bneGREEN: Rich countries must cut oil and gas output 74% to ensure fair transition

bneGREEN: Rich countries must cut oil and gas output 74% to ensure fair transition
Oil production / CCO Public Domain
By Richard Lockhart in Edinburgh April 5, 2022

Rich countries must reduce oil and gas output by 74% by 2030 and fully by 2034 in order to keep the world on track for 1.5°C and give poorer oil-reliant countries longer to replace their income from fossil fuel production.

A new report from the University of Manchester commissioned by the International Institute for Sustainable Development (IISD) warned that in order to pursue a fair transition, which would minimise the economic impact of ending oil production on the world’s poorer producers, different phase-out dates for wealthier producers were needed.

Poorer nations should be given until 2050 to end production but will also need significant financial support to transition their economies, said the report, written by Professor Kevin Anderson, a leading researcher at the Tyndall Centre for Climate Change Research, and Dr Dan Calverley.

The richest countries, which produce over a third of the world’s oil and gas, must cut output by 74% by 2030; the poorest, which supply just one ninth of global demand, must cut back by 14%.

This means that there is no room for any country to raise production, with all having to make significant cuts this decade.

“Responding to the ongoing climate emergency requires a rapid shift away from a fossil fuel economy, but this must be done fairly. There are huge differences in the ability of countries to end oil and gas production, while maintaining vibrant economies and delivering a just transition for their citizens,” said Anderson.

The report noted that some poorer nations are so reliant on fossil fuel revenues that rapidly removing this income could threaten their political stability. Countries like South Sudan, Republic of Congo, and Gabon, despite being small producers, have little economic revenue apart from oil and gas production.

By contrast, it observes: “Wealthy nations that are major producers typically remain wealthy even once the oil and gas revenue is removed.” Oil and gas revenue contribute 8% to US GDP, but without it, the country’s GDP per head would still be around $60,000 – the second-highest globally.

When countries signed the UN Paris Agreement, they agreed that wealthy nations should take bigger and faster steps to decarbonise their economies and also provide financial support to help poorer countries move away from fossil fuels.

This principle has been applied to coal power generation, with the UN calling on wealthy OECD countries to phase out coal use by 2030, and the rest of the world by 2040.

The report, Phaseout Pathways for Fossil Fuel Production, applies similar principles to oil and gas. It quantifies how much future production is consistent with the Paris climate targets and what this implies for the 88 countries responsible for 99.97% of all oil and gas supply.

It sets viable phase-out pathways for five different groups of countries based on their differing capacities to make a rapid and just transition away from fossil fuels.

For a 50% chance of limiting the global temperature rise to 1.5°C different countries should meet different targets.

The 19 highest-capacity countries, with average non-oil GDP per person (GDP/capita) of over $50,000, must end production by 2034, with a 74% cut by 2030.

This group produces 35% of global oil and gas and includes the US, UK, Norway, Canada, Australia and the United Arab Emirates.

The 14 high-capacity countries, with average non-oil GDP/capita of nearly $28,000, must end production by 2039, with a 43% cut by 2030. They produce 30% of global oil and gas and include Saudi Arabia, Kuwait and Kazakhstan.

The 11 medium-capacity countries, with average non-oil GDP/capita of $17,000, must end production by 2043, with a 28% cut by 2030. They produce 11% of global oil and gas and include China, Brazil and Mexico.

The 19 low-capacity countries, with average non-oil GDP/capita of$10,000, must end production by 2045, with an 18% cut by 2030. They produce 13% of global oil and gas and include Indonesia, Iran and Egypt.

Lastly, the 25 lowest-capacity countries, with average non-oil GDP/capita of $3,600, must end production by 2050 with a 14% cut by 2030. They produce 11% of global oil and gas and include Iraq, Libya, Angola and South Sudan.

“There is very little room for manoeuvre if we want to limit warming to 1.5°C. Although this schedule gives poorer countries longer to phase out oil and gas production, they will be hit hard by the loss of income. An equitable transition will require substantial levels of financial assistance for poorer producers, so they can meet their development needs while they switch to low-carbon economies and deal with growing climate impacts,” said Calverley

The report also offers a more ambitious scenario with a 67% chance of meeting 1.5°C. This would require the richest countries to end oil and gas production by 2031 and the poorest by 2042.

In a less ambitious scenario, with a 50% chance of meeting 1.7°C – reflecting “well below 2 degrees” – the richest countries would have to halve oil and gas production by 2035 and end it by 2045. The poorest countries would have until 2062 to phase out all production, but there would still be no room for additional oil and gas production.