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Fossil fuel phase-out – hype and hypocrisy Radhika Chatterjee and Indrajit Bose give the lie to developed-country claims of leading the shift away from fossil fuel dependence. AT COP 28 in Dubai, developed countries positioned themselves as supporters of a fossil fuel phase-out. If the commitment had been genuine and backed with real efforts back home, they could be lauded for it. However, for those who knew better, they were clearly playing to the gallery and wanted to shift the pressure to developing countries. It was a case of ‘do as we say, and not as we do’, because they are not walking the talk. Several reports published in 2023 have stated that the developed countries, who are also among the biggest historical emitters, continue to have massive fossil fuel expansion plans going up to 2050. A report by Oil Change International (OCI), titled ‘Planet Wreckers: How Countries’ Oil and Gas Extraction Plans Risk Locking in Climate Chaos’,1 identifies ‘five global north governments … as the biggest climate hypocrites and most egregious Planet Wreckers: the United States, Canada, Australia, Norway and the United Kingdom’. These countries, ‘despite having the greatest economic means to rapidly phase out production, and immense historical responsibility for causing the climate crisis … account for a majority (51 percent) of planned expansion from new oil and gas fields through 2050’, states the report. ‘Four of these countries (excluding Norway) are amongst the top ten historical contributors to the climate crisis based on their domestic emissions,’ the report adds. The report also states that new drilling in high-income countries with ‘outsized historical responsibility for causing the climate crisis, while claiming to be climate leaders, is inexcusable’. In fact, these countries ‘have the technical, financial, and economic ability to phase out fossil fuels the fastest’. The report points out that an equitable phase-out trajectory for global oil and gas production based on economic capacity would see these countries completely phase out their own production by the mid-2030s while committing their fair share to finance a fair transition globally. Further, several ‘global north governments, such as top fossil fuel financier Japan, and companies headquartered in the global north play a key role in pushing and funding’ fossil fuel projects, ‘often to supply their own market’, shows the OCI report. Fossil fuel expansion plans of major historical polluters US According to the report, the US, ‘the largest historical emitter of CO2’, is ‘by far the largest oil and gas producer in the world: it was responsible for one in every five barrels of oil and gas extracted globally in 2022. In 2022, the US also led the world in new oil and gas extraction committed to development’. According to the United Nations Environment Programme (UNEP)’s ‘Production Gap Report: Phasing Down or Phasing Up? Top Fossil Fuel Producers Plan Even More Extraction Despite Climate Promises’,2 in March 2023, the US government ‘approved the largest single oil project on federal lands, the ConocoPhillips Willow project in Alaska, which is projected to produce up to 180,000 barrels of oil a day as early as the late 2020s’. The OCI report shows that the US is ‘poised to be the world’s largest expander of oil and gas extraction from 2023 to 2050, single-handedly representing more than one-third of planned global expansion’. US oil output is projected to rise to an average of 13.2 million barrels per day in 2024, and 13.4 million barrels per day in 2025, according to federal estimates.3 For context, that’s about half a million barrels per day more than the prior annual record set in 2019, according to a news report.4 Another report by OCI, titled ‘Biden’s Fossil Fuel Fail: How US Oil and Gas Supply Rises Under the Inflation Reduction Act, Exacerbating Environmental Injustice’,5 highlights the drawbacks of the US’ Inflation Reduction Act (IRA), which the country often cites as part of its ambitious climate action plans. This report details ‘the most recent oil and gas production projections from the Rhodium Group’s Climate Deck, which provide the first publicly-available analysis of energy and emissions under the implementation of the IRA. The projections anticipate an overall rise in oil and gas production under the IRA’. They ‘demonstrate that the IRA supports a modest decline in US oil and gas demand while allowing an increase in oil and gas production and a dramatic rise in oil and gas exports’. The findings of this report underscore that the IRA will itself not drive the phase-out of oil and gas production in the US but instead enable the continued expansion of production, keeping the US ‘on course to be the biggest expander of oil and gas extraction in the world through 2050’. Further, the Rhodium Group’s model cited in the report projects that despite the IRA’s investment in renewable energy, electric vehicles and batteries, the US could still miss its Paris Agreement goal of reducing its emissions by 50-52% below 2005 levels by 2030. The model’s mid-emissions pathway suggests that ‘US greenhouse gas emissions will total 4.42 billion metric tons in 2030. This is 34% below 2005 levels and misses the US Paris Agreement goal by 16 to 18 percentage points’. In any event, says the report, this goal is ‘already insufficient to limit global temperature rise to 1.5 degrees Celsius. This is especially damning considering the United States’ responsibility as the world’s largest historical climate polluter to cut its emissions faster than the global average’. In fact, ‘moderate declines in US domestic consumption of oil and gas stimulated by the IRA’s support for renewable energy and electric vehicle adoption are countered by significant increases in US oil and gas extraction, with the difference exported to global markets. The projected growth in US oil and gas exports substantially undermines domestic emissions reductions’. Further, UNEP’s Production Gap Report reveals that the US Energy Information Administration (EIA) forecasts that oil production will reach and remain at record high levels of 19-21 million barrels per day from 2024 to 2050, while gas production is projected to increase continuously, reaching 1.2 trillion cubic metres in 2050. Shedding light on the US’ liquefied natural gas (LNG) expansion plans, the Production Gap Report states that ‘in July 2022, the US became the world’s leading exporter of LNG and as of March 2023, the US Department of Energy had authorised 18 large-scale LNG export projects totalling 450 billion cubic metres per year of capacity’. It is to be noted that recent research has demonstrated that ‘domestically, natural gas is no better for the climate than coal, largely owing to the methane leaks associated with it; now, though, it appears that exporting LNG, because of the extra leakage of the supercooled gas during transit, could allow even larger amounts of methane to escape into the atmosphere and, hence, could do much more damage to the climate than coal does’.6 Canada According to OCI’s ‘Planet Wreckers’ report, ‘Canada is on track to be the world’s second largest developer of new oil and gas extraction from 2023 to 2050. Canada alone could be responsible for 10% of planned expansion globally … Canada ranks as the worst Group of 20 (G20) country for production subsidies and public finance for oil and gas.’ UNEP’s Production Gap Report shows that in Canada, both ‘the federal and provincial governments have recently approved new oil and gas developments, such as the Bay Du Nord offshore oil project in 2022 and the Cedar LNG export terminal in 2023’. Australia Australia is ‘the world’s third largest exporter of fossil fuel pollution’, according to the OCI report. The section on Australia in UNEP’s Production Gap Report states that a ‘government list of “major projects” showed 69 coal projects and 49 new oil and gas projects in the pipeline. These together represent nearly 5 GtCO2eq [gigatonnes of CO2 equivalent] of potential emissions’. Highlighting fossil fuel plans of the West Australian Environmental Protection Agency, the OCI report mentions that the Agency has ‘recently approved an extension of nearly 50 years for Woodside Energy’s North West Shelf gas processing facility – this would allow it to operate until 2070, as well as enabling new gas fields in the surrounding areas like Scarborough and Browse. By the company’s own estimate, the project will cause around 4 billion tonnes of carbon dioxide-equivalent emissions, or almost a decade of Australia’s annual climate pollution’. The Australian government is ‘missing half the equation’ in acting on the climate crisis by backing a shift to renewable energy but having no plan to get out of fossil fuels, according to Prof Lesley Hughes, a leading climate change scientist who is a member of the independent Climate Council and government advisory body the Climate Change Authority. Hughes was quoted in a news report as saying there is a ‘cognitive dissonance’ between the government’s stated commitment to addressing the problem and the pace at which it is moving. The dissonance, she says, is most clear in it subsidising or approving new and expanded fossil fuel developments while arguing it supports trying to limit global heating to 1.5˚C.7 Norway Norway is ‘Europe’s largest producer of oil and gas and one of the world’s top 10 exporters of fossil fuel emissions’, states the ‘Planet Wreckers’ report. ‘Norway is pursuing an aggressive policy to increase oil and gas exploration, having awarded as many exploration licences from 2012 to 2021 as in the 47 years prior. In 2023, the Norwegian government awarded 47 new licences to 25 different oil and gas companies on the Norwegian shelf,’ adds the report. ‘Norway’s continued promotion of oil and gas exploration and development is in stark contradiction with its international commitments.’ United Kingdom Highlighting the contradictions of the UK government’s legal framework of maximising ‘economic recovery’ from North Sea oil and gas production, the OCI report elaborates that the ‘current government policy is to “max out” oil and gas extraction in the North Sea and give the North Sea a “new lease of life” by approving new fields and licences. This contradicts the advice of the Independent Committee on Climate Change, which stressed in its recent progress report: “Expansion of fossil fuel production is not in line with Net Zero. [...] The UK will continue to need some oil and gas until it reaches Net Zero, but this does not in itself justify the development of new North Sea fields.”’ ‘In recent years, the British government pushed to approve new oil and gas projects, including the high-profile Cambo and Rosebank fields,’ notes the report. ‘In October 2022, the government opened a new licensing round, allowing over 100 new licences and blatantly defying climate science. The British Prime Minister re-announced plans for continued licensing of North Sea oil and gas in July 2023…’. Further, UNEP’s Production Gap Report shows that the UK government ‘approved a major new coal mine in 2022, the first in over 40 years, which is intended to supply coal for the steel industry in the UK and abroad’. The OCI report mentions that ‘the United Kingdom played a leadership role as the convener of the Glasgow Statement/Clean Energy Transition Partnership launched at COP26, through which 38 other countries and institutions pledged to end international public finance for fossil fuel projects. However, this leadership is undermined by the UK’s hypocrisy in its push to give North Sea oil and gas fields a “new lease of life”’. A news report cites the UK government's climate advisers as saying Britain has ‘lost its clear global leadership position on climate action’. The article states: ‘The Climate Change Committee, which tracks the UK government’s decarbonisation efforts, said in a new report that government backing for a new coal mine and new domestic oil and gas production undermined Britain’s “international messaging” telling other countries to stop developing fossil fuels.’8 Germany According to the Production Gap Report, Germany ‘closed down its last hard coal mine in 2018, but remains the world’s second-largest producer of lignite, the most carbon-intensive type of coal’. The report also highlights the continued reliance on coal by Germany. It mentions that ‘in response to the 2022-2023 global energy crisis, Germany made changes to its laws to allow for a delay in closure of hard-coal-fired power plants, and reactivated both hard-coal and lignite-powered plants from the grid reserve until 31 March 2024. An amendment to the Coal Phase-out Act delayed the retirement of 1.2 gigawatts (GW) of lignite-fired power plants from 2022 until 31 March 2024 and, at the same time, brought the coal phase-out in the western lignite mining region forward from 2038 to 2030 (for 3 GW of lignite-fired power plants)’. The ‘intensive use’ of German coal power plants led to additional emissions of 15.8 million tonnes of CO2 in 2022, according to a report by consultancy Energy Brainpool commissioned by Green Planet Energy.9 Throwing light on Germany’s fossil fuel expansion plans, UNEP’s Production Gap Report says ‘Germany has recently pushed for continued public investment in the gas sector by the G7 countries. The government also plans to build more LNG import terminals than any other EU country, spending at least EUR9.8 billion (USD11.3 billion) between 2022 and 2038’. One news report has highlighted the contradictions of German energy policy: ‘As the West champions green policies and urges the developing world to follow suit, Germany is engaged in the dismantling of a substantial wind farm to clear the way for the expansion of an open-pit lignite coal mine. This move, undertaken by German energy giant RWE, raises questions about the country’s commitment to its environmental promises and the broader global effort to combat climate change. German energy giant RWE is undertaking the dismantling work in the western region of North Rhine Westphalia, where one wind turbine has already been dismantled. The company plans to weed out seven more to pave the way for an additional 15m to 20m tonnes of so-called “brown” coal to be excavated.’10 Fossil fuel subsidies of historical polluters According to the Oxfam report ‘Climate Equality: A Planet for the 99%’, ‘the 11 largest economies in the Global North provided the equivalent of US$1.8 trillion in direct and indirect fossil fuel subsidies in 2020, with the highest average per-person subsidies being in Russia (US$3,560), the USA (US$2,006), Australia (US$1,729) and Canada (US$1,686)’.11 In Canada, ‘national and sub-national fossil fuel production subsidies totalled CAD2 billion (USD1.6 billion) in 2021 with over half going towards deep drilling credits in British Columbia for gas wells’, UNEP’s Production Gap Report states. The report adds, ‘Between 2018 and 2021, the Canadian government also provided CAD21.7 billion (USD16.6 billion) in public finance (i.e. loans, grants, and guarantees) for domestic fossil fuel development including pipelines.’ Elaborating on the use of the national tax system to subsidise fossil fuel production in Norway, the UNEP report mentions that although the country’s tax system ensures a 78% effective tax rate on oil and gas production profits, ‘the government effectively acts as a co-investor that shoulders a large share of risk in all new investments. To support the industry during the fall in oil price in early 2020, the government introduced a special tax scheme in which all new developments approved by the end of 2023 will benefit from special provisions … [T]his temporary scheme may amount to a tax subsidy of around NOK 26 billion (USD2.7 billion). The government provided further tax breaks and budget expenditures for oil and gas production (primarily for research, development, and demonstration) worth NOK 656 million (USD76 million) in 2021, according to OECD estimates’. According to OCI’s ‘Planet Wreckers’ report, the UK government gives ‘generous domestic tax breaks to the oil and gas industry’. Explaining further, the report says, ‘For example, the windfall tax, introduced [in 2022], features a major loophole that allows companies to claim tax relief on investments, making oil and gas companies eligible for up to GBP 11 billion in tax relief. Over the lifetime of the Rosebank oil field, Equinor and its partners will receive GBP3.75 billion in tax relief.’ Australia too seems to be providing substantial subsidies ‘despite committing to end fossil fuel subsidies over 10 years ago as part of the G20’, says OCI. The country ‘continues to provide significant domestic fossil fuel subsidies, estimated at AUSD11.1 billion in 2021-22’. In Germany, it is the lignite coal producers that enjoy subsidies from the government. According to the Production Gap Report, they benefited ‘from mining royalty and water fee exemptions, amounting to EUR49.5 million (USD58.5 million) in 2021’. Highlighting the investments made by Germany in fossil fuels, the report notes that ‘Germany’s export credit agency (Hermes Cover), the German development bank (KfW), and the German Investment and Development Corporation jointly invested USD2.8 billion a year in public finance for fossil fuels in 2019-2021’. The report adds that ‘a draft policy released by Germany’s export credit agency in July 2023 indicates that the agency plans to continue supporting the development of new gas fields and related transport facilities until 2025 when justified by national security and in compliance with the Paris Agreement targets’. End the hypocrisy It needs to be highlighted in this context that ‘not all fossil fuel producing countries have the same degree of dependence on fossil fuel revenues and ability to plan and implement economic diversification and just transition strategies, nor the same level of historical responsibility for driving climate pollution and exploitative models of resource extraction’, a point made in the OCI report. When it comes to the five developed countries (the US, Canada, Australia, Norway and the UK) responsible for the majority of planned expansion from new oil and gas fields through 2050, OCI stresses: ‘Equity dictates that these countries accelerate their phase out pathways and pay their climate debt and their fair share of the global energy transition to Global South countries. Instead, they choose the path of hypocrisy: claiming the mantle of climate leadership while undercutting global climate targets by promoting new oil and gas extraction which will exacerbate climate impacts on the most vulnerable populations of the world.’ As they say, the proof of the pudding is in the eating, and it is time for the developed countries to stop fooling the world and to halt their fossil fuel expansion, reverse course in emission trends and provide the necessary means of implementation to developing countries so the latter can embark on their just transition away from fossil fuel dependence while addressing their sustainable development needs and eradicating poverty. Radhika Chatterjee and Indrajit Bose are senior researchers with the Third World Network. Notes 1. https://priceofoil.org/content/uploads/2023/09/OCI-Planet-Wreckers-Report.pdf 3. https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf 4. https://edition.cnn.com/2023/08/08/politics/pence-energy-plan/index.html 5. https://priceofoil.org/content/uploads/2023/11/Fossil-Fuel-Fail-report_web.pdf 6. https://www.newyorker.com/news/daily-comment/a-smoking-gun-for-bidens-big-climate-decision 11. https://policy-practice.oxfam.org/resources/climate-equality-a-planet-for-the-99-621551/ *Third World Resurgence No. 358, 2024/1, pp 21-24 |
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