The Production Gap 2020

• 09 Dec 2020

On 2^nd December, 2020, the United Nations Environment Programme (UNEP)released the Production Gap Report, 2020.

About the Report

• The first Production Gap Report was launched in November 2019.
• Modelled after UNEP’s Emissions Gap Report series and conceived as a complementary analysis, the Production Gap Report revealed that while the pandemic and resulting lockdowns led to “short-term drops” in coal, oil and gas production, pre-COVID plans and post-COVID stimulus measures point to a continuation of increasing fossil fuel production.

Key Findings

• The report highlights the discrepancy between countries’ planned fossil fuel production levels and the global levels necessary to limit warming to 1.5°C or 2°C. This gap is large, with countries aiming to produce 120% more fossil fuels by 2030 than would be consistent with limiting global warming to 1.5°C.
• The COVID-19 pandemic and associated response measures have introduced new uncertainties to the production gap (the difference between national production plans and low-carbon (1.5°C and 2°C) pathways, as expressed in fossil fuel carbon dioxide (CO2) emissions).
• The fossil fuel production gap will continue to widen if countries return to their pre-COVID plans and projections for expanded fossil fuel production.
• To follow a 1.5°C-consistent pathway, the world will need to decrease fossil fuel production by roughly 6% per year between 2020 and 2030.
• Countries are instead planning and projecting an average annual increase of 2%, which by 2030 would result in more than double the production consistent with the 1.5°C limit.
• Between 2020 and 2030, global coal, oil, and gas production would have to decline annually by 11%, 4%, and 3%, respectively, to be consistent with a 1.5°C pathway.
• This translates to a production gap similar to 2019, with countries aiming to produce 120% and 50% more fossil fuels by 2030 than would be consistent with limiting global warming to 1.5°C or 2°C, respectively.
• To date, governments have committed far more COVID-19 funds to fossil fuels than to clean energy. Policymakers must reverse this trend to meet climate goals.
• The COVID-19 pandemic has provided a reminder of the importance of ensuring that a transition away from fossil fuels is just and equitable.
• Countries that are less dependent on fossil fuel production and have higher financial and institutional capacity can transition most rapidly, while those with higher dependence and lower capacity will require greater international support.

Key Recommendations

Six main areas of action for governments could help ensure a managed, just, and equitable transition away from fossil fuels that “builds back better” from the COVID-19 pandemic:

Ensure COVID-19 recovery packages and economic stimulus funds support a sustainable recovery and avoid further carbon lock-in

• Many countries have begun to make investments in areas such as renewable energy, energy efficiency, green hydrogen, and improved pedestrian infrastructure.
• But if this is accompanied by significant support for high-carbon industries, COVID-19 recovery measures still risk locking in high-carbon energy systems and development pathways for decades into the future.
• Governments that choose to invest in high-carbon industries to boost economies and safeguard livelihoods in the short term — perhaps because they see few near-term alternatives — can nonetheless introduce conditions to that investment to promote long-term alignment with climate goals.

Provide local and international support to fossil-fuel dependent communities

• Each country and region faces unique challenges in a transition away from fossil fuels, depending on their dependence on production and their capacity to transition.
• Inclusive planning is essential, as is financial, technical, and capacity-building support for communities with limited financial and institutional capacity.

Reduce Existing Government Support for Fossil Fuels

• Many long-standing forms of government support to fossil fuels — including consumer subsidies, producer subsidies, and public finance investment — stand in the way of a sustainable recovery to COVID-19 and need to be ended.

Introduce Restrictions on Fossil Fuel Production Activities and Infrastructure

• Restricting new fossil fuel production activities and infrastructure can avoid locking in levels of fossil fuel production higher than those consistent with climate goals. It can also reduce the risk of stranded assets and communities.

Enhance Transparency of Current and Future Fossil Fuel Production Levels

• A key barrier to aligning energy and climate plans is the lack of clarity on levels of fossil fuel production and planned or expected growth. To improve transparency, countries could ensure that relevant production data are more readily and publicly accessible.
• They can also provide information on how their fossil fuel production plans align with climate goals, and on their support to the production of fossil fuels.
• Governments can also take steps to disclose their level of exposure to fossil fuel asset stranding and associated systemic risk, and to require companies within their jurisdiction to do so.

Mobilize and Support a Coordinated Global Response

• Policies to transition away from fossil fuels will be most effective if supported by countries collectively, as this will send consistent, directional signals to energy producers, consumers, and investors.
• International cooperation, both through established channels and in new forums, can support a just and equitable wind down of fossil fuels.
• The Paris Agreement’s global stocktake, nationally determined contributions (NDCs), and long-term low greenhouse gas emission development strategies (LEDS) offer opportunities to facilitate a transition away from fossil fuel production through the UN climate change process.
• International financial institutions can help shift financial support away from fossil fuel production while scaling up support for low-carbon energy.