Curbing fossil fuel supply to achieve climate goals

Governments continue to plan on, and invest heavily in, the expansion of fossil fuel production for the purposes of economic development and revenue generation, and also as a geopolitical strategy. However, the 2020 crash in oil prices, driven by oversupply and collapsing demand following the COVID-19 pandemic, highlights why betting on continued growth in fossil fuel demand is a risky strategy. Workers and communities in fossil fuel dependent regions can be left stranded when the industry contracts, and governments who rely heavily on fossil fuel revenue streams may find themselves facing a crisis as their budgets diminish. While the sharp drop in oil demand in 2020 reflects exceptional circumstances and specific dynamics in oil markets, it signals why careful planning for a managed decline in fossil fuel production needs to be part of the climate conversation.

A small, but growing, number of governments are beginning to recognize the need to reconcile their climate mitigation plans with their energy production strategies, and are enacting new forms of “supply-side” climate policy to limit coal, oil and gas production. This can take the form of bans on exploration and extraction, removal of fossil fuel production subsidies, restrictions on finance for fossil fuel projects, and transition planning for workers and communities. Such initiatives are involving not just governments, but also an array of nonstate actors, with investors divesting from fossil fuels, communities developing transition plans, and even some fossil fuel companies redefining themselves as “energy” rather than oil or coal companies, to enable them to move into a post-fossil fuel era.

The academic literature has, for the most part, lagged behind this policy shift, with limited attention paid to the design and implementation of supply side climate policies. In particular, there is still little understanding of their feasibility and effectiveness, and how they might complement more traditional “demand-side” policies Moreover, the reasons why some jurisdictions are willing to pursue limits on supply, while others race to extract, are not well explored.

This special issue brings together pioneering new work on supply side climate policy. The contributions span across disciplines, geographies and scales of governance, to bring to light some of the barriers to, and opportunities for, supply side action. An important theme running through the special issue is that a new “anti fossil fuel norm” is emerging in climate policy. While governments are still far from aligning energy production and climate mitigation ambitions, the papers highlight that feasible economic, political and social pathways exist that can bring down fossil fuel production in line with climate goals.