Time to Target Fossil Fuel Demand, Not Supply

LONDON, Sept 11 (Reuters Breakingviews) – Just stop oil production – and, for that matter, gas and coal supply. Then there will be hardly any greenhouse gas emissions. Mission accomplished.

It’s a seductive theory. With global emissions still rising and the northern hemisphere suffering the hottest summer on record, many climate change activists want companies to stop pumping crude. They also want investors to stop funding the fossil fuel industry – and to put an end to coal, gas and oil-fired power generation.

Campaigners are, of course, right that the world needs to cut its use of fossil fuels. But focussing on curbing supply is not as effective as pushing for measures that cut demand – such as carbon taxes, faster permissioning of renewable energy and green subsidies.

International climate negotiators are also wrangling over whether to “phase down” fossil fuels. The diplomatic texts don’t spell out whether it is supply or demand that should be cut. Though politicians sometimes talk about phasing down “use”, which puts the emphasis on reducing consumption, the ambiguity of the official language may not be helpful.

After all, big fossil fuel producers such as Saudi Arabia and Russia are opposed to any suggestion that they need to cut production. They have so far stymied various attempts to get a global deal to phase down fossil fuels, including at COP27, last year’s United Nations climate change conference and last weekend’s Group of 20 summit.

Of course, the likes of Saudi Arabia still wouldn’t be happy at the prospect of falling demand for their products. But even if they block a global deal on phasing down consumption, other countries could press ahead and do it anyway as that is within their control.