An incompatible expansion of fossil fuels


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 keeping global temperature rises to 1.5°C. Instead, government plans and projections indicate an average 2% annual increase for each fuel over this time period. These are the findings of the latest ‘Production Gap Report (2020)’⁴⁰ , launched by leading research institutions and experts, in collaboration with the United Nations Environment Programme (UNEP).

Covid-19 is expected to cut fossil fuel production in 2020 by 7%, but this will barely change the total production expected by 2030. Countries are on track to produce more than double the amount of fossil fuels consistent with a 1.5°C scenario.⁴¹

As discussed earlier in this paper, we are seeing trillions of dollars and euros being pumped into global economies to support the recovery from Covid-19. There has been recognition around the world of the potential this creates to drive a green recovery and support the UN’s calls to ‘build back better’.⁴²

Devoting 30% of its €750bn ’Next Generation Recovery Fund’ to green projects, the EU is out in front. France and Germany have earmarked about €30bn and €50bn respectively of their own additional stimulus packages for environmental spending. China, at the other end of the scale, has allocated only 0.3% of its package, about €1.2bn, for green projects.⁴³

Fig. 4 – Fossil fuel production is set to be far above safe climate levels

Production of coal, oil and gas must fall by 6% a year until 2030 to keep global temperature rises under the 1.5°C target of the Paris Agreement. Current government plans and projections indicate an average 2% annual increase for each fuel over this time period.

Source: Guardian / Production Gap Report (2020)

Fig. 5 – Public money commitments to fossil fuels, and clean and other energy, in recovery packages

Covid-19 recovery efforts in G20 countries have committed more public funds to fossil fuels than to clean energy, with significant differences by country (as of 11 November 2020).

Source: Production Gap Report (2020)

Prior to the 2020 elections, the US had allocated $26bn, or just over 1%, of its announced recovery on green spending. But with a pledge of $1.7tn and the promise of a 'clean energy revolution', the presidency of Joe Biden has the potential to transform the green recovery globally.⁴⁴

However, as it stands, governments have committed far more Covid-19 funds to fossil fuels than to clean energy. As of November 2020, G20 governments had committed USD 233 billion to activities that support fossil fuel production and consumption, as compared with USD 146 billion to renewable energy, energy efficiency, and low-carbon alternatives.⁴⁵

Of the support going to fossil fuels, USD 23 billion is support specific to fossil fuel production. The vast majority of this support has been unconditional and lacked any social, economic, or environmental conditions. It includes tax cuts on fossil fuel exports in Argentina, equity and loan guarantees for Canada’s Keystone XL pipeline (albeit now cancelled in the first few days of Joe Biden’s presidency), a rebate on coal extraction revenue due to the government in India, a temporary tax relief package for Norway’s oil and gas industry, and reductions in oil and gas royalty rates and the weakening of environmental regulations in the US.⁴⁶

As the ‘Production Gap Report (2020)’ concludes, we are currently at risk of missing a crucial opportunity for a “just, and equitable wind-down” of fossil fuel production. Rather than recovery packages and economic stimulus funds that support a sustainable recovery, we risk further “carbon lock-in”. Funds that could be used to help countries transition and provide fossil-fuel dependent communities and economies with the support needed for diversification, are instead intensifying patterns that existed prior to the pandemic.⁴⁷