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Trajectories for a Just Transition of the Fossil Fuel Industry

  • Sven TeskeEmail author
Open Access
Chapter

Abstract

This section provides historical production data for coal, oil and gas between 1980 and 2015. The 2.0 °C and 1.5 °C scenario lead to specific phase-out pathways for each of the fossil fuel types. Current regional production volumes are compared with future demands. The results provide the input for the employment analysis in the following chapter for the fossil fuel sector. This section discusses the need to shift the current political debate about coal, oil and gas which is focused on security of supply and price security towards an open debate about an orderly withdrawal from coal, oil and gas extraction industries.

The implementation of the 2.0 °C and 1.5 °C climate mitigation pathways presented here will have a significant impact on the global fossil fuel industry. Although this may appear to be stating the obvious, current climate debates have not yet involved open discussion of the orderly withdrawal from the coal, oil, and gas extraction industries. Instead, the political debate about coal, oil, and gas has focused on the security of supply and price security. However, mitigating climate change is only possible when fossil fuels are phased-out. This section provides an overview of the time-frame of this phase-out under the 2.0 °C and 1.5 °C Scenarios compared with the 5.0 °C pathway.

9.1 Fossil Energy Resources—The Sky Is the Limit

An unrelenting increase in fossil fuel extraction conflicts with the finite nature of these resources. At the same time, the global distribution of oil and gas resources does not match the distribution of demand. Therefore, some countries currently rely almost entirely on imported fossil fuels. Therefore, is the relative scarcity of fossil fuels an additional reason an energy transition? The Global Energy Assessment (GEA 2012), an integrated assessment of the global energy system, has published a comprehensive overview of estimated available fossil fuel reserves and resources. Table 9.1 shows the estimates for conventional and unconventional coal, oil, and gas reserves and resources. The distinction between reserves and resources is based on the current technology (exploration and production) and market conditions. The resource data are not cumulative and do not include reserves (GEA 2012).
Table 9.1

Fossil reserves, resources, and additional occurrences

Energy carrier

Reserves

[EJ/year]

Resources

[EJ/year]

Demand in 2015

[EJ/year]

Conventional oil

4900–7610

4170–6150

41.9

Unconventional oil

3750–5600

11,280–14,800

Conventional gas

5000–7100

7200–8900

33.8

Unconventional gas

20,100–67,100

40,200–121,900

Coal

17,300–21,000

291,000–435,000

16.5

The assessment shows that there is no shortage of fossil fuels. There might be a shortage of conventional oil and gas, but unconventional resources are still significantly larger than our climate can cope with. Reducing global fossil fuel consumption for reasons of resource scarcity alone is not essential, even though there may be substantial price fluctuations and regional or structural shortages, as we have seen in the past (Teske and Pregger 2015).

9.2 Coal—Past Production and Future Trajectories Under Three Scenarios

Global coal production is dominated by China, which in 2017, produced over 3.5 billion tonnes of coal, 45% of the world volume, followed by India with 716 million tonnes, the USA with 702 million tons, and Australia with 481 million tons. The top 10 producers, in order of annual production, are China, India, USA, Australia, Indonesia, the Russian Federation, South Africa, Germany (mainly lignite), Poland, and Kazakhstan. These countries account for 90% of the global coal production.

Figure 9.1 shows the historical time series for global coal production. The data are based on the BP Statistical Review 2018 (BP 2018), as are the following overviews of oil and gas. Production volumes have declined in recent years, mainly due to changes in demand in China, but they rose again in 2017.
Fig. 9.1

Global coal production in 1981–2017 (BP 2018—Statistical Review)

Under the 5.0 °C scenario, the required production of thermal coal (excluding coal for non-energy uses, such as steel production) will remain at the 2015 level, with an annual increase of around 1% per year until 2050. As shown in Fig. 9.2, under the 2.0 °C Scenario, coal production will decline sharply between 2020 and 2030 at a rate of around 6% per year. By 2030, the global coal production will be equal to China’s annual production in 2017, at 3.7 billion tons, whereas that volume will be reached in 2025 under the 1.5 °C Scenario.
Fig. 9.2

Global coal production until 2050 under the three scenarios

9.3 Oil—Past Production and Future Trajectories Under the Three Scenarios

Oil production almost doubled between 1965 and 1975. After the early 1990s, it grew almost constantly and by 2017, the production volume was about three times higher than in 1965 and twice as high as in 1985 (Fig. 9.3). Unlike coal, there is no sign of a decline in oil production in response to reduced demand. Oil production is more widely distributed than coal production. Three countries, the USA, Russia, and Saudi Arabia, have global market shares of around 12–14% each, whereas four countries, Canada, Iran, Iraq, and China, produce around 5% each. The other oil-producing countries have significantly lower market shares.
Fig. 9.3

Global oil production in 1965–2017 (BP 2018—Statistical Review)

Figure 9.4 shows the global oil production levels required by the three calculated scenarios. Oil for non-energy uses, such as the petrochemical industry, is not included in this graph. Again, oil production in the 5.0 °C Scenario will grow steadily by 1% until the end of the modelling period in 2050. Under the 2.0 °C Scenario, oil production will decline by 5% per year until 2030 and by 3% annually until 2025. After 2030, production will decline by around 7% per year, on average, until oil production for energy is phased-out entirely. The oil production capacity of the USA, Saudi Arabia, and Russia in 2017 would be sufficient to supply the global demand calculated for the 2.0 °C Scenario in 2035. The 1.5 °C Scenario will cut the required production volumes in half by 2030, reducing them further to the equivalent of the production volume of just one of the three largest oil producers (the USA, Saudi Arabia, or Russia) by 2040.
Fig. 9.4

Global oil production until 2050 under the three scenarios

9.4 Gas—Past Production and Future Trajectories Under the Three Scenarios

Gas production has grown steadily over the past four decades, leading to an overall production of 3500 billion cubic meters—3.5 times higher than in 1970. The production of natural gas is even more widely distributed than oil production. According to 2017 figures, by far the largest producers are the USA, with 20% of the global volume, and Russia with 17%. Four countries have market share of around 5% each: Canada (4.8%), Iran (6.1%), Qatar (4.8%), and China (4.1%). The remaining 43% of global gas production is distributed over 42 countries (Fig. 9.5).
Fig. 9.5

Global gas production in 1970–2017 (BP 2018—Statistical Review)

In the 5.0 °C Scenario, gas production will increase steadily by 2% a year for the next two decades, leading to an overall production increase of about 50% by 2050. Compared with coal and oil, the gas phase-out will be significantly slower in the 2.0 °C and 1.5 °C Scenarios. Furthermore, these scenarios assume that infrastructure, such as gas pipelines and power plants, will be used after this phase-out for hydrogen and/or renewable methane produced with electricity from renewable sources (see Chap.  5, Sect  5.2). Under the 2.0 °C Scenario, gas production will only decrease by 0.2% per year until 2025, then by 1% until 2030, and on average by 4% annually until 2040. This represents a rather slow phase-out and will allow the gas industry to gradually transfer to hydrogen. The phase-out under the 1.5 °C Scenario will be equally slow, and a 4%/year reduction will occur after 2025 (Fig. 9.6).
Fig. 9.6

Global gas production until 2050 under the three scenarios

9.5 Overview: Required Fossil Fuel Resources Under the 5.0 °C, 2.0 °C, and 1.5 °C Trajectories

In summary, the global fossil fuel extraction industry must reduce production at a rate of 2% per annum under the 2.0 °C Scenario and 3% per annum under the 1.5 °C Scenario. A constant reduction in production seems unlikely if no international measures are taken to organize the economic and social transitions in the producing countries, and for the communities and workers involved. The idea of a ‘just transition’ is well documented in the international literature. According to the International Labour Organization (ILO 2015), the concept was first mentioned in the 1990s, when North American unions began developing the concept of just transition.

Initially, trade unionists understood ‘just transition’ to be a program of support for workers who lost their jobs due to environmental protection policies. Since then, several UNFCCC Climate Conferences have referred to the ‘just transition’ concept. The Paris Climate Agreement 2015, during the 21st session of the Conference of the Parties (COP 21) “decided to continue and improve the forum on the impact of the implementation of response measures (hereinafter referred to as the improved forum), and adopted the work programme, comprising two areas: (1) economic diversification and transformation; and (2) just transition of the workforce, and the creation of decent work and quality jobs” (UNFCCC-JT 2016).

Table 9.2 provides possible trajectories for global coal, oil, and gas production, consistent with the Paris Agreement targets. These trajectories are the results of the 2.0 °C and 1.5 °C Scenarios, documented in detail over the previous six chapters of this book. Chapter  10 uses these trajectories to calculate possible employment effects, both in terms of job losses in the fossil fuel industry, job gains in the renewable energy industry, and options for transitioning the gas industry towards a renewably produced hydrogen industry.
Table 9.2

Summary—coal, oil, and gas trajectories for a just transition under the 5.0 °C, 2.0 °C, and 1.5 °C Scenarios

 

2015

2020

2025

2030

2035

2040

2045

2050

5.0 °C: Primary energy [PJ/a]

Coal

140,895

147,324

153,529

167,795

179,666

191,078

196,692

200,680

Lignite

19,835

18,836

18,550

18,573

18,597

19,028

19,546

19,562

Natural gas

123,673

133,732

145,075

162,132

178,213

194,467

207,273

214,702

Crude oil

166,465

173,082

181,520

190,294

197,300

204,563

208,561

210,970

5.0 °C production units

Coal [million tons per year]

5871

6138

6397

6991

7486

7962

8196

8362

Lignite [million tons per year]

2088

1983

1953

1955

1958

2003

2058

2059

Natural gas [billion cubic meters]

3171

3429

3720

4157

4570

4986

5315

5505

Oil [thousand barrels per day]

94,836

98,606

103,414

108,412

112,403

116,541

118,819

120,191

2.0 °C—primary energy [PJ/a]

Coal

140,624

136,111

114,647

77,766

45,445

25,594

12,480

7568

Lignite

19,835

16,779

8333

3203

1630

912

288

0

Natural gas

123,770

132,209

130,797

126,054

105,321

78,390

42,535

9949

Crude oil

166,472

164,438

141,523

109,213

71,812

45,013

26,649

15,461

2.0 °C—production units

Coal [million tons per year]

5859

5671

4777

3240

1894

1066

520

315

Lignite [million tons per year]

2088

1766

877

337

172

96

30

0

Natural gas [billion cubic meters]

3174

3390

3354

3232

2701

2010

1091

255

Oil [thousand barrels per day]

94,840

93,682

80,627

62,219

40,912

25,644

15,182

8808

1.5 °C— primary energy [PJ/a]

Coal

141,275

125,431

84,267

41,360

14,243

9134

9363

9759

Lignite

19,835

16,956

5006

2056

777

0

0

0

Natural gas

123,426

132,241

125,494

104,349

80,940

50,883

23,202

7315

Crude oil

166,472

163,957

114,986

68,449

36,541

22,923

16,772

14,794

1.5 °C production units

Coal [million tons per year]

5886

5226

3511

1723

593

381

390

407

Lignite [million tons per year]

2088

1785

527

216

82

0

0

0

Natural gas [billion cubic meters]

3165

3391

3218

2676

2075

1305

595

188

Oil [thousand barrels per day]

94,840

93,408

65,509

38,996

20,818

13,059

9555

8428

References

  1. BP (2018), British Petrol, Statistical review, website with statistical data for download, downloaded in September 2018, https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/downloads.html
  2. GEA (2012): Global Energy Assessment - Toward a Sustainable Future, Cambridge University Press, Cambridge, UK and New York, NY, USA and the International Institute for Applied Systems Analysis, Laxenburg, Austria; www.globalenergyassessment.org
  3. ILO (2015), International Labour Organization, Just Transition – A report for the OECD, May 2017, Just Transition Centre, www.ituc-csi.org/just-transition-centre
  4. Teske, Pregger (2015), Teske, S, Pregger, T., Naegler, T., Simon, S., Energy [R]evolution - A sustainable World Energy Outlook 2015, Greenpeace International with the German Aerospace Centre (DLR), Institute of Engineering Thermodynamics, System Analysis and Technology Assessment, Stuttgart, Germany https://www.scribd.com/document/333565532/Energy-Revolution-2015-Full
  5. UNFCCC-JT (2016) Just Transition of the Workforce, and the Creation of Decent Work and Quality Jobs – Technical paper, United Nations – Framework Convention on Climate Change (UNFCCC) 20 https://unfccc.int/sites/default/files/resource/Just%20transition.pdf

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Authors and Affiliations

  1. 1.Institute for Sustainable FuturesUniversity of Technology SydneySydneyAustralia

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