On Monday, a panel of the world's top climate scientists released a grave warning: Current policies are not enough to stave off the most devastating consequences of climate change. According to the Intergovernmental Panel on Climate Change, or IPCC, climate pollution from the world's existing coal, oil, and gas projects is already enough to launch the planet past 1.5 degrees Celsius (2.7 degrees Fahrenheit) of warming, and world leaders must abandon up to $4 trillion in fossil fuels and related infrastructure by midcentury if they want to keep within safe temperature limits.
Instead, rich countries like the United States are going in the opposite direction. Just last week, President Joe Biden approved ConocoPhillips' Willow Project, a so-called "carbon bomb" that could add some 239 million metric tons of carbon emissions to the atmosphere, about as much as the annual emissions from 64 coal-fired power plants.
A new report released this week, "An Economist's Case for Restrictive Supply-Side Policies," argues that bans, moratoria, and similar measures are sorely needed to keep the United States from extracting more fossil fuels. It highlights 10 policies that can complement clean energy investments to help the country achieve the goals of the IPCC while also prioritizing the health and economic security of America's most vulnerable communities.
"The IPCC shows that restrictive supply-side measures have to be part of the policy mix," said Mark Paul, a Rutgers University professor and a coauthor of the report. "We actually need to stop extracting and burning fossil fuels, there's just no way around it."
Until quite recently, most American economists and policymakers have focused on demand-side solutions to climate change — primarily a carbon price that would leave curbing greenhouse gas emissions up to market forces. Supply-side policies, on the other hand, are concerned with suppressing the amount of fossil fuels available for purchase. They come in two flavors: supportive and restrictive. Supportive supply-side policies include some of the tax credits and subsidies in the Inflation Reduction Act, the climate spending law that Biden signed last year, which support renewable energy to displace fossil fuels. Restrictive policies more actively seek to constrain fossil fuel development.
Some of the most aggressive policies recommended in the new report would use congressional authority to stop new fossil fuel projects, whether by banning new leases for extraction on federal lands and in federal waters or by outlawing all new pipelines, export terminals, gas stations, and other infrastructure nationwide. Other measures would use economic levers to restrict fossil fuel development. For example, taxing the fossil fuel industry's windfall profits could curtail supply by making oil and gas production less profitable. Requiring publicly traded companies to disclose their climate-related financial risks could also accelerate decarbonization by making polluters without credible transition plans unattractive to investors.
The benefit of these policies, Paul said, is that they can directly constrain carbon-intensive activities and therefore more certainly guarantee a reduction in climate pollution. That's not the case with demand-side policies, where lawmakers have to hope that consumers' behavior will lead to less fossil fuel being produced and burned. (The Inflation Reduction Act included some of these policies, like consumer subsidies for electric vehicles and other low-emissions technologies.)
Restrictive supply-side policies in the U.S. can also support international decarbonization. If the U.S. were to only reduce domestic demand for fossil fuels while keeping supply high, it could reduce the price of oil, gas, and coal abroad — incentivizing other countries to use more of those fuels.
That said, not all restrictive supply-side policies are an easy sell. Some, like nationalizing the fossil fuel industry — which would effectively neutralize the sector's outsize political influence and allow it to be dismantled in an orderly fashion — have not yet entered the political mainstream. Others, however, are closer to reality, and five have previously been introduced in congressional bills. The Keep It in the Ground Act, for example, introduced in 2021 by Democratic Senator Jeff Merkley, from Oregon, sought to prevent public lands and waters from being leased for fossil fuel extraction. The 2021 Block All New Oil Exports Act, sponsored by Democratic Senator Ed Markey, from Massachusetts, proposed reinstating a ban on exporting U.S. crude oil and natural gas, which was in place for 40 years before Congress lifted it in 2015.
Philipe Le Billon, a geography professor at the University of British Columbia who runs a database on restrictive supply-side policies to curtail fossil fuels around the world, said ending federal subsidies to the fossil fuel industry is the policy most likely to garner bipartisan political support. "It would be so easy to say, 'Come on, you made $200 billion last year, so no more subsidies,'" he told Grist. The End Polluter Welfare Act, introduced in 2021 by Democratic Senator Bernie Sanders, from Vermont, and Democratic Representative Ilhan Omar, from Minnesota, sought to do just that, in addition to stopping public funds from being used for fossil fuel research and development.
The fossil fuel industry gets somewhere between $10 and $50 billion in U.S. subsidies every year.
Paul said it's hard to imagine any of the policies being enacted while the House of Representatives is under Republican leadership, but he highlighted the climate-related financial risk disclosure policy as a candidate for bipartisan support, since it seeks to inform action from investors. "Even the staunchest capitalist should be on board with this," he said. Outside of Congress, the Securities and Exchange Commission, an independent federal agency that protects investors from financial fraud and manipulation, has proposed such a policy.
Subnational "fossil-free zones" — areas that are off-limits to some or all types of fossil fuel development, like oil and gas drilling, gas stations, or export terminals — could be promising too; they've already been declared in many communities, and they demonstrate how combined demand- and supply-side interventions could play a role in a more comprehensive fossil fuel phaseout.
To gain momentum for restrictive supply-side policies, Paul said it's crucial to educate policymakers about "the actual math" behind U.S. and international climate goals. Investments in clean energy are a good start, Paul said, but they're just "the first bite out of the apple. We need many more bites to limit emissions and preserve some semblance of a habitable planet."
This article originally appeared in Grist at https://grist.org/economics/the-ipcc-says-we-need-to-phase-down-fossil-fuels-fast-heres-how-the-us-could-do-it/.
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