as much fossil fuels by 2030 than consistent with 1.5°C
This discrepancy was further quantified this week, in a new report released by SEI, together with the UN Environment Programme and other leading research institutions. The 2020 Production Gap Report shows that, if we are to limit global warming to 1.5°C, countries will need to reduce global fossil fuel production by an average of 6% per year over the next decade.
Alarmingly, the world’s governments seem to be moving in the opposite direction: major fossil fuel producers are planning and projecting an average annual increase of 2%. By 2030, this would result in more than double the fossil fuel production than would be consistent with the 1.5°C limit.
COVID-19 recovery spending going in the wrong direction
What’s more, government responses to the economic impacts of the COVID-19 pandemic risk locking in high-carbon development pathways.
Lockdowns caused a sharp, short-term drop in global fossil fuel production– by about 7% in 2020, according to preliminary estimates. But there is an impending whiplash, as governments pour money into high-carbon sectors and loosen environmental requirements in efforts to boost their economies and protect livelihoods.
A flurry of recent assessments finds that government recovery spending in high-carbon sectors outweighs green recovery investments. The Energy Policy Tracker, for instance, shows that G20 governments have, to date, directed over US$240 billion in COVID-19 recovery support to fossil fuel production and consumption, such as to airlines, airports, highways, car manufacturers, fuel, and fossil-based power consumers – but only US$155 billion to renewable energy, energy efficiency, and other low-carbon alternatives.
The risks here are high. Doubling down on fossil fuels will not just exacerbate the climate crisis; it means a very disruptive transition for workers, communities, and societies as a whole when the necessary shift to a net-zero economy happens.
It’s also a missed opportunity. As a report by a coalition of finance ministers shows, investing in a green recovery can not only create more and better jobs in the near term, it can reduce the longer run risks of asset and job stranding associated with high-carbon industries. One estimate found that investments made in renewable energy, energy efficiency, and mass transit yield three times the number of jobs than an equivalent investment in the fossil fuel sector.
The policy solutions to wind down fossil fuel production exist
In this year’s Production Gap Report, we identify six areas of action, arming policymakers with options to start winding down fossil fuels as they enact COVID-19 recovery plans.
National governments can enhance the transparency of their current and future fossil fuel production levels, reduce subsidies and other forms of existing support for fossil fuels, introduce restrictions on production, and ensure stimulus funds go to green investments. Governments can tie any support to high-carbon industry to conditions that promote long-term alignment with climate and other environmental goals.
Policymakers must also ensure local and international support for fossil-fuel-dependent communities and economies to transition away from fossil fuels. Countries that are less dependent on fossil fuel production and have higher financial and institutional capacity can transition most rapidly, while those with higher dependence and lower capacity will require greater international support.
A managed decline calls for international cooperation
Finally, we must do this together. Despite not mentioning fossil fuels directly, the Paris Agreement is full of ways to spur an international wind-down of coal, oil, and gas: our research shows that the global stocktake, nationally determined contributions (NDCs), and long-term low greenhouse gas emission development strategies (LT-LEDS) offer ample opportunities to facilitate a transition away from fossil fuel production.
We also need to redirect international investment. In keeping with the Paris Agreement’s requirement to make finance flows “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development,” more and more multilateral development banks – including the European Investment Bank and the World Bank Group – are refraining from financing coal, oil, and/or gas projects. At the same time, financial institutions need to increase investment in human capital and viable economic alternatives for countries and regions highly dependent on fossil fuel extraction.
Countries must also start working together to align their plans for fossil fuel production with Paris Agreement goals. Indeed, US Vice-President-elect Kamala Harris has proposed pursuing an international agreement on managing the decline of fossil fuel production.
The policy solutions to transition away from coal, oil, and gas are available. What is needed now is the political will and international cooperation to realize them. Embarking on this journey may represent one of the most challenging global undertakings of the 21st century, but one necessary for securing a more sustainable and resilient future.