Lethal addiction: Post-Covid economic recovery plans around the world have heavily leaned on fossil fuels despite the urgent need to cut production | Photo: Proactiveinvestors.co.uk

Fossil fuel production set to rise, climate goals in jeopardy: Production Gap Report 2020

While recent months have seen a spate of ‘net-zero by mid-century’ announcements from major economies, global fossil fuel production plans fail to reflect such ambitions according to the report

This year, the world as we have known it changed drastically. The suddenness of the COVID-19 pandemic and the resulting lockdown measures and economic downturn have triggered conversations around the future of the planet, especially when it comes to its dependence on fossil fuels. But a new report has found that despite calls for a greener future, on paper, major countries remain committed to fossil fuel production, in some cases, even more than they were pre-pandemic.

The special issue of the Production Gap Report, written by leading research organisations and the UN, measured the gap between the Paris Agreement goals and countries’ planned production of fossil fuels. It stated that research indicates the world needs to cut down its fossil fuel production by 6% every year in the next decade. On the ground, however, the report found countries were planning and projecting an average annual increase of 2%. This would result in more than double the production that would keep the world on the 1.5°C pathway.  

The path that we need to follow

According to the report, global coal, oil and gas production would have to decline annually by 11%, 4% and 3% annually in order to achieve the Paris goals. But while the pandemic has resulted in short-term reduction this year, post-Covid stimulus measures will continue to widen the pre-Covid production gap. “The research is abundantly clear that we face severe climate disruption if countries continue to produce fossil fuels at current levels, let alone at their planned increases,” said Michael Lazarus, a lead author on the report and the director of SEI’s US Center.

Public money commitments to fossil fuels, and clean and other energy, in recovery packages | Source: Production Gap Report 2020

“The pandemic-driven demand shock and the plunge of oil prices this year has once again demonstrated the vulnerability of many fossil-fuel-dependent regions and communities. The only way out of this trap is diversification of these economies beyond fossil fuels. Alas, in 2020 we saw many governments doubling down on fossil fuels and entrenching these vulnerabilities even more,” said Ivetta Gerasimchuk, a lead author of the report and the lead for sustainable energy supplies at IISD.

The numbers speak for themselves. G20 countries have, so far, committed over $230 billion dollars, as part of COVID-19 recovery measures, to the fossil fuel industry – both for production and consumption. In comparison, their pledge towards clean energy, which includes renewable energy, energy efficiency and low-carbon alternatives, has been much less – $150 billion.

Some of the toxic commitments include tax cuts on fossil fuel imports in Argentina, a rebate on revenue due to the government in India for coal extraction and a tax relief package for Norway’s oil and gas industry.

The way forward

“This report’s findings make it crystal clear 2020 can’t be the year when nothing changes, it must be the year when everything changes,” says Steven Nadel, executive director at the American Council for an Energy-Efficient Economy (ACEEE). The Production Gap Report highlights six areas of action that policymakers need to undertake to wind-down fossil fuel production. Chief among these is introducing restrictions on production activities and infrastructure and enhancing transparency of current and future production levels. “Governments should also direct recovery funds towards economic diversification and a transition to clean energy that offers better long-term economic and employment potential. This may be one of the most challenging undertakings of the 21st century, but it’s necessary and achievable,” says Gerasimchuk.

The report also touches upon the need for a just and equitable transition to clean energy. It recommends countries with lower dependence on fossil fuel production, which are incidentally some of the world’s largest producers such as the US, Australia, Canada and the UK, need to rapidly wind down. The countries that depend most on fossil fuels and with limited capacity, such as Angola, Iraq, Nigeria and Venezuela, however, will need international support for a just transition in the form of increased development assistance, more policy space and fair carbon pricing mechanisms, the report recommended.

“Winding down fossil fuel production at a rate in line with Paris goals requires both international cooperation and support,” said SEI Research Fellow Cleo Verkuijl, who is a lead author on the report. “As countries communicate more ambitious climate commitments to the UN climate process ahead of the 2021 UN Climate Change Conference in Glasgow, they have the opportunity to incorporate targets and measures to decrease fossil fuel production into these plans, or NDCs.”

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