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Regional Distribution of Production

Given that fossil fuel production needs to decline in all normative pathways for achieving the Paris Agreement’s climate mitigation goals, an important question is which countries should be phasing out production more rapidly. This is, ultimately, a normative question. Researchers have explored this question using a variety of methods and normative principles as the basis for allocating remaining production, including cost-effectiveness (or economic efficiency), minimising local social and environmental impacts, and various principles of equity, justice or fairness. 

Kartha et al (2018) recognise the importance of equity in considering how supply-side production cuts distributed, based on the principle of common but differentiated responsibilities and respective capabilities. They suggest that high-income countries that have benefited from extraction should take the lead and bear greater responsibilities for implementing policies to reduce extraction. CSO’s Equity Review (2021) further suggests that wealthy countries must act earlier and provide support for poorer countries. It notes that poorer, more fossil-fuel dependent countries face greater risk of economic and social disruption, so they should be supported and be granted longer phase out periods. The Review also recommends phasing out projects first and fastest where they are most harmful to communities, to address human rights concerns. Muttitt and Kartha (2020) also suggest prioritising mitigation efforts in communities that suffer harm from extraction activities. See also our category page on Equity Considerations in Fossil Fuel Phase Out

When equity is considered in addition to where it is cost-effective to produce, Pye et al (2020) highlight some important trade-offs that question the benefits of production-redistribution to low- and middle-income countries on an equity basis. These include lock-in to a sector that will shrink, and in which it will be difficult to compete against large incumbents, and much higher production costs (compared with the cost-effective distribution) with equity implications for consumers. Lenferna (2018) suggests that the two objectives might converge where there are inefficient reserves in high-income countries (e.g., Canadian oil sands), providing a strong basis to keep those reserves underground. 

More generally, McGlade and Ekins (2015) suggest that under a normative scenario to keep temperatures below 2°C warming (at a 60% probability), a large share of gas, oil and coal reserves around the world should remain unused. Based on an objective of cost-effectiveness, they model the regional distribution of reserves that need to remain unused and left in the ground, showing wide regional differences (e.g., the US and Former Soviet Union need to leave over 90% of their coal reserves unextracted, while China and India would need to leave 66% of reserves). Welsby et al (2021) use the same model but this time assume a 1.5°C goal (50% probability), and similarly highlight regional differences concerning who can extract. Similar to McGlade and Ekins, they highlight reserves that are high-cost and high-carbon, and which should therefore remain unextracted, including 99% of unconventional oils, such as tar sands, and 86% of unconventional gas. Arctic oil and fossil methane gas resources, across all regions where these are located, also remain undeveloped. 

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