World’s governments must wind down fossil fuel production by 6% per year to limit catastrophic warming

2 December 2020

A special issue of the Production Gap Report – published by leading research organisations ODI, SEI, IISD, E3G and the UN – finds that the COVID-19 recovery marks a potential turning point, where countries must change course to avoid locking in levels of coal, oil, and gas production far higher than consistent with a 1.5°C limit.

Countries plan to increase their fossil fuel production over the next decade, even as research shows that the world needs to decrease production by 6% per year to limit global warming to 1.5°C, according to the 2020 Production Gap Report.

The report, first launched in 2019, measures the gap between Paris Agreement goals and countries’ planned production of coal, oil, and gas. It finds that the “production gap” remains large: countries plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with a 1.5°C temperature limit.

This year’s special issue looks at the implications of the COVID-19 pandemic – and governments’ stimulus and recovery measures – on coal, oil, and gas production. It comes at a potential turning point, as the pandemic prompts unprecedented government action – and as major economies, including China, Japan, and South Korea, have pledged to reach net-zero emissions.

“This year’s devastating forest fires, floods, and droughts and other unfolding extreme weather events serve as powerful reminders for why we must succeed in tackling the climate crisis. As we seek to reboot economies following the COVID-19 pandemic, investing in low-carbon energy and infrastructure will be good for jobs, for economies, for health, and for clean air,” said Inger Andersen, Executive Director of the United Nations Environment Programme (UNEP). “Governments must seize the opportunity to direct their economies and energy systems away from fossil fuels, and build back better towards a more just, sustainable, and resilient future.”

The report was produced by the Stockholm Environment Institute (SEI), the International Institute for Sustainable Development (IISD), the Overseas Development Institute, E3G, and UNEP. Dozens of researchers contributed to the analysis and review, spanning numerous universities and additional research organizations.

“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. “The research is similarly clear on the solution: government policies that decrease both the demand and supply for fossil fuels and support communities currently dependent on them. This report offers steps that governments can take today for a just and equitable transition away from fossil fuels.”

The report’s main findings include:

  • To follow a 1.5°C-consistent pathway, the world will need to decrease fossil fuel production by roughly 6% per year between 2020 and 2030. Countries are instead planning and projecting an average annual increase of 2%, which by 2030 would result in more than double the production consistent with the 1.5°C limit.
  • Between 2020 and 2030, global coal, oil, and gas production would have to decline annually by 11%, 4%, and 3%, respectively, to be consistent with the 1.5°C pathway.
  • The COVID-19 pandemic – and the “lockdown” measures to halt its spread – have led to short-term drops in coal, oil, and gas production in 2020. But pre-COVID plans and post-COVID stimulus measures point to a continuation of the growing global fossil fuel production gap, risking severe climate disruption.
  • To date, G20 governments have committed over US$230 billion in COVID-19 measures to sectors responsible for fossil fuel production and consumption, far more than to clean energy (roughly US$150 billion). Policymakers must reverse this trend to meet climate goals.

“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. “Instead, governments should 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.”

The report also delves into how the world can equitably transition away from fossil fuels, with the most rapid wind-down needed from countries that have higher financial and institutional capacity and are less dependent on fossil fuel production. Some of the largest fossil fuel producers in this group, including Australia, Canada and the US, are currently among those pursuing major expansions in fossil fuel supply.

Countries highly dependent on fossil fuels and with limited capacity will need international support to transition equitably, and the report explores ways to facilitate that cooperation.

“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.”

The report outlines six areas of action, arming policymakers with options to start winding down fossil fuels as they enact COVID-19 recovery plans. Among other things, they can reduce existing government support for fossil fuels, introduce restrictions on production, and ensure stimulus funds go to green investments (while tying any high-carbon support with conditions that promote long-term alignment with climate goals).

“This report shines a light on how government action, in many cases, risks locking us into fossil-fueled pathways. And it lays out the alternative, with solutions and examples for moving beyond coal, oil, and gas production,” said SEI’s Executive Director, Måns Nilsson. “It’s time to imagine, and plan for, a better future.”