Covid-19 recovery could answer urgent need to wind down fossil fuels

The urgent need for climate action and for a just transition away from fossil fuels  flowed through the presentations and discussions of this week’s 2020 Virtual Forum on Fossil Fuel Supply and Climate Policy.

The forum focused on the altered energy landscape amid the Covid-19 pandemic, and on the resulting implications for fossil fuel production, greenhouse gas emissions, and economic recovery. Experts from SEI, the International Institute for Sustainable Development, the United Nations, the International Energy Agency and numerous other institutions and universities discussed the social and political complexities of tackling fossil fuel production and ensuring a wind-down in line with climate goals.

Anne-Sophie Cerisola, Director of the Climate Ambition Team at the Executive Office of the UN Secretary General, moderated the forum’s plenary session. Many experts present, she said, have come to the “same diagnosis” about Covid-19 recovery plans.

The plans “have to address the terrible consequences of the crisis…but they are also a remarkable opportunity to make some structural changes in the transformation towards the low-carbon resilient economies that leave no one behind,” she said.

The theme of “just transition” characterized much of the day’s conversation. Fatima Denton, Director of the United Nations University Institute for Natural Resources in Africa, pointed out that the loss of fossil fuel production revenue would have a significant impact on social spending for a number of hydrocarbon-rich countries in Africa.

“I would say that Covid-19 has actually fast-forwarded the reality that African economies have to be more diversified and that tremendous dependency on oil and gas is not the way forward,” she said. For growth and fossil fuels to be successfully decoupled, Denton said, Africa will need to be part of a far-reaching “global solidarity transition.”

Similarly, Moustapha Kamal Gueye, Coordinator of the International Labour Organization’s Green Jobs Programme, emphasized the importance of building a strong social dialogue between workers, employers and governments in both post-pandemic reconstruction and green transition plans.

A recurring theme was the need for a strong signal to both governments and producers that momentum for change exists and will not be given up lightly. Tatiana Mitrova, Director of the SKOLKOVO Energy Centre at the Moscow School of Management, noted that many producing countries are facing multiple disasters and need a clear picture of what a post-Covid-19 recovery looks like.

“If there is no clear message from the consumers, producers prefer to think that the status quo will be restored,” she said. “It might be wishful thinking, it might be a mistake, but this is how the psychology of the decision-makers work around the world in all resource-rich countries.”

Indeed, last year’s Production Gap Report found that countries are collectively planning to produce 120% more fossil fuels by 2030 than consistent with limiting warming to 1.5°C. An upcoming special issue of the report due in October will look at the implications of the Covid-19 pandemic and response measures on this “production gap”.

Two parallel sessions delved deeper into policy specifics: an English-language session tackled the prospects for international cooperation, while a Spanish-language session explored the implications of the fall in the price of oil for producing regions in Latin America.

Prospects for international cooperation

Speakers in the English-language session discussed the prospects and mechanics of a global transition away from fossil fuel production. Tzeporah Berman, International Programme Director at Stand.Earth and Adjunct Professor at York University, gave an overview of the case for a “Fossil Fuel Non-Proliferation Treaty”, modelled on the three pillars of the 1968 nuclear weapons NPT: non-proliferation (ending new exploration and production), global disarmament (phasing out existing stockpiles and production in line with 1.5°C) and peaceful transition (ensuring a just transition for workers, communities and countries).

“There are many countries who can’t negotiate a just transition on their own because they are currently so dependent economically on production or in fact they are pursuing new production…simply to feed their debt,” she said. “We need a globally negotiated just transition.”

Navroz Dubash, Professor at the Centre for Policy Research, impressed upon the audience that an agreement should take into account past emissions and climate histories of each participant country, especially in the determination of “who gets to burn what.” He also emphasized the difficulty and unlikelihood of a formal treaty amid the politics of allocating supply.

He added that shifting domestic narratives are “crucial to facilitating international engagement on climate issues” and moving away from forms of climate conservatism rooted in the difficult question of how a migration to renewables can occur without the costs falling on society’s poorest members.

“I think ultimately this conversation has to move very rapidly from what is feasible in terms of international politics to what is feasible in terms of domestic politics in key countries,” he said. “What is the domestic narrative?”

Declining oil prices and implications for Latin America and the Caribbean

Concurrently, in a Spanish-language session, speakers highlighted the challenges facing fossil-fuel-producing regions and countries in Latin America and the Caribbean (LAC).

Carlos Monge, an advisor at the Natural Resource Governance Institute, noted that governments in oil-producing countries are poorly prepared for the decline of the oil sector, with many parts of currently operational projects only just breaking even. Not only does this pose a problem in the short term, he pointed out, but it sets up long-term challenges in terms of how LAC might respond to a lack of return on its significant investments in the sector.

Monge suggested a solution to this problem is for governments in LAC to pursue two parallel transitions: a shift in the energy matrix and rapid economic diversification. He argued this would generate the employment and the fiscal income that the sector currently provides, preventing the serious socio-economic consequences that might otherwise emerge.

Panelists also discussed the role of activism in a transition away from fossil fuels. Leila Salazar-López, Executive Director of Amazon Watch, emphasized the significant human and environmental costs of production, especially those which fall on indigenous communities.

“There is no climate solution without forests. We cannot protect forests without protecting indigenous rights,” she said.

Catalina Toro Pérez, Associate Professor at the National University of Colombia, spoke of instances of local resistance to land-based fossil fuel extraction which have been successful in halting or delaying extractive projects. But she raised the question of where such resistance might be found when it comes to protecting oceans from similar practices, given the rise in offshore projects.

A possible solution to the overall challenge, she said, is the development of an alternative to the rentier, extractivist model – one that comes with de-growth and requires a strengthening of democratic processes.