The Production Gap Report 2021

The Production Gap Report tracks the gap between governments’ planned fossil fuel production and global production levels consistent with limiting warming to the temperature targets under the Paris Agreement (1.5°C and 2°C).  

The Report features 15 country profiles of major fossil fuel-producing countries (Australia, Brazil, Canada, China, Germany, India, Indonesia, Mexico, Norway, Russia, Saudi Arabia, South Africa, the United Arab Emirates, the United Kingdom, and the United States), summarising their national plans for future extraction. 

The Report importantly finds that governments plan to produce over double the amount of fossil fuels in 2030 (in CO₂ terms) than would be consistent with a 1.5°C pathway, and 45% more than what would be consistent with a 2°C pathway. Countries have not explicitly recognised or planned for the rapid reduction of fossil fuels that global and domestic targets require. In fact, governments are collectively projecting an increase in global oil and gas and only a modest decrease in coal over the next two decades, leading to future fossil fuel production far beyond the limits implied by 1.5°C and 2°C carbon budgets, respectively. Governments' production plans would lead to around 240% more coal, 57% more oil, and 71% more gas than allowed under a 1.5°C scenario in 2030 whilst under a 2°C pathway, the figures are 120% more coal, 14% more oil, and 15% more gas in 2030. 

Importantly, the Report recognises the role of supply-side policies in closing the production gap, noting also that governments have substantial control over fossil fuel supply (supply-side policies are those that limit or discourage extraction, as opposed to demand-side policies that aim to limit or discourage consumption). It also recognises the benefits to using supply-side policies where fossil fuel prices become so low that they would otherwise trigger further production in the absence of limits to supply. Specifically, governments should: acknowledge the need to wind down fossil fuel production, implement strategies to decrease fossil fuel production, restrict fossil fuel exploration and extraction; and phase out government support for fossil fuel production.  

Recognising the importance of just transition, the Report notes that countries with higher financial and institutional capacity should lead the way with restrictions on fossil fuel exploration and extraction. It also considers the role of carbon dioxide removal (CDR) technologies, noting that much more reductions are needed if such technologies fail to develop at a large scale. 

The paper provides a strong technical basis to support the argument that no new fossil fuel exploration and extraction projects should be permitted to meet global Paris Agreement targets. It also highlights the global nature of the challenge, and that countries cannot consider their own production in isolation. It supports supply-side policies as a way to achieve those emissions reductions. The conclusion that current plans are inadequate for Paris-aligned policy ambition highlights the need for considering phase out of fossil fuel production and limiting investment into new projects and associated infrastructure.