Phasing out fossil fuels: is real progress being made?

"There is more CO2 contained in the oil and gas reserves already being extracted than in our entire global carbon budget to keep warming under 1.5 degrees C."

Romain Loulalalen from NGO Oil Change International (OCI) tells Alasdair where we are on the global phase out of fossil fuels, what the current challenges are, how COP26 was significant and what political changes to expect in the next few years on oil and gas.  He also comments on whether the oil majors are genuinely committed to net zero targets.

Further reading: 

• Production Gap Report 2021
• Managing Peak Oil: a recent report by Carbon Tracker
• Oil Change International's Big Oil Reality Check
• Beyond Oil and Gas Alliance
• The Fossil Fuel Non-Proliferation Treaty initiative

Find all our latest investigations, features and interviews at www.landclimate.org

Transcript

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Alasdair: 0:06

Hello, and welcome to the economy land and climate podcast. My name is Alasdair MacEwen, and in this episode I spoke to Romain Loualalen, the global policy lead from the NGO Oil Change International or OCI, to find out about progress in the global phaseout of fossil fuels.

Romain: 0:25

Over the past, I would say, a year and a half, two years, I would say every major oil and gas company has come up with a net zero plan. They want to be seen as actors in this energy transition, they want to be seen as leading in it. And they've been deploying immense communications and PR resources to convince the public that they're actually serious about decarbonising. That would be great if it were true. The problem is, it's not. It really isn't. And it's demonstrably not.

Alasdair: 0:56

I began by asking Romain to explain OCI's his work and his role there.

Romain: 1:00

We were founded in the in the Bush years in the US in the early 2000s, to oppose the rapid expansion of oil and gas production in the US, and the influence that the oil and gas industry had and continues to have over politics in the US and elsewhere. But over the years, we've grown and we've started doing more and more international work. And so my job at OCI is to coordinate our global policy work, which is basically convincing as many countries as possible to keep fossil fuels in the ground. As an organisation, we're very focused on the supply side of the equation, of the climate equation. That is, we advocate for a managed and equitable phase out of fossil fuel production, and we're very focused on oil and gas in particular, and looking at how we can design and promote policies to keep these fossil fuels in the ground, in line with the carbon budgets that we still have, to limit warming to 1.5 degrees C. And so the question of how we're going to end the expansion of global fossil fuel production, and phase it out, basically in line with what's been agreed in Paris, it's been a taboo in international climate politics. It's a weird situation where we know and we've known for decades that fossil fuels are the main driver of the climate crisis. But there was never really a serious conversation on how we can stop producing the fuels that are fueling this climate crisis. And so we see our job in this context as trying to make sure that this is no longer the case. This is no longer sort of the elephant in the room. And this is explicitly tackled in national policies and politics and at the global level. And basically, no longer is this sort of taboo that everyone knows needs to be tackled, but no one wants really to address.

Alasdair: 2:48

Okay, that's really interesting. I mean, how are we doing on getting rid of fossil fuels?

Romain: 2:54

Well, there's a short answer and the long answer. The short answer is we're doing very poorly, but the tide is turning. But before I can give you the long answer, I think we need to take a step back and grasp the scale of the challenge that we're discussing here. Obviously, our entire economy, our society, and I would even say our civilization is built upon an abundance of cheap fossil fuels, right. And this has permeated our culture and our politics, to a degree that is sometimes hard to grasp, because we grew up in a fossil fuel civilisation. And so we don't really understand, or we can't really imagine a world beyond fossil fuels, because that's all we've known, right? But the reality is, we've known for decades, as I said, the climate crisis is fueled by oil, gas and coal, and 75% of global emissions of greenhouse gases comes from burning fossil fuels. And so there's a very straightforward connection between, you know, the pillars or the engine of our current civilisation, and at the same time, something that is destabilising it or it creates the risk that we can destabilise our civilisation and economies and societies, if we continue with the status quo. So what's striking is that the response to that for decades, has always been to say, we need to reduce our consumption of fossil fuels, right. And so that's why every country in the world has a policy to promote renewable energy, to promote electric vehicles to reduce the consumption of fossil fuels. But it's like no one or not a lot of people, have actually thought about tackling both the production and the consumption. So if you go to COP26, or all the COPS, basically, it's always about how, you know each individual country is going to reduce their reliance on fossil fuels in their economy, scale up renewable energy and all this but there is an entire wing of climate policy that's never explored, which is the cleanest fossil fuel is the one you don't extract. It's the one that you keep in the ground. That's because the power of the incumbents in this system is incredibly strong, right? The oil and gas industry is one, or has been one of the most politically powerful industries in the history of the world. Basically, it's literally the industry that's running the society in a lot of places, not only in petrostates in the Gulf, but we're also seeing it in countries like the US and Canada and Australia, where a lot of the energy and economic policy is driven by fossil fuels. And so that explains the resistance to change that we're witnessing. And that explains why we're doing so poorly in transitioning away from fossil fuels, even though I think the consensus now is incredibly clear that transitions happening need to happen very, very fast. An example of that power and an example of the fact that this is

not going well: 5:45

if you look at the Paris Agreement, which was signed in 2015, and is still the most important international climate policy document out there, it does not mention fossil fuels. It just doesn't. The words "fossil fuels" are not mentioned in that document, even though we know that this is the root of the problem. But if we look at the figures, what we're talking about when I say we're not doing well, and we're not taking the steps that we need to be taking to transition away from fossil fuels, a few figures or data points are, I think, interesting to look at. Our own research at OCI shows that there is more CO2 contained in the oil and gas reserves are already being extracted, than in our entire global carbon budget to keep warming under 1.5 degrees C. And that's not even talking about the new fields that the oil and gas industry wants to open. The entire business of oil and gas exploration that's happening around the world. If we only look at what's already being extracted, if all that is extracted, warming will be above 1.5 degrees C. The UN Environment Program published a report called the Production Gap Report. And if people are interested, I think that's a really good source of information about the reality of fossil fuel extraction today. It shows that countries are planning to produce more than double the amount of oil and gas or fossil fuels in general, by 2030 that would be consistent with limiting warming to 1.5 degrees C. So not only is there too much fossil fuels being exploited right now, but the plans, the expansion plans of the industries are even worse, and are going to make the problem even worse. And you have the International Energy Agency, which is the world's foremost authority, when it comes to energy issues. That says the first thing that the world needs to do if we want to maintain a chance to limit warming to 1.5 degrees C is to stop, immediately, opening new oil and gas projects around the world. Everywhere. There is no atmospheric space for new oil and gas. That's the reality. That's the scientific consensus on oil and gas in terms of change. So it's very clear that the world has not yet reckoned with the reality that the era of unchecked oil and gas exploration and production needs to come to an end very, very fast. To me as an activist and as someone who's generally worried about the climate crisis, it is striking to see this discrepancy, right, between the scientific consensus on the fact that we have way, way too much fossil fuels, and we plan to extract way, way too much of it. And the political response, which has been basically non existent. But looking at the production is not enough, right? Because what needs to happen is reducing production and consumption. And if you look at consumption as well, the governments are not doing what they need to be doing. Just one fact that I find very striking

on that: 8:40

45% of global car sales are SUVs. 45% of global car sales are SUVs. If you look at just that, that is the one figure that people need to remember when we as activists say that governments are not serious about exiting fossil fuels.

Alasdair: 8:59

That's interesting, if quite depressing, in a sense. What do you see as the possible levers for change? And what would be the next steps for you that we need to take?

Romain: 9:10

The reality is that we're in a weird transition period where all I just described is true. And at the same time, we know that the writing is on the wall for the oil and gas industry, we know that their growth prospects are basically disappearing. And they know that too. They know that the uptake of renewable energy, the uptake of electric vehicles is going to impact the growth, the consumption growth, and we're really, really close to being at the historical peak of fossil fuel consumption, which means that the only way for the industry is down from onwards. Because in 10 years, no one will be buying new, you know, diesel cars or petrol cars around the world. And that's not just in Western Europe or North America that's going to be anywhere and so the industry knows, and the petrostates know that oil is going to go down. Coal is already on the way down. In the Global North coal is basically being phased out already. And countries like China and India, which are the main consumers of coal for electricity are already, you know, taking steps, and have already signaled that the future is not there, because renewable energy makes so much sense now, from an economic and environmental stance. Things are changing. And we're starting to see the realisation in political circles, that the transition away from fossil fuels is going to happen and needs to be managed. And so that's where I think COP26 was pretty significant, because it was the first time that we started actually having this conversation in a COP around phasing down fossil fuels.

Alasdair: 10:47

Can you say a little bit more about what happened at COP26? And why it's so important? I'd just like to get some more detail on that if possible.

Romain: 10:54

No, absolutely. COP26 was very interesting. Traditionally, because of the way the UN Climate Negotiations are built, it's been impossible to bring up the notion of fossil fuels within the negotiations. And that's because the decisions need to be unanimous. And all countries need to agree on the final text from the current negotiations, which gives veto power to, you know, petrostates or countries that are heavily reliant on fossil fuels. That's why as I said, the Paris agreement doesn't mention fossil fuels. And that's why it's been incredibly difficult to mention the root cause of the climate crisis within the climate negotiations. Feels like you're in a madhouse sometimes, because talking about everything but the main problem in these spaces, however, in Glasgow at COP26, there was sort of a concerted effort to include some language recognising that coal in particular needs to be urgently phased out because the consensus there is very clear. The UK Presidency of COP26 made it a priority to have that language in the text. And it was interesting to see the political or diplomatic process that works trying to water down the ambition around that. Initially, the text was around phasing out coal, then it became phasing out unabated coal, which means coal without CCS, and then it became phasing down, instead of phasing out, coal because some countries didn't want to go too fast.

Alasdair: 12:21

Sorry, just to interrupt - CCS is carbon capture and storage.

Romain: 12:24

That is right. But in the end, we still had a mention of the need for countries to phase down coal powered electricity, which was a first, and so it was significant politically, but it's also when you look at it, it's also ridiculous, right? Because it is so far behind what the science says is necessary. This is something that there was a consensus on 15 years ago, you know, 15 years ago, we already knew that coal needed to be phased down. When the Kyoto Protocol was signed, we already knew that coal needed to be phased out in 1997. So you know, it's significant, but at the same time, it's also, you know, sort of depressing. But what's interesting, and what was really interesting, from my point of view in Glasgow, is that you had initiatives on the margins of the negotiations that actually put that question on the table. So you had two initiatives in particular, that were quite powerful and quite ambitious, that were launched at COP26. The first one, you had 35 countries, committing to end international public finance for fossil fuel projects, basically saying, we will stop subsidising fossil fuel extraction and infrastructure projects abroad with public money. So that can be through public development banks, that can be through export credit agencies, and so you had a trickle down of countries, at COP26 announcing that they were joining that, and so clearly saying, there is no justification for a country these days, or at least for countries that want to be ambitious leaders in the climate space, to continue funding fossil fuel projects abroad. This is a waste of public money, and this is not aligned with our domestic plans for decarbonisation. The second initiative that I personally worked on a lot, so I was really excited about it, it's called the Beyond Oil and Gas Alliance, or BOGA. And it was launched by the governments of Denmark and Costa Rica. And it's basically an alliance of 10 countries and several provinces or regions, saying, we will put an end to oil and gas exploration, and we will phase out our existing production of oil and gas, and so really recognising that the continued expansion of oil and gas production is incompatible with the commitments that these countries have taken into the Paris agreement. And so it was a big win because it was the first time in the history of climate, the climate conversation, that you have a diplomatic initiative that focuses on the production side of the equation, and that was unheard of. It's not the first time you have fossil fuel focused initiatives. But it's the first time you have something that really looks at the production or the supply. For the first time in Glasgow, despite the power of the incumbents, the constant greenwashing from the industry, the net zero pledges, all of the smoke and mirrors that happened in this process, we were able to get some recognition that there needs to be a global conversation on phasing out fossil fuels and starting with production. Another sign of that, and I'll stop there is there is an initiative called the Fossil Fuel Non Proliferation Treaty that is trying to create that conversation, that's really trying to mobilise civil society and governments around the world to say, we need a global conversation on how we're going to manage this transition away from fossil fuel production. How we're going to have a just transition that supports workers and communities and impacted communities when we phase out fossil fuel production, and we need the main producing countries to be around the table and to agree on a timeline to phase out production that is compatible with the Paris agreement. And so this is an initiative that that is getting a lot of momentum right now. And so we're hoping to see it grow. And so things are moving and Glasgow was clearly a sign of that.

Alasdair: 16:16

Do you think that we've reached a kind of tipping point yet with this?

Romain: 16:20

I think we're reaching a stage where we can start having this conversation. And it's politically feasible to have that conversation now on the global stage. That wasn't the case up until now and so I think we're seeing the Overton Window sort of shift towards allowing us to have this conversation. I think the real tipping point that's happening is the fact that there is a clear recognition now that continued expansion of fossil fuel production is not compatible with climate targets, and governments and the oil and gas industry has no choice but to position themselves vis vis that question, right? It's a question they could ignore in the past, they could just say, oh but we need oil and gas, we need to continue producing oil and gas. But now they have to answer increasingly hard questions around the future of their production and the future of their business models. So I think that's where the tipping point is another tipping point that we're almost there, depending on the analysts, you know, some things that were there some things that were not there is what I said earlier about the peak in global fossil fuel consumption, right? As soon as the consumption of fossil fuels starts declining, the trend will be irreversible. We're never going back to fossil fuels. And so they know that and so they're trying to justify continuing to invest in fossil fuels three different ways. But they know that time's up for them.

Alasdair: 17:44

Can you say something about the ways that you mention? I mean, I know earlier you talked about the kind of smoke and mirrors and obviously there are some quite major fossil fuel companies that have embraced net zero, at least the net zero language. Can you say something about that?

Romain: 17:59

Over the past, I would say year and a half, two years, I would say every major oil and gas company has come up with a net zero plan. They want to be seen as actors in this energy transition, they want to be seen as leading in it. And they've been deploying immense communications and PR resources to convince the public that they're actually serious about decarbonising. That would be great if it were true. The problem is it's not. It really isn't. And it's demonstrably not. If an oil and gas company, a major, wants to be a credible actor in the transition, and really have an impact in terms of emissions of CO2, right? What do they need to do according to the science? They need to stop exploring for new oil and gas. They need to stop approving new extraction projects. They need to have an immediate trajectory to decline their production of oil and gas. They need to have targets, you know, climate targets that include what we call the scope three, which is basically the emissions [that] are associated with burning the products that they sell. They need to be good political actors. That means ending the lobbying, you know, no longer lobbying against the transition. And they need to stop the sort of magical thinking that is basically, we can continue to extract a lot of oil and gas for the next 25 years, because our emissions are going to be compensated by planting forests the size of India or two times the size of India, or capturing CO2 in the ground, which is just unrealistic, and is never going to happen. And so there's a lot of these things that need to happen. And what we're seeing when we analysed at OCI, the plans of the oil and gas majors that you'd be hard pressed to find any oil and gas companies that does any of these things. They may they may do one item on this list, but I'm pretty sure you would find zero of them that does even half of the items on this list. So what they will say is that they're going for net zero because they will, you know, offset their emissions, because they will invest in CCS. So carbon capture and storage where you put basically you take the emissions and you put in the ground. Because they're investing in renewable energy massively. So they think that's compensating for the CO2 emissions from their own guess. And that's basically like saying, I'm on a diet, I'm going to add lettuce to my burger, and[the] average calorie intake of my food is going to go down so that I'm going to get slimmer. That's not how it works, because the the actual amount of calories that you're eating is still the same. So you know, it's great, it can be seen as a good thing that oil and gas companies are investing in renewable energy. But as long as they don't stop the bad stuff, as long as they don't, you know, phase out the production of fossil fuels, they're not going to be credible actors in this space. And the oil and gas companies will always say, but we're just meeting demand, right? Our job is not to manufacture demand, we're meeting it. But that's not true, because they manufacture demand all the time. They manufacture demand by slowing the transition through political processes. By lobbying against, you know, ambitious climate policy, and the death of the Build Back Better legislation in the US at the hand of the oil and gas industry is very clearly that. There are manufacturing demands by creating new products or new needs. Hydrogen, the notion of hydrogen as the next fuel that will help us in this transition is, in particular, what we call blue hydrogen that's produced with natural gas, which is a fossil fuel is clearly, you know, an attempt by the oil and gas industry to create more demand. And so there's a lot of hypocrisy and cynicism in there, from these companies whose billions and billions of dollars in profits are tied to fossil fuel incomes, and want to pretend that they're actually transitioning when in fact, what they're trying to do is prolong their social licence to operate, and make sure that we remain hooked on fossil fuels for as long as possible.

Alasdair: 22:04

From an investor perspective, do you think there are still incentives for you know, say, average investors to be investing in fossil fuels in the short term?

Romain: 22:13

So to be honest, I'm not a investment expert. But what I'm seeing is that over the past years, the market value of the big oil and gas companies has collapsed, because no one thinks that these companies have a future. And no one thinks that they're going to be able to continue making as much money as they've been making in the future, because the market for fossil fuels is going to shrink, inevitably, whether under increased, you know, climate policy around the world, or just because the market fundamentals are really not favourable to fossil fuels anymore. And it's only going to get worse as electric vehicles get cheaper, as renewable energy gets cheaper, and as you know, as governments are under increased pressure to just decarbonise their economy, because climate change is becoming an increasingly important topic for public opinion. I think what I've seen is that the market cap for ExxonMobil, for instance, has decreased tremendously. They're not the only fossil fuel company that's in this situation. In the short term, they're still making a lot of money and a lot of returns. But we we know that these companies are not going to continue doing that. Right now they're enoying a massive boom because of the post-COVID recovery, because of government's failure to use the COVID crisis to invest in fossil free infrastructure or fossil fuel recovery. So right now, they're making a lot of money. By the way, they're making a lot of money at the expense of the average consumer, who's suffering right now, because of energy prices in the UK, in France and elsewhere, but that's not gonna last, and the writing is definitely on the wall for these guys.

Alasdair: 23:41

And what do you think we should be looking out for then, in the next year or so in terms of possible political changes that may be significant?

Romain: 23:51

There's a lot of conversations happening in particular in some of the producing countries in the Global North, about how we're going to tackle the oil and gas industry. A couple of examples. I don't know if it's going to materialise in the next year, but these are clear signs that things are changing. Canada, which is sort of under the radar, right, no one really talks about Canada. But Canada is a massive producer of oil and gas, and a massive funder of oil and gas projects around the world. Canada is now debating basically an emissions cap for its oil and gas industry that's basically going to lead to its industry shrinking inevitably because the cap is going to go down over time. And so they're going to have to manage a just transition away from oil and gas extraction in Canada. That's unheard of in that country. And you know, it still sees itself as sort of a petrostate and so for that political window to have opened in a country like Canada is very significant. The UK is a second example of that. The UK has been under increasing pressure, in particular as COP26 president, you know, to be coherent, right? You know, how can you be seen as a climate leader, if you're continuing to issue oil and gas exploration licenses in the North Sea and elsewhere. What is the coherence of your national net zero target if you have no plan to phase out oil and gas extraction in the North Sea in a way that's compatible with what science says needs to happen? And so there's been a lot of campaigns happening in the UK and the government, the Conservative government in the UK, has been forced to announce that they will implement what they call climate compatibility checkpoints for oil and gas production in the UK, meaning therefore, each new project in the North Sea, they will have to demonstrate that this is compatible with the UK's commitment on climate change. There's going to be a lot of back and forth and a big battle around that, because the oil and gas industry in the UK has a definition of what that means, and the civil society has another definition of what that means. And so it's going to be fraught for sure. But this is something that up until five years ago was unthinkable in the UK. There was no real debate about how we're going to phase out oil and gas production there. And now it's more like at what pace are we going to phase out oil and gas production rather than if we're going to do that. And finally, another example. It's not there yet, but in Norway, which is also a very significant producers of oil and gas, the government is still very much in favour of that. But they're increasingly under pressure to defend the policy to continue exploring in the Arctic, to continue issuing new licenses. And so what we're seeing is that, in a lot of these historical producing countries, their social licence to produce fossil fuels is really slowly disappearing. Not fast enough, but that's massive progress compared to where we were only a few years ago.

Alasdair: 26:40

Is it fair to say that you're optimistic about achieving these goals around ridding ourselves of fossil fuel?

Romain: 26:47

I'm optimistic on the fact that the transition is happening, and is going to happen, and we are in the early stages of the transition. I have no doubt in my mind that in 20 years, 25 years, fossil fuels will have a much, much smaller place in our in our daily lives and our economy and our society. That for me is inevitable. It's the direction of history, basically, and there is no stopping that. What I'm not optimistic about and what you know, keeps me up at night is at what pace we're going to do this transition. And you know, whether we're going to manage to do it fast enough to maintain a chance to limit warming to 1.5C, and whether also, we're going to do it in a just and equitable way. The just transition dimension of this is incredibly important. You know, fossil fuels still provide incomes and livelihoods for thousands and thousands of families around the world, right? Millions of families in some places. That doesn't change the fact that that industry needs to die, and it needs to die quickly if we want to retain the chance of a livable climate in the future. But the oil and gas workers or the coal miners are not to blame for that, and so they need to be taken care of. And they need to be supported by their governments to transition away from these jobs. There was a survey in Scotland recently of oil and gas workers that shows that a lot of them would be keen actually to work in the renewable sector, because they also need meaning in their work, you know, they need to feel that they're on the right side of history, and not work for a dying industry. And so that's the responsibility of the governments to do that. The second dimension I think is going to be very fraught and very difficult is equity. The expansion of fossil fuel production has happened everywhere, it needs to happen everywhere. There's no space for new projects anywhere. But that doesn't mean that countries should phase out production at the same pace. Right? You can't expect Nigeria or Angola to phase out their oil and gas production at the same pace as Norway or Canada or the US. Right? There needs to be a notion of climate justice in there. Whatever is left in terms of the carbon budget should be given to these countries because that's not a an oil and gas budget. That's a development budget for these countries. And a country like Norway, which is essentially the richest country on Earth, like the best managed, you know, country on Earth and is just a paradise, has no ground saying that they can't manage a transition away from oil and gas production, when in fact, you know, they need to and they need to support that transition in other countries.

Alasdair: 29:22

My thanks to Romain Loualalen for his time. If you'd like to know more about this subject, we'll be publishing a reading list on our podcast episode page. Also, do check out our ELCI website for more in depth articles on issues like these. Thanks for listening!