It’s time for governments to work together to end the reign of fossil fuels
BY TZEPORAH BERMAN AND MARK CAMPANALE
COVID-19 continues to shake the global economy, and energy markets are no exception. Over the past few months, the fossil fuel industry has experienced a rapid, chaotic decline. The International Energy Agency has released some eye-watering projections regarding energy demand in the light of the COVID-19 crisis. In the IEA’s scenario, oil demand will fall by a massive 9%, coal by 8%, and gas by 5%. Meanwhile, the agency expects solar to continue to grow by 15% and wind by 10%, with CO2 emissions from the fossil fuel sector falling by 8% in 2020.
Amid all this change, the major fossil fuel companies are lobbying to protect corporate interests and investors are looking to recoup capital. But fossil-fuel dependent countries, communities, and workers are left without a plan for recovery.
This is a crossroads moment. And now, with governments dedicating unprecedented levels of stimulus to COVID-19 recovery, two clear pathways are presenting themselves. Either we continue to pump capital into back-stopping a sector that was in financial decline long before the pandemic or we accelerate an equitable transition away from fossil fuels to clean energy and a low-carbon sustainably managed economy.
The fossil fuel peril
The risks associated with fossil fuels are clear. Despite expanding production, jobs in the sector have been drying up. The industry is unprofitable and over the years has built up a staggering mound of debt in spite of receiving trillions in government subsidies. All of which is on top of the fact that fossil fuels are largely responsible for climate change, with 75% of greenhouse gas emissions to date coming from oil, gas, and coal. These emissions are on track to take the world past the Paris Agreement’s 1.5 degree Celsius limit by 2030.
Despite this stark reality, before COVID-19 the fossil-fuel sector had plans for expansion that would have resulted in 120% more emissions than would have been consistent with the goal of limiting global temperature rise to 1.5 degrees Celsius. About a decade ago, Carbon Tracker, an organization founded by one of us (Mark Campanale), labeled this supply of fossil fuels, in excess of the planet’s ability to absorb emissions, the “carbon bubble.” The size of this carbon bubble, as revealed in the U.N. Environment Programme’s Production Gap report, continues to grow. In the coming decade the oil and gas majors are planning to pursue a business-as-usual path, investing shareholder funds into expanding production. These investments would stand in the way of the goals of the Paris Climate Agreement. Carbon Tracker’s recent Breaking the Habit report reveals the names of the companies whose projects would contribute to breaking the carbon budget.
The existing United Nations Climate Change Convention does not include mechanisms to account for and cut emissions from the supply of fossil fuels.
In the realm of public policy, these fossil fuel expansion plans have not been taken into consideration. The existing United Nations Climate Change Convention does not include mechanisms to account for and cut emissions from the supply of fossil fuels. On one hand, governments wave emissions reduction targets at the main climate negotiating meeting, the Conference of the Parties, while on the other they simultaneously hand out new fossil-fuel exploration plans and production agreements.
It’s time for governments to tackle this inconsistency head-on.
A treaty for the future
A more ambitious international effort is needed to address this production gap and ensure COVID-19 recovery efforts increase resilience to major shocks and stresses, rather than lock in the unjust, unsustainable practices of the past. No country or community can spark an equitable energy transition on its own, and this is particularly true of those that are overly reliant on fossil fuels or that bear major debt loads.
Today, a team of climate, policy, and legal experts from around the world is proposing a Fossil Fuel Non-Proliferation Treaty, to be developed along with a strengthened Paris Accord.
The three pillars of the 1968 Nuclear Non-Proliferation Treaty—non-proliferation, global disarmament, and peaceful transition—provide a framework for the creation of the new fossil-fuel treaty.
1. Don’t add to the problem (non-proliferation). End new exploration and expansion into new reserves.
2. Get rid of the existing threat (global disarmament). Phase out existing stockpiles and production in line with the goal of not exceeding temperature rise of 1.5 degrees Celsius.
3. Accelerate an equitable transition (peaceful transition). Increase access to renewable energy and other low-carbon solutions. Develop just transition plans.
A movement to advance a Fossil Fuel Non-Proliferation Treaty can advance the conversation regarding the science-based need to wind down production and provide the missing mechanism for global cooperation on an equitable transition.
No country or community can spark an equitable energy transition on its own, and this is particularly true of those that are overly reliant on fossil fuels or that bear major debt loads.
The treaty would increase transparency and accountability by exposing national governments, companies, and investors driving the climate emergency through the creation of a global registry of fossil fuel that would track emissions from current and proposed projects. It would be a record of potential emissions from projects still in the planning stages, a schedule of so-called “unburnable carbon” that should be kept underground. The registry would link fossil fuels to supply and to the companies and people that benefit along the way. In addition, an Oil Exit List that is also under development would highlight companies and investors moving out of fossil fuels, a change that would bring enormous benefit to the global economy. Carbon Tracker earlier this year estimated that coal developers risk wasting more than $600 billion because it is already cheaper, in all major markets, to generate electricity from new renewables than from new coal plants. And in the oil and gas sectors, there is a very similar picture of potentially wasted capital and unneeded projects.
As the world works to respond to the global health pandemic over the coming months, the aim should be “better than normal” rather than “back to normal.” Normal just wasn’t good enough. It’s going to take transformative ideas like the Fossil Fuel Non-Proliferation Treaty to generate the resilience, equity, and new opportunities the world so desperately needs right now.
Tzeporah Berman is an adjunct professor of environmental studies at York University in Toronto, chair of the Fossil Fuel Non-Proliferation Treaty Initiative, and the international program director at Stand.Earth.
Mark Campanale is the founder and executive chairman of Carbon Tracker, an independent financial think tank that conducts in-depth analysis on the impact of the energy transition on capital markets.
Illustration by Wenting Li.