2. What is supply-side climate policy?

Fossil fuels account for more than three-quarters of the anthropogenic GHG emissions driving climate change (IEA, 2019), and thus have been a key focus for climate policymakers. Overwhelmingly, mitigation policy has tended to emphasize reducing demand for fossil fuels, through measures such as carbon pricing, or supporting the development of alternative energy sources to displace fossil fuels. More recently, however, a new suite of policies has emerged that focuses attention upstream, on fossil fuel supply (Erickson et al., 2018). This so-called ‘supply-side’ policy emphasizes limiting the exploration, extraction and transport of coal, oil and gas in the name of combatting climate change (Green & Denniss, 2018; Lazarus & van Asselt, 2018).

Proponents of a supply-side approach emphasize its value as a complement to existing policies aimed at reducing fossil fuel demand. Clearer signals on the future of fossil fuel production can help prevent the construction of new infrastructure that locks in future emissions growth (Erickson et al., 2015). This, in turn, reduces risks of asset stranding if climate or financial imperatives force the early retirement of fossil fuel assets. The combination of supply and demand side measures can help reduce the overall cost of achieving emission reduction goals, and provide an insurance policy if any individual policy measure fails (Asheim et al., 2019; Green & Denniss, 2018). Moreover, constraining supply brings a range of additional sustainability benefits, such as reducing biodiversity loss, and localized pollution and health impacts associated with fossil fuel production (Epstein, 2017; Harfoot et al., 2018; Tudela, 2020).

Governments are beginning to recognize the additional value of limiting fossil fuel supply, in addition to reducing demand. In this issue, Tudela (2020) charts some of the pioneering attempts to constrain fossil fuel production with explicit environmental rationales and offers early examples from Latin America. He highlights the case of Costa Rica, for instance, which has had a ban on oil extraction in place since 2002. While this ban was initially enacted for reasons of biodiversity conservation, rather than climate change, it now forms a pillar of the country’s climate strategy, alongside its carbon neutral goals.

To examine the prevalence of these types of policy innovations more broadly, Gaulin and Le Billon (2020) have compiled a new ‘Fossil Fuel Cuts Database’ to collect examples of supply-side policies worldwide. They identify more than 1300 supply-side initiatives implemented between 1988 and 2017 by governments, civil society and financial funds worldwide. This growth in new policies suggests that ‘supply-side’ policy is moving closer to the mainstream of climate change policymaking.

3. Barriers to enacting supply-side policy

While the work of Gaulin and Le Billon (2020) and Tudela (2020) highlights a growing momentum, policies to limit fossil fuel supply are still the exception rather than the norm, particularly in countries that are major fossil fuel producers. Several contributions to this special issue highlight the challenges to enacting supply-side policies faced by governments.

Most major fossil fuel producing nations suffer from the problem of ‘carbon entanglement’, where dependence on fossil fuels generates a vested interest in bringing fossil fuels to market, making it both politically and economically challenging to step away from production (Gurría, 2013). This is evident in the Norwegian case, highlighted by Bang and Lahn (2020), where oil and gas has provided a major source of welfare funding for the state. Through prudent management of oil and gas revenues, Norwegian oil wealth has translated into prosperity and long-term security for its citizens. At the same time, it has created a deep dependence on these revenues, which has made it difficult for the government to reconcile oil production with its climate leadership ambitions.

As a consequence of this ‘carbon entanglement’, many governments have created institutional and financial support systems for the fossil fuel industry, which enable continued production. Gençsü et al. (2020) draw attention to the issue of fossil fuel production subsidies in the European Union, showing how governments continue to make climate goals harder to reach by providing €21 billion per year of support for oil, gas and coal production (with €2.6 billion of this amount allocated to the transition away from coal). Indeed, this subsidization continues despite international agreement to ‘mak[e] finance flows consistent’ with the Paris goals of decarbonization (UNFCCC, 2015; Article 2.1), aided by a lack of transparency around fossil fuel financing.

Government support for industry expansion continues, in part, because of the political power of the incumbent fossil fuel industry in many jurisdictions. Curran (2020) provides a powerful description of how this operates in Australia, where the coal industry holds sway over aspects of decision making in both the financial sector and the political system. As Curran highlights – and as reflected in several papers in this issue and beyond (see for example: Bang & Lahn, 2020; Graham et al., 2019; Stokes, 2020; Strambo & González Espinosa, 2020) – close networks between fossil fuel industry actors, financiers, and political elites have helped the industry perpetuate fossil fuel dependence, hindering the clean energy transition. Reducing the influence of these vested interests on climate policy remains a significant task.

Finally, several contributions to this issue highlight that a key barrier to supply side policy includes our cultural discourses around the role of fossil fuels in society. In Colombia, for instance, Strambo and González Espinosa (2020) illustrate that the government itself often perpetuates the idea that fossil fuelled development is both inevitable and necessary for economic growth. This is echoed in the Norwegian case, where the industry has successfully propagated the idea that oil is an indispensable source of welfare for the country (Bang & Lahn, 2020). This narrative about the importance of fossil fuel production for economic growth is rarely challenged; its dominance helps explain why many countries continue to subsidize and support the industry past the point where it clearly makes more economic sense to look to alternative sources of energy.

4. Moving forward: domestic opportunities to manage supply

Despite these barriers, some countries have taken steps to wind down their fossil fuel production. From developing nations, such as Belize and Costa Rica, to industrialized countries such as Denmark, France, New Zealand and Spain, supply-side approaches are increasingly being adopted in the real world (Gaulin & Le Billon, 2020; SEI et al., 2019; Tudela, 2020). These ‘first movers’ in the area of supply-side action are critical for their demonstration effect, which suggests that such approaches can form a practically and politically feasible component of the climate policy toolkit. Studying these experiences also provides important lessons to inform future action.

One clear message that cuts across several contributions is the importance of transition planning and assistance to ensure a low-carbon transition that is just, equitable and smooth. Such efforts are necessary to minimize the potential disruptions and losses faced by consumers, workers, communities, and others heavily dependent on fossil fuel assets, and help build support for climate action.

From a literature review of past and current transitions in the energy sector and beyond, Green and Gambhir (2020) identify the key agents and groups that may be adversely affected by structural change associated with decarbonization and thus warrant particular consideration in any transition planning. The authors emphasize the importance of going beyond addressing only the potential financial losses associated with transitions, and looking to a larger set of possible transitional assistance policies, including support for worker re-training, community development, and other ‘forward looking’ approaches to help push new models of post-fossil fuel development. Distilling ‘best practice’ lessons for transition planning in the short, medium, and longer term, they note that comprehensive and adaptive support strategies have the greatest potential for ensuring successful transitions – but that such strategies are costlier and more complex to implement.

Offering lessons from the hard coal mining phase-out in Germany's two largest hard coal mining areas, the Ruhr area and Saarland, over the 1950–2018 period, Oei et al. (2020) reflect that, in both cases, protection of the industry through subsidies led to a lengthier and more costly transition. Among policy recommendations for successful transition planning, the authors emphasize the need for decision makers to take into account long-term effects and impacts beyond local communities; the value of economic diversification; and the importance of listening both to external, independent experts, and of involving local stakeholders for locally-adapted solutions and higher acceptance.

In addition to careful government planning and support, civil society can play an important role in steering a transition away from fossil fuels. For instance, Tudela (2020, p. 927) credits civil society mobilization with being ‘the crucial driver’ of moratoria on oil exploration adopted in both Belize and Costa Rica. Curran’s (2020) contribution similarly describes how the divestment movement played a critical role in reducing the scope and scale of the proposed Adani Carmichael coal mine through sustained pressure on national and international financiers. Rafaty et al. (2020), in turn, highlight a key role for litigation, often championed by civil society, in challenging coal mining permits across the world. They argue, for instance, that a strong legal case can be made for the revocation of permits for Europe’s largest opencast lignite mine situated at Germany’s biodiverse and historically significant Hambach Forest.

At the same time, powerful incumbent forces can pose a significant challenge to civil society’s ability to effect change. In the case of Australia’s Carmichael mine, Curran (2020) demonstrates how the resilience of the current energy status quo has seen the substantial mining project be approved with significant support from the Australian federal and Queensland governments in the form of tax exemptions, deferrals and capital subsidies, despite civil society opposition. Popular efforts can also pull in the opposite direction. In Costa Rica, a citizen group recently initiated a referendum initiative, which, if successful, would see the country’s 18-year-old moratorium on petroleum exploration overturned (Tudela, 2020).

In this contested space marked by competing interests and narratives, one important avenue for supporting action to limit or curtail fossil fuel production may lie in cultivating a stronger appreciation of its broader economic and sustainable development benefits. Indeed, as Tudela (2020) shows, rather than being linked to climate change concerns, the overriding considerations for the adoption of oil moratoria in Belize, Costa Rica, and parts of Mexico were protection of the local environment and biodiversity, and relatedly, safeguarding of critical economic sectors such as (eco)tourism and fisheries.

Rafaty et al.’s (2020) natural capital accounting approach demonstrates how significant the economic benefits of supply-side action can be. When accounting for the environmental, societal, and health costs of Germany’s Hambach lignite mine, they estimate that the province of North Rhine-Westphalia could save in the region of €100–200 billion over the next three decades by ceasing mining operations immediately. In light of these findings, the authors make a persuasive case for the modification of legal criteria for coal mining permits to reflect considerations such as climate change, local ecology and human health; and for making natural capital assessments part of the standard protocol in the consideration of fossil fuel exploitation permits.

5. Scaling up: opportunities for international cooperation

International cooperation can strengthen the effectiveness of supply-side approaches to limit fossil fuel production (SEI et al., 2019). Collective action not only increases the scale of action, but also can give countries the confidence and trust that others are taking reciprocal action. Moreover, cooperation can reduce the risk of carbon leakage through the international fossil fuel market (Asheim et al., 2019). International cooperation on supply-side climate policy can further send an important signal to policymakers, investors, companies, consumers and civil society, that the world is moving beyond a fossil fuel economy. Crucially, as Muttitt and Kartha (2020) and Newell and Simms (2020) emphasize in their contributions to this issue, international cooperation is also needed to ensure that such a transition takes place in an equitable way.

One way to elevate actions to curtail fossil fuel production internationally that has recently gained increased attention is to incorporate supply-side action into the existing UN climate process (Piggot et al., 2018; SEI et al., 2019). Despite the UN climate regime’s historical focus on demand-side action – the Paris Agreement makes no direct mention of fossil fuels – actions to limit fossil fuel supply can support achievement of the treaty’s long-term goals of limiting the global average temperature to well below 2°C above pre-industrial levels, and pursuing efforts to stay below 1.5°C, as well as making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. Various opportunities exist to integrate supply-side elements into the Paris Agreement’s architecture, including through the Agreement’s transparency framework, commitment setting, financial support and capacity building, the global stocktake, and sharing of experiences and lessons learned (Piggot et al., 2018). Many of these approaches could initially be pursued by one country or a small group of countries, thus side-stepping the need for buy-in from all major fossil-fuel-producing and exporting nations, many of whom have traditionally been reluctant to embrace ambitious climate action (Depledge, 2008).

But despite existing possibilities to integrate supply-side action into the UN climate regime, this approach has gained little traction to date. For instance, a 2019 assessment of 53 fossil fuel producing nations’ nationally determined contributions (NDCs) found that only two countries had included any supply-side measures in their climate pledges (Verkuijl et al., 2019). It remains to be seen whether countries’ second round of NDCs, as well as long-term low-emission development strategies – both due for submission in 2020 – will pay more attention to this crucial dimension of climate action.

It is against this backdrop that calls have recently emerged for international cooperation to achieve the imperative of leaving most fossil fuels in the ground. Indeed, supply side policies can complement existing approaches, acting as a form of ‘insurance’ against the possibility of the global community’s failure to meet the Paris Agreement’s goals (Asheim et al., 2019). Reflecting the role of coal as the most carbon-intensive fossil fuel, and its relatively easy substitution in many cases with alternative sources of energy, several of these calls have focused on the curtailing or elimination of coal production as a starting point (Burke & Fishel, 2020; Christoff & Eckersley, 2013; PIDF, 2015).

Yet as Newell and Simms (2020) note in their contribution, the majority of proven oil and gas reserves must also be left unburned to stay below the Paris Agreement’s temperature limits, and it is questionable whether this will be achieved through existing forms of cooperation. The authors thus argue that the time is ripe for an international ‘fossil fuel non-proliferation treaty’ to manage a global winddown of coal, oil, and gas extraction. Drawing parallels with the 1968 Treaty on the Non-Proliferation of Nuclear Weapons (NPT), they argue that both the speed at which NPT was concluded and the treaty’s three-pillar structure offer an instructive precedent to ensure a fossil fuel phase-down that is in line with science, and takes into account the development needs of the world’s poor.

Indeed, any international effort to stem the supply of fossil fuels will need to grapple seriously with questions of equity and fairness. While such issues have long been debated in the context of greenhouse gas emissions reductions, the conversation is more incipient on the supply-side, yet no less compelling. As Muttitt and Kartha’s (2020) contribution demonstrates, the picture is far from straightforward. The authors cast light on the complex and variable impacts that both fossil fuel extraction, and a transition away from fossil fuels, can have on core national policy concerns, such as energy provision, national and local economies, employment, and public revenue, as well as local environmental and human rights impacts. They make tangible the varied circumstances facing different fossil fuel producing countries and regions in terms of fossil fuel dependence and capacity to transition. Combining approaches to equity, the authors offer five principles as a starting point for equitably curbing fossil fuel extraction within climate limits: (1) phasing down global extraction at a pace consistent with limiting warming to 1.5°C; (2) enabling a just transition for workers and communities; (3) curbing extraction consistent with environmental justice; (4) reducing extraction fastest where doing so will have the least social costs; and (5) sharing transition costs fairly, according to ability to bear those costs. Taking steps to operationalize these principles, they argue, is not only a moral, but also a political imperative, as it will raise the chance of success for global cooperation to prevent extreme climate disruption.

6. Conclusion

At the time of writing this editorial, the COVID-19 pandemic is still wreaking havoc across the world. The economic consequences in many countries are predicted to be dire: in an effort to mitigate the worst effects of the global economic recession, governments are injecting trillions of dollars equivalent into their economies. From a climate perspective, governments find themselves at a crossroads: will their decisions pave the way to a green recovery, or further lock in their dependence on fossil fuelled development pathways?

Worryingly, initial analyses of stimulus and recovery packages suggest that public resources are predominantly being committed to high-carbon sectors (Harvey, 2020). Yet some governments are also recognizing that recovery presents a unique opportunity to overcome carbon entanglement. For instance, in the midst of the pandemic, Spain – one of the hardest-hit countries – released its proposal for a new climate law, with a stated intention to ban all new fossil fuel projects and to develop a just transition strategy (MITECO, 2020). Similarly, the new Irish coalition government has also pledged to introduce a Climate Action Bill that includes an end to new oil and gas exploration and extraction licenses (Bray, 2020). The road to recovery may thus offer fertile ground for supply-side climate action, speeding up the phase-out of fossil fuel production while meeting climate goals.

The papers in this special issue confirm that a new anti-fossil fuel norm is taking hold in climate policymaking (Green, 2018). A growing number of countries are adopting supply-side policies, and in countries lacking such policies, new debates are arising about the need to reconcile energy and climate policy. This, in turn, has spawned new ideas around governing the transition away from fossil fuels – from innovative approaches to transition planning at the local level, to new ideas for governing the transition at the global level, such as a fossil fuel non-proliferation treaty. From a research perspective, the topic raises many important new avenues of interrogation, suggesting that it may merit similar attention and dedicated research tools and methods as enjoyed by other strands of climate policy, such as carbon pricing or renewable energy.

Achieving the ambitious goals of the Paris Agreement requires consideration of a fuller suite of policy levers for reaching net zero emissions. As this special issue shows, supply-side climate policy should be part of this portfolio. It is growing in importance not just as a rich vein for both intellectual inquiry but for practical and effective climate action. We hope that the contributions in this issue inspire other researchers and policymakers to continue this momentum.