Navigating Energy Transitions: Mapping the road to 1.5°C

This report from the International Institute for Sustainable Development assesses modelled pathways for limiting warming to 1.5°C and provides recommendations on the measures required to achieve the limit. The report focuses on oil and gas but does not address coal. It takes the median of 26 scenario pathways from the IPCC’s Sixth Assessment Report and the International Energy Agency’s 2021 Net Zero by 2050 scenario. This scenario selection is based on specific, precautionary assumptions in relation to carbon dioxide removal and carbon capture and storage (‘CCS’) technology because of the uncertainties around deployment of these technologies. The selected scenarios with less reliance on such technologies require a “significantly faster” decline in oil and gas production. 

The report finds that multiple scenarios indicate the need for a rapid decline in global oil and gas production to reach net-zero in line with 1.5°C. It suggests that fields in operation and those under development would generate more emissions than is permitted under the 1.5°C pathways, meaning that new oil and gas fields are not needed, and if developed would generate stranded assets (as they would need to cease production soon after opening or existing fields would need to cease producing anticipated amounts), or push the world beyond 1.5°C based on their production. The report highlights that governments have currently granted licenses that far exceed what can be allowed to meet 1.5°C, suggesting that licensed reserves beyond those already in production or under development should remain unextracted. A key recommendation is that governments need to end the licensing of new oil and gas fields. 

With respect to oil, production should decline by 15% by 2030 (i.e. average oil production decline of 2% for the rest of this decade), and by at least 65% by 2050 as compared to levels in 2020. With respect to gas, production should decline by 30% by 2030 (i.e. average annual gas production decline of 3% for the rest of this decade), 55% by 2035 and at least 65% by 2050, as compared to levels in 2020.  

The report also finds that gas power plant capacity in operation/construction/planned will result in more generation than consistent with a 1.5°C pathway, and that construction of new plants risks resulting in “a dangerously high number of stranded assets”. Electricity generation from unabated gas plants needs to reduce by “about 95%” by 2040 to meet 1.5°C. Unless gas power plants in operation lower operation capacity, new gas power plants beyond those in operation/construction would need to be decommissioned before their economic lifetime or retrofitted for CCS (although retrofitting is significantly more costly than including sequestration technology in infrastructure from the start of the infrastructure’s lifetime). The report therefore finds meeting 1.5°C means no new gas power generation capacity.  

With respect to Europe, the report suggests that the region’s gas demand in the medium and longer term can be met by existing import capacity, leaving no room for new fossil infrastructure in a 1.5°C scenario. The report also recognises the energy pressures Russia’s invasion of Ukraine has placed on the global and European energy market. However, it suggests that Europe should not increase its reliance on gas but rather meet its demand by accelerating renewable energy and using existing import capacity. It suggests new gas infrastructure such as “LNG terminals and pipelines” can adversely affect meeting climate targets. 

Finance flows from oil and gas fields should be redirected towards renewable energy such as investment for solar and wind. The report recommends that developing countries “leapfrog” to 100% renewable energy to avoid lock in of carbon-intensive pathways. It also offers ways to address the issue of investment treaties e.g. reform or repeal. The report also touches on measures to bolster commitments to net zero made by the corporate sector. 

The report reinforces the idea that the carbon budget associated with a 1.5°C temperature target provides a useful basis to assess compatible levels of existing and future oil extraction, gas extraction and gas power generation. It provides a strong, evidence based, mandate to reject new investments into fossil fuel extraction and infrastructure, and to move towards phase out of fossil fuels.