To Boost Climate Ambition, We Need to Close the “Production Gap”
Photo by Patrick Hendry
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Leaders from governments, business and civil society from across the world are gathered in New York, US, today for the UN Secretary General’s Climate Action Summit.

But there is an elephant in the room: the continued drive to expand coal, oil and gas production.

Without addressing this fossil fuel "production gap," it will be impossible to meaningfully tackle global warming.

Leaders from governments, business and civil society from across the world are gathered in New York, US, today for the UN Secretary General’s Climate Action Summit. The reason is clear: countries need to ramp up their climate ambition, and fast.

Governments need to triple their emission reduction pledges to limit warming to the Paris Agreement goal of “well below” 2°C above preindustrial levels. Reductions need to increase five-fold from what is currently pledged, to secure a 1.5°C scenario.

Rapid advances in low-carbon technology are promising, and play a key role in bringing these targets within reach. But there is an elephant in the room: the continued drive to expand coal, oil and gas production. Without addressing this, it will be impossible to meaningfully tackle global warming.

In November 2019, a new Production Gap Report will shed light on how to better align fossil fuel production with climate objectives.

Until now that truth has largely gone unsaid in the international climate arena; the term “fossil fuels” does not even show up in the Paris Agreement on climate change. But there are signs of change. Individuals and institutions have already pledged to divest some USD 11 trillion from fossil fuel stocks, bonds and investment funds. Hundreds of civil society organizations have signed the Lofoten Declaration, which highlights the need to manage the decline of fossil fuel production. And ahead of today’s summit, UN Secretary-General António Guterres called for a halt on new coal-fired power plants.

But we cannot stop there. Countries plan to increase fossil fuel production well beyond what is compatible with globally agreed temperature limits. Major infrastructure projects in coal, oil and gas continue to attract investors, receive public permits or otherwise enjoy government support. Energy analysts predict that investment in fossil fuel exploration, extraction and delivery infrastructure could well remain at about USD 1 trillion annually through 2040.

Like the widely recognized emissions gap, this “production gap” between countries’ planned levels of fossil fuel production, and what is needed to achieve international climate goals is important. New investments in fossil fuel infrastructure perpetuate fossil fuel use and strengthen powerful fossil fuel interests, making climate goals harder to achieve. If policymakers fail to account for the vast majority of fossil fuel reserves that need to remain unburned, they put workers, markets and communities at risk of a more drastic, costly and disruptive transition towards a low-carbon economy.

In November 2019, a new Production Gap Report will shed light on how to better align production with climate objectives. It will show that if nothing changes, countries will be on track to produce 50% more fossil fuels by 2030 than can be used in a 2°C world. That number more than doubles if we want to limit warming to 1.5°C – a level that we know would still result in significant climate impacts. The production gap is largest for coal, but planned oil and gas production is also on track to push temperature rise beyond the agreed limits.

The UN Secretary-General’s Climate Action Summit is a timely opportunity to recognize the production gap and explore opportunities for closing it. For example, countries can set policies and targets to wind down fossil fuel production and make these part of their Nationally Determined Contributions (NDCs) and long-term low-emission development strategies under the UN climate process.

Recently, the Stockholm Environment Institute (SEI) partnered with the NDC Explorer to visualize to what extent the current round of international climate pledges address fossil fuel production. The tool reveals that only two countries – India and Nigeria – have adopted measures to financially disincentivize or address public support for fossil fuel production. Many of the world’s biggest fossil fuel producing nations do not mention fossil fuels at all in their NDCs, ignoring the central role of coal, oil and gas production in perpetuating the climate crisis.

Yet the opportunities for addressing fossil fuel supply are abundant – from removal of subsidies for fossil fuel producers and divestment of public funds from fossil fuel holdings, to placing restrictions on new fossil fuel development, and just transition planning for fossil fuel-dependent communities.

Adding such “supply-side” policies to the overall climate policy toolkit can have a host of advantages. It can help avoid “carbon lock-in,” where investments in ongoing production uphold the advantages of fossil fuel incumbents, and tie the economy to future production. It can make reducing emissions more cost-effective. And tackling fossil fuel production can support broader sustainable development aims by helping to reduce air and water pollution, and protecting biodiversity, which are key targets of the SDGs.

In recognition of this, policies to constrain fossil fuel production are beginning to gain ground. The governments of Belize, Costa Rica, Denmark, France and New Zealand, for instance, have all set limits on the exploration and future extraction of oil and gas. Germany and Spain have committed to phasing out coal production. And several of these countries are developing or implementing new transition planning processes and support programmes to help fossil fuel-dependent workers and communities adjust as their industry declines.

Such measures demonstrate that addressing fossil fuel supply is not only necessary but also feasible. Indeed, there has perhaps never been more public support for such actions. On Friday, 20 September 2019, millions of people all over the world participated in an unprecedented Climate Strike. Among the calls to action was to address, head on, the fact that the majority of the world’s fossil fuels need to stay in the ground.

Countries have until 2020 to submit updated, stronger climate pledges, in the form of NDCs required under the Paris Agreement. This is the chance to address what we all know: fossil fuel production needs to wind down, and it is not going to happen on its own.

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The author of this guest article, Cleo Verkuijl, is a Research Fellow at the Stockholm Environment Institute.


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