OCI: ‘Transformational Moment’ Is Last, Best Chance to Break from Fossils
The slow emergence from pandemic lockdown is the “last, best chance to plan for the economy we need to stay within 1.5°C and avoid the worst chaos of global warming,” declares a recent five-point call to policy-makers to cooperate in a rapid worldwide phaseout out of fossil fuels.
“Now is precisely the time for governments…to systematically disentangle their economies from this volatile and toxic industry in a way that lines up with global climate goals, invests deeply in a just transition for workers and local communities, and builds the clean energy sectors we will need long into the future,” writes Oil Change International Senior Research Analyst Kelly Trout.
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The brutally unmanaged drop in global oil fortunes has left countries like Iraq and Nigeria “reeling from sudden drops in oil revenue,” while the United States “squanders public money on oil bailouts,” writes OCI. Meanwhile, oil and gas workers are “being laid off without robust economic support systems in place,” while their employers lobby governments to allow them to sidestep their social and environmental responsibilities.
“If governments leave the ‘when’ and ‘how’ of the end of oil and gas up to tumultuous markets, the outcome will not be good for either people or the planet,” says OCI. Instead, it urges, the exit from fossils “can be predictable, people-centred, and Paris-proof…if governments stop letting the industry and financial markets call the shots.”
In its “deep dive,” OCI lays out five reasons why global governments must take control to pro-actively manage the current decline in oil and gas production. First up is the incontrovertible fact that “rapid, systemic change” will be necessary to stay below the 1.5°C safety limit on average global warming.
While global fossil production is still on a drastic upward curve, “global greenhouse gas emissions need to drop by 7.6% each year,” says OCI, citing the Emissions Gap report released last fall by the UN Environment Programme. OCI recommends a number of policies to reverse the trend, including a ban on permits for new fossil infrastructure, the end of fossil subsidies, and “mobiliz[ing] the massive, sustained investments that are needed to build the scaffolding of a new, resilient, and regenerative economy.”
Second, OCI says, in the absence of good policy, the transition to a green economy risks “replicating harmful power structures, creating social unrest, and deepening inequality”. Citing the Climate Justice Alliance, OCI notes that “transition is inevitable. Justice is not.” With robust transition plans, off-ramps from fossil fuels that create new, high-quality jobs, deep investment, and trust-building through “social dialogue and planning”, a “cruel and chaotic” transition can be avoided.
The OCI’s third—and, perhaps, most chilling—reason for a fossil exit is that “financial pain for the industry does not neatly equate to carbon staying the ground.” Even “stranded assets can turn into carbon ‘zombies’”—oil and gas fields that produce even as they never turn a profit. “As long as the market price of oil is marginally higher than the costs of operating the field or well, a company has a financial incentive to keep pumping oil and gas. Even if the project as a whole never breaks even, the company is still recouping sunk investment.” And when oil prices melt down, governments are often there to buffer Big Oil with a bailout.
The solution? Cooperation on a global scale, with governments taking a starring role in managing the exit, rather than leaving it to big business.
“If climate goals are to be met, equity must be a core consideration in how governments manage the decline of fossil fuels,” writes OCI.
The final reason governments must step up to manage the retreat from fossils—and do it now—is that such a chance will not come again.
“This is a transformational moment in which governments face stark choices,” writes OCI. The pandemic is “a fork in the road for every country” that could bring an end to an “irrational” dependence on fossils.
“Will governments build back better, crafting a Just Recovery, or attempt to return to an unstable, unsustainable, unjust status quo?” asks OCI. “In part, the answer will depend on who politicians listen to at this moment.”