When you’re facing a crisis as big and daunting as climate change, where the stakes are as high as can be and every minute counts, you use every tool in the toolbox to find a solution.
That means reducing greenhouse gas emissions that come from fossil fuels by deploying energy efficiency and renewable energy, putting limits on carbon pollution, and simultaneously seizing on “supply-side” opportunities to limit the expansion of unnecessary and harmful fossil fuel production. It makes sense: reduce demand whenever and as fast as you can, ensure that supply is not unnecessarily increased, prevent new fossil fuel investments from being “locked in” for the longer term—and always, consistently pick the best strategic option for each situation or opportunity.
If you were starting a home repair project, you wouldn’t expect to get it all done with a hammer—at very least, you’d need a screwdriver, and you would probably bring along a few different types in case you needed them. If your faucet were leaking, you would begin by plugging the leak temporarily, but also track the problem to its source to prevent it from repeating.
For many years, groups like NRDC have been picking up tools to reduce emissions of greenhouse gases by addressing the demand or consumption side of fossil fuels, while simultaneously working to prevent harmful expansion of fossil fuels that take us further in the wrong direction. As a deepening climate crisis produces calls for faster action and more ambitious adoption of low-carbon strategies, and the risk of unwise long-term investments grows, the need to hold off new oil and gas production has garnered new attention.
The Paris Targets and the Urgent Need for Climate Action
The increased urgency to act sooner rather than later to slash our carbon emissions has driven more serious consideration of efforts to embrace supply-side tools as an important part of a broader strategy. A wide range of international institutions have acknowledged that the large majority of known fossil reserves must remain undeveloped to meet climate targets.
- In 2011, the Carbon Tracker Initiative released its first unburnable carbon report pointing to the concept of the carbon budget which outlined that 80 percent of reserves (public and private) would be unburnable to limit global warming under 2.0°C.
- The International Energy Agency acknowledged as far back as 2014 that global emissions were on track to exceed the remaining carbon budget for a below 2.0°C scenario by 2040.
- Just over a year later, Austria’s International Institute for Applied Systems Analysis calculated that the Paris Agreement had cut projected carbon emissions by half, though still not enough to stay within the carbon budget.
- In 2017, a joint report by Carbon Tracker and the UN Principles for Responsible Investment (PRI) initiative concluded that $2.3 trillion in new upstream oil and gas projects could become stranded assets by 2025 in a 2.0°C scenario.
- In 2017, a team of researchers publishing in the journal Nature Climate Change determined that the available carbon budget could be another 40% smaller than thought, based on a recalculation of when the “pre-industrial” period before significant greenhouse gas emissions ended.
Countries in the Paris Agreement will have considerable challenges to meet their commitments at the rate we are producing and using fossil fuels now. It will be even more difficult to achieve the more ambitious targets required to stay under the threshold of 2.0°C average global warming, much less 1.5°C. Comprehensive solutions such as carbon emission caps and carbon taxes are not widely adopted worldwide. Instead, there are troubling trends of industry and government pursuing a pro-fossil fuel expansion strategy that remains at odds with international climate agreements. That reality has produced greater calls for deeper investment in a more comprehensive mix of policy and strategy options, including measures to address fossil fuel exploration and production head-on.
The Full Toolbox
In a March 2018 article in the journal Climatic Change, part of a special issue on fossil fuel supply and climate policy, economists Fergus Green of the London School of Economics and Richard Denniss of the Australia Institute argue that restrictive supply-side (RSS) policies can succeed as part of a wider policy toolbox—just as they did with Australia’s widely-admired tobacco control program, and with limits on chlorofluorocarbons, asbestos, and leaded gasoline. Their list of RSS policies includes:
- Fossil fuel subsidy reductions;
- Fossil fuel supply taxes;
- Fossil fuel production quotas;
- Fossil fuel supply bans and moratoria.
“Given the widespread use of restrictive supply-side policies in other policy domains, their relative neglect in the climate policy domain seems anomalous,” they write, contending that restrictive supply-side climate policies “have distinctive economic and political benefits, in view of which this neglect is unwarranted.”
In a review of the Climatic Change paper, Vox.com climate columnist David Roberts cites four advantages of restrictive supply-side (RSS) policies: they’re relatively easy to administer, cover weaknesses in demand-side strategies, avoid locking in expensive, new fossil infrastructure with anticipated lifespans in the decades, and address the “green paradox” that suggests short-term fossil fuel production accelerating ahead of anticipated demand-side initiatives. To be clear, NRDC does not promote indiscriminate adoption of these supply-side policies. Just like any other tool to tackle climate change, they must be evaluated based on solid analysis of both emissions benefits as well as economic impacts to both communities and labor.
“No one is arguing that RSS policies are better than demand-side policies, or a substitute for them,” Roberts stresses. “But RSS policies are an excellent complement to demand-side policies, with economic and political strengths that help fill in the gaps. They are simple, transparent, easy for the public to grasp, and unmistakable signs of good faith in international climate negotiations.”
The next blog “The Growing Push Against Fossil Fuel Exploration and Production” will discuss trends in the adoption of supply-side policy world-wide and how NRDC has embraced this strategy as part of its work.