‘An equitable redistribution of unburnable carbon’ – new paper

The paper explores the implications of a more equitable distribution of fossil fuel production under long-term climate goals. ‘Equitable’ in this context means shifting the remaining production of fossil fuels towards producing countries who have lower levels of development, or lower levels of historical benefit from fossil fuel production.

The authors from EI were Principal Research Associate Dr Steve Pye and Senior Research Associate Dr James Price. Alongside ISR colleagues Senior Research Fellow Dr Nick Hughes, PhD student Mr Daniel Welsby and Professor of Resources and Environment Policy Professor Paul Ekins, as well as Siân Bradley from Chatham House.

Context

The research was carried out because there is a growing body of literature that discusses the implications of fossil fuel phase out for equity.  Globally, we need to reduce fossil fuel production significantly. There is an argument that developed countries should phase out their production more rapidly, allowing developing countries to continue their fossil fuel production for longer. However, limited quantitative analysis has been undertaken to date to inform this discussion.

The researchers explored this issue using a global energy systems model to understand the implications of fossil production redistribution based on different equity criteria. Redistribution was implemented through higher economic disincentives (carbon tax) on producers in more developed regions.

Findings

The paper shows that a redistribution towards developing country producers is challenging for several reasons:

• the high level of economic disincentives required
• the limited near-to-medium term benefits in a shrinking market
• the increased costs for import dependent countries

In regard to disincentives: large production taxes must be applied to see shifts away from large producing regions, due to the low costs of production. However, the research found when the shifts do occur, they tend to be in 15-20 years’ time, and in a rapidly declining market. Finally, while there may be some benefits for developing country producers, the higher costs of these resources means higher prices for import dependent countries. This leaves an important question concerning equity for whom?

Despite these findings, the paper highlights the importance of equity principles in guiding the development of supply side policy and in development assistance, and to ensure that developing country perspectives are properly understood and recognised.

Further information

• Read the paper ‘An equitable redistribution of unburnable carbon’.
• The original idea for this paper emerged from a Chatham House report that considered the carbon risk and resilience for emerging oil and gas producing countries. Read the report on the Chatham House website.

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