The assessment for Australia highlighted that Ministers had rejected calls to ban new fossil fuel projects, that some 69 coal projects and 49 new oil and gas projects are in the pipeline which represent nearly 5 GtCO2eq of potential emissions. Fossil fuel production is a major source of Australia’s domestic emissions, accounting for 19% of the total in 2021.
The Federal Labor Government has approved 10 new or extended coal or gas projects since coming to power in May 2022.
At the launch UN Secretary General Antonio Guterres called it "a startling indictment of runaway climate carelessness."
"It reveals that governments are on track to produce more than twice the amount of fossil fuels in 2030 than would be needed to limit the global temperature rise to 1.5 degrees Celsius." said UN Secretary General Antonio Guterres.
"In other words, governments are literally doubling down on fossil fuel production; that spells double trouble for people and planet.
"We cannot address climate catastrophe without tackling its root cause: fossil fuel dependence. Fossil fuel emissions are already causing climate chaos which is devastating lives and livelihoods, and we’re on course for far worse.
"Leaders must act now to save humanity from the worst impacts of climate chaos, and profit from the extraordinary benefits of renewable energy. That means ending our fossil fuel addiction by shrinking supply, driving down demand, and accelerating the renewables revolution, as part of a just transition.
"Countries must phase out coal – by 2030 in OECD countries and 2040 elsewhere. And the G20 must take the lead in ending licensing and funding for new oil and gas.
"COP28 must send a clear signal that the fossil fuel age is out of gas – that its end is inevitable. We need credible commitments to ramp up renewables, phase out fossil fuels, and boost energy efficiency, while ensuring a just, equitable transition.
"Fossil fuels are sending essential climate goals up in smoke. It’s time for change."
Key findings of the report:
- Governments, in aggregate, still plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting warming to 1.5°C. The persistence of the global production gap puts a well-managed and equitable energy transition at risk.
- Taken together, government plans and projections would lead to an increase in global coal production until 2030, and in global oil and gas production until at least 2050. This conflicts with government commitments under the Paris Agreement, and clashes with expectations that global demand for coal, oil, and gas will peak within this decade even without new policies.
- Major producer countries have pledged to achieve net-zero emissions and launched initiatives to reduce emissions from fossil fuel production, but none have committed to reduce coal, oil, and gas production in line with limiting warming to 1.5°C.
- Governments should be more transparent in their plans, projections, and support for fossil fuel production and how they align with national and international climate goals.
- There is a strong need for governments to adopt near and long-term reduction targets in fossil fuel production and use to complement other climate mitigation targets and to reduce the risks of stranded assets.
- Given risks and uncertainties of carbon capture and storage and carbon dioxide removal, countries should aim for a near total phase-out of coal production and use by 2040 and a combined reduction in oil and gas production and use by three-quarters by 2050 from 2020 levels, at a minimum. The potential failure of these measures to develop at scale calls for an even more rapid global phase-out of all fossil fuels.
- An equitable transition away from fossil fuel production must recognize countries’ differentiated responsibilities and capabilities.
- Governments with greater transition capacity should aim for more ambitious reductions and help finance the transition processes in countries with limited capacities.
It highlighted that there is also a "need for governments to adopt both near and long-term reduction targets for fossil fuel production and use to complement other climate mitigation benchmarks and reduce the risks of stranded assets. Countries with greater transition capacity should aim for faster reductions than the global average."
“Governments’ plans to expand fossil fuel production are undermining the energy transition needed to achieve net-zero emissions, throwing humanity’s future into question,” said Inger Andersen, Executive Director of UNEP. “Powering economies with clean and efficient energy is the only way to end energy poverty and bring down emissions at the same time."
“Starting at COP28, nations must unite behind a managed and equitable phase-out of coal, oil and gas — to ease the turbulence ahead and benefit every person on this planet,” she added.
The 2023 Production Gap Report provides newly expanded country profiles for 20 major fossil-fuel-producing countries: Australia, Brazil, Canada, China, Colombia, Germany, India, Indonesia, Kazakhstan, Kuwait, Mexico, Nigeria, Norway, Qatar, the Russian Federation, Saudi Arabia, South Africa, the United Arab Emirates, the United Kingdom of Great Britain and Northern Ireland, and the United States of America. These profiles show that most of these governments continue to provide significant policy and financial support for fossil fuel production.
While Australian Ministers line is soft on coal, they argue strongly that gas is an essential transition fuel to justify its expansion. Yet Australia is still increasing coal and gas production for the export market.
“We find that many governments are promoting fossil gas as an essential ‘transition’ fuel but with no apparent plans to transition away from it later,” says Ploy Achakulwisut, a lead author on the report and SEI scientist. “But science says we must start reducing global coal, oil, and gas production and use now — along with scaling up clean energy, reducing methane emissions from all sources, and other climate actions — to keep the 1.5°C goal alive.”
Carbon Capture and Storage
The report highlighted that given the risks and uncertainties with Carbon Capture and Storage (CCS) and Carbon Dioxide Removal (CDR), that countries should aim for "near total phase-out of coal production and use by 2040 and a combined reduction in oil and gas production and use by three-quarters by 2050 from 2020 levels, at a minimum."
"The potential failure of these measures to become sufficiently viable at scale, the non-climatic near-term harms of fossil fuels, and other lines of evidence, call for an even more rapid global phase-out of all fossil fuels." says the report.
Australia's Fossil Fuel Addiction
The report examines fossil fuel production, climate targets, plans for phase out for 20 countries, including Australia. Here is what it says on Australia in full:
Announced climate ambitions
In June 2022, Australia updated its NDC, raising its emission reduction target to 43% below 2005 levels by 2030, up from the prior target of 26–28%. New legislation codifies Australia’s emissions targets, including net-zero emissions by 2050, requires the government to account for progress, and mandates the independent Climate Change Authority to advise on strengthened targets for future NDC updates (Parliament of Australia, 2022).
Government views on domestic fossil fuel production
Australia is one of the world’s top two LNG and coal exporters, and its coal and gas industries have strong influence in political debate, diplomacy, economic strategy, and policy development, both nationally and in fossil-fuel-exporting states (Disavino, 2021; Hamilton et al., 2023; IEA, 2023a). In March 2023, the Minister for Resources noted to Parliament that “Australia’s coal and gas resources are essential for energy security, stability and reliability both domestically and across the Asia-Pacific and will be needed for decades” (King, 2023).
Ministers have rejected calls to ban new fossil fuel projects (Thompson, 2023).
A government list of “major projects” showed 69 coal projects and 49 new oil and gas projects in the pipeline (Department of Industry, Science and Resources, 2022a). These together represent nearly 5 GtCO2eq of potential emissions, though not all are expected to materialize, as some of the projects are at announcement or feasibility stage (Campbell et al., 2023).
A small number of projects have been cancelled by government decisions to rescind licenses or reject approvals, and through legal challenges under environmental laws. Some state governments have imposed regional bans on some forms of production. For example, the state of Victoria has banned hydraulic fracturing (Parliament of Victoria, 2022), though still allows conventional gas production.
Fossil fuel production is a major source of Australia’s domestic emissions, accounting for 19% of the total in 2021 (DCCEEW, 2023a), and half of the emissions covered by the Safeguard Mechanism, a baseline-and-credit scheme that covers large industrial facilities and ensures that absolute aggregate emissions covered by the scheme fall over time.
Covered facilities, including coal mines and gas projects, will need to reduce emissions or acquire and surrender offsets; new facilities, including gas projects, face more stringent emission constraints (DCCEEW, 2023b). The impact of these changes on fossil fuel production remains unclear, though reactions by Australia’s gas importers suggest an expectation of material effects on future gas production (Morton, 2023).
Plans and projections for domestic fossil fuel production
Recent energy trade projections by the government see coal production increasing slightly to 2025, then remaining constant to 2028 (Figure 3.6), with the overall increase shared between metallurgical and thermal coal. Production of gas is projected to slightly decline to 2025, then remain constant to 2028, with the export share constant around 70% (Department of Industry, Science and Resources, 2023). The government’s emission projections to 2035 assume a modest decline in coal mining, due in part to reduced domestic consumption, and a small increase in LNG production and exports (DCCEEW, 2022, pp. 45, 47).
Government support for domestic fossil fuel production
- Fiscal support for fossil fuel production includes the Fuel Tax Credit Scheme, of which coal mining is among the largest beneficiaries (Australian Taxation Office, 2021); tax incentives under the Petroleum Resource Rent Tax (Treasury, 2023b); and direct capital expenditure for infrastructure (The Australia Institute, 2022).
- Australia’s fiscal regime for oil and gas production have allowed many operators of major projects to pay little or nothing in royalties or resource rent taxes (Bruce, 2019; Butler, 2021; Campbell, 2020). Despite being highly profitable, to date no LNG project has paid Petroleum Resource Rent Tax (Commonwealth of Australia, 2023).
- Changes to the Petroleum Resource Rent Tax announced in May 2023 will increase taxation of the gas industry somewhat, but fall short of earlier proposals for reform (Janda et al., 2023).
- The new government has removed some of its predecessor’s subsidies for gas exploration and infrastructure. The government is continuing with plans to provide AUD 1.5 billion (USD 1 billion) for a new port in Darwin Harbour that could support the development of shale gas fracking in the Beetaloo Basin (Gibson, 2022). Infrastructure Australia is currently considering proposals for the government to fund gas pipelines and supporting infrastructure in the Beetaloo Basin (Infrastructure Australia, 2022), and large gas extraction projects are planned there (Reuters, 2023d).
- Financing for coal and gas has been banned through some government vehicles, including through the Powering Our Regions Fund (Bowen, 2023) and the Industry Research and Development Act (House of Representatives, 2023). Coal and gas financing is still allowed through other agencies, including Export Finance Australia and the Northern Australia Infrastructure Fund.
- The government owns and expands the rail network that transports thermal coal to the world’s largest coal port at Newcastle (ARTC, 2022).
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Government support for international fossil fuel production
Export Finance Australia has funded fossil fuel projects overseas and exports from Australia with more than AUD 1.6 billion (USD 1.2 billion) between June 2009 and June 2020 (Rui & Strachan, 2021). As of August 2023, the government has not committed to end overseas government financing of fossil fuel projects.
Policies and discourses on a managed wind-down of fossil fuel production
There is no national policy framework aiming to restrict fossil fuel exploration, production, or infrastructure development.
The Treasurer has directed the Treasury to conduct analysis of climate and transition impacts on Australia’s national economy and budget (Wright & Foley, 2022). The Treasury is also exploring standardized requirements for financial disclosures of climate risks (Treasury, 2023a).
Independent Australian regulators have begun scrutinizing carbon risk management and greenwashing, including with regards to fossil fuel companies. Actions to date have focused on guidance statements and encouraging voluntary action (APRA, 2021; Hughes, 2023).
Policies and discourses supporting a just and equitable transition away from fossil fuel production
The government has made budget commitments that it frames as enabling regional economic transition, including a Powering the Regions Fund with AUD 1.9 billion (USD 1.3 billion) in grants, a National Reconstruction Fund with AUD 15 billion (USD 10 billion), and a Rewiring the Nation programme with funds of AUD 20 billion (14 USD billion) (Bowen & McAllister, 2022; Department of Industry, Science and Resources, 2022b).
A Net Zero Authority is to be established by legislation, building on an agency within the Department of the Prime Minister and Cabinet. The Authority is to support workers in coal-mining and emissions-intensive sectors, support regions and communities to take advantage of clean energy industries, and help mobilize private investment (Department of the Prime Minister and Cabinet, 2023).
References
SEI, Climate Analytics, E3G, IISD, and UNEP. (8 November 2023). The Production Gap: Phasing down or phasing up? Top fossil fuel producers plan even more extraction despite climate promises. Stockholm Environment Institute, Climate Analytics, E3G, International Institute for Sustainable Development and United Nations Environment Programme. https://doi.org/10.51414/sei2023.050
UNEP, 8 November 2023, Production Gap Report 2023, https://www.unep.org/resources/production-gap-report-2023
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