‘Inverse Opec’: Kamala Harris plan to wind down oil production awaits its moment

The proposal to negotiate a managed decline of fossil fuels is politically and diplomatically sensitive but finds support among a handful of climate leaders

Kamala Harris (Photo: Gage Skidmore /Flickr)

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The prospect of an “inverse Opec” to tackle climate change came a step closer when Kamala Harris was appointed running mate to US Democratic presidential candidate Joe Biden.

In her climate platform while contending for the top job herself, Harris proposed a meeting of major emitters in early 2021. This was to kick off “the first-ever global negotiation of the cooperative managed decline of fossil fuel production”.

Under Biden, the climate summit is set to go ahead with the less confrontational goal of persuading others to make “more ambitious national pledges”.

While Biden plans to constrain oil drilling on public lands and in the Arctic, his stance on fossil fuels has been tempered by political sensitivities around energy jobs. In August, he assured voters in the swing state of Pennsylvania, which has a significant shale gas industry: “I am not banning fracking. Let me say that again. I am not banning fracking. No matter how many times Donald Trump lies about me.”

But the idea could have traction with the handful of international leaders that have decided to leave coal, oil and gas in the ground for the sake of the climate.

Comment: Kamala Harris is right to propose a managed decline of fossil fuel production

While described in Harris’s platform as a “global negotiation”, the idea as laid out in a blog post by Aimee Barnes, who contributed to the development of this policy, is not to replicate the mammoth diplomatic mission of the Paris Agreement. Rather, it would start with a “minilateral” of leading countries – the “inverse Opec” – and build out.

New Zealand, France and Costa Rica were identified as “natural partners” in such an initiative, in light of their domestic curbs on oil and gas production.

“We’d certainly welcome the United States taking a leadership role in managing the decline of fossil fuel production around the world and would be pleased to help,” James Shaw, climate minister of New Zealand, told Climate Home News in an emailed statement.

As well as banning new offshore oil and gas exploration, New Zealand is pushing for fossil fuel subsidy reform in international forums, said Shaw. “The meeting Ms Harris is proposing could build on this work and take us a long way towards a global consensus on the urgent need to end the use of fossil fuels.”

Barnes also named Norway as a potential ally, a country that aspires to climate leadership yet exports oil with a carbon footprint ten times the size of its national emissions. In August, Oslo launched a new oil licensing round in the Arctic Barents Sea.

Here the response was less enthusiastic. Climate and environment minister Sveinung Rotevatn ducked the issue of whether Norway would shrink its oil sector, when asked for comment by Climate Home News.

“The industry will not be closed over night and will still be important for Norway for many years to come, but we do need to develop alternatives,” he said in a statement.

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The key argument is that governments are collectively planning to extract much more coal, oil and gas than can be burned within the global warming limits of the Paris Agreement.

Climate policy mainly focuses on cutting demand, by promoting clean energy. But if supply is not curtailed in lockstep, it leads to a glut of cheap dirty fuel, undermining the transition.

Ignoring this mismatch brings economic risks, researchers warned in a special issue of Climate Policy journal this month, as starkly illustrated by the oil market crash resulting from Covid-19. “Workers and communities in fossil fuel dependent regions can be left stranded when the industry contracts, and governments who rely heavily on fossil fuel revenue streams may find themselves facing a crisis as their budgets diminish.”

That is playing out in Canada, where tar sands heartlands have been hit hard by the pandemic downturn and the Trudeau administration is clinging to power by its fingernails.

“I don’t think we have ever been more exposed to the volatility of the global oil and gas markets, and the kind of vulnerability that has created, than we have been in the last few months,” said Catherine Abreu, director of Climate Action Network Canada.

The conversation about winding down oil production “still has a long way to go” in the US and Canada, said Abreu. She welcomed the Harris proposal as a way to normalise the concept and plan how to diversify oil-dependent economies. “If we were able to think through the longer term transition for workers and communities in the oil sector in Canada, it would really help us to implement some of those supply side policies we need.”

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Precedents for this approach include the Powering Past Coal Alliance, a club led by Canada and the UK that added new members on Thursday, all committed to ending coal burning for electricity.

The other model, with entirely different motives to these low carbon clubs but some overlapping interests, is Opec. The group of oil-exporting nations periodically coordinates cuts in oil production to shore up prices – most recently in April.

In theory, big producers would benefit from a managed decline, with higher and more stable prices generating revenue to invest in alternative industries.

However the prevailing dynamic of the oil market is intense competition, with Saudi Arabia and Russia selling as much as possible while they still can. On Thursday, the Saudi energy minister rebuked other Opec members for exceeding their agreed production quotas.

Michael Lazarus, co-leader of the Stockholm Environment Institute’s research on supply-side climate policy, said there was a need to bring major oil producers on board with climate action.

“The Paris Agreement has not got all-in participation from Russia or Saudi,” he said. “Some countries are highly dependent on fossil fuels and if we don’t address the needs of those countries to diversify, we are going to fail.”

It is in the interests of those countries to be more proactive on climate, Lazarus argued. “Being a bystander means you are going to be exposed to asset stranding, decline of communities and livelihoods.”

Policy options like a wellhead carbon tax, with the revenues used to diversify oil-dependent economies, would give producers more incentive to be part of the solution. “There are measures that would bring producers along for the ride,” said Lazarus.

This article was amended on 22 September 2020 to clarify Aimee Barnes’ role.

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