Fossil fuel supply needs to be phased out as well as demand, and should be accomplished in a predictable manner, to ensure a just transition.
When the Lofoten Declaration was launched in September 2017, an indefinite moratorium on oil and gas production already existed in Costa Rica, and oil and gas moratoriums applied to several biodiversity hotspots; more policies to restrict fossil fuel supply have been recorded since the Declaration’s launch.
Such a transition can not happen overnight and requires a just transition for workers, communities and entire countries.
The sound of one hand clapping? The cut with one arm of the scissors? Both metaphors are useful when thinking about what climate leadership means. In order to align national policies with the Paris Agreement’s 1.5 or 2 degree climate targets, it is not enough to cut emissions solely by addressing demand. Fossil fuel supply needs to be phased out as well, in a predictable manner, ensuring a just transition.
Calls for Supply-Side Policy in the Talanoa Dialogue
A growing body of peer-reviewed literature demonstrates the effectiveness of restricting fossil fuel supply for achieving climate change mitigation, in addition to the established need to reduce fossil fuel consumption. An overview is provided in the SEI submission to the UNFCCC’s Talanoa Dialogue. But the evidence supporting supply-side policy is far from being new and theoretical: the energy efficiency gains and technological break-throughs in the 1970s were enabled by OPEC’s quotas and cuts of oil production.
The Talanoa Dialogue received a number of submissions calling for the restriction of fossil fuel supply, as summarized by the UNFCCC Secretariat. One such submission is the Lofoten Declaration, which has been signed by nearly 500 NGOs. This declaration calls on “countries, regions, and corporate actors who are best positioned in terms of wealth and capacity to undergo an ambitious just transition away from fossil fuel production”.
First-movers on Limiting Fossil Fuel Supply
When the Lofoten Declaration was launched in September 2017, an indefinite moratorium on oil and gas production already existed in Costa Rica, and oil and gas moratoriums also applied to several biodiversity hotspots such as the Lofoten islands (Norway) themselves. Another swath of supply-side climate action included decisions to consolidate or shut down coal mines in Europe and China, while India increased taxation on coal production.
A new wave of policies to restrict fossil fuel supply has been recorded since the Declaration’s launch. In December 2017, France became the first country in the world to permanently ban new oil exploration licenses with immediate effect and all oil extraction by 2040. Also in December 2017, the World Bank announced its plan to stop funding upstream oil and gas after 2019, joining other private and public financial institutions divesting from fossil fuels. In early 2018, both New Zealand and Belize announced an end to oil and gas exploration in their waters. Further, the Netherlands committed to phasing out gas production in Groningen, and Ireland is on its way to banning fossil fuel exploration through legislation. And earlier in May 2018, Costa Rica’s newly-elected President raised the bar even higher by announcing a plan to permanently ban fossil fuels and to make Costa Rica the first fully decarbonised country in the world.
Some of these first movers came together at an event on “Enhancing ambition by addressing fossil fuel supply and ensuring a just transition” on the sidelines of SBSTA 48 in Bonn earlier in May (see recording online). The official side-event was co-organized by IISD, OCI and ODI with support of SEI and CAN-Rac and celebrated climate leadership as, for the first time, representatives of UNFCCC Parties joined non-Parties in a public discussion of supply-side mitigation.
The event brought together speakers representing three Parties (France, New Zealand and the Maldives) and five non-Parties (International Labor Organisation, World Bank Climate Change Group, SEI, E3G and GIZ). One idea that came out of this discussion was the concept of an international alliance of first-movers on limiting fossil fuel supply, similar to other international groups raising the climate action bar, such as the Friends of Fossil Fuel Subsidy Reform, the International Solar Alliance and the Powering Past Coal Alliance.
Getting the Signals Right for a Just Transition
The need to “get the signals right” was the recurring theme of the IISD-OCI-ODI side-event in Bonn. First-movers such as France and New Zealand know that their domestic fossil fuel reserves are only a drop in the global supply. However, they see their policies restricting fossil fuel production as a sign of climate action integrity and a signal to the rest of the world.
According to the Intergovernmental Panel on Climate Change, known fossil fuel reserves are at least four times bigger than the world can afford to burn while staying within safe climate limits (Table 2.2, p.64). However, foregoing or phasing out fossil fuel extraction is a difficult decision, especially for jurisdictions with a significant production of fossil fuels. Such a transition can not happen overnight and requires a just transition for workers, communities and entire countries. Clear timelines and targets are needed for the sunsetting of the sector, similar to emission and renewable energy targets that also serve as signaling tools.
The earlier the end point is recognized, and the more the needs of a just transition are anticipated, the less disruptive this process will be for vulnerable groups. IISD’s submission to the Talanoa Dialogue compiles many of the lessons learned, to tell the stories of coal phase-outs and their social and economic implications and to inform the transition away from oil and gas.
Over the next few years, we will face even more urgency for a just transition away from fossil fuels, clear policy signaling, and cutting emissions with both arms of the scissors. Discussions like the side event in Bonn in May 2018 will be essential for building narratives and leadership from the first movers, and responding to the climate change challenge.