To phase out or phase down? Why the debate on fossil fuels misses key point

Greater focus must be given to the potential economic and climate risks of reliance on ’abated’ fossil fuel production.

Expert comment Published 12 December 2023 3 minute READ

Dr Daniel Quiggin

Senior Research Fellow, Environment and Society Centre

As COP28 nears its conclusion, a great deal of optimism and controversy is centred around the phasing ‘out’ or ‘down’ of fossil fuels. Neither term has ever been included in the negotiating text of previous COPs, hence the optimism.

But the revelation that the Organization of the Petroleum Exporting Countries (OPEC) sent private letters to its 13 members – including COP28 host the United Arab Emirates (UAE) – urging them to ‘proactively reject any text or formula that targets energy, ie fossil fuels, rather than emissions’ caused controversy. OPEC members own 80 per cent of global oil reserves.

After we apply any such target to ‘unabated’ fossil fuels, what about ‘abated’ fossil fuels?

However, this optimism and controversy appears to be missing the more important question: after we apply any such target to ‘unabated’ fossil fuels, what about ‘abated’ fossil fuels? Abatement is the process of capturing CO2 as fossil fuels are burnt, preventing a proportion of those CO2 emissions entering the atmosphere, either by using that CO2 in products or storing it in geological formations deep underground in near perpetuity.

While more than 100 countries already support a phase-out of unabated fossil fuels, the definition of unabated has not been agreed within the COP process. During the 2021 COP26 summit, the Glasgow climate pact mentioned unabated in reference to coal. However, the lack of agreed definition is resulting in uncertainty. Could a coal power station capturing 10 per cent of the emitted CO2 be considered abated?

Even if COP28 defines abated as at least 90 per cent of fossil fuel emissions from power plants, and 50-80 per cent of methane from energy supply – as was included within a footnote to the 2022 IPCC report – what about the downstream emissions? No one is seriously proposing applying carbon capture and storage (CCS) to the downstream emissions from cars, planes, gas boilers, tanker ships, and diesel generators (to name a few).

If carbon capture and storage (CCS) enables the continued use of abated fossil fuels at levels anywhere near today’s levels, we must consider the entire supply chain of emissions.

We must tackle all sources of greenhouse gas (GHG) emissions, and abating fossil emissions via CCS is an important technology, capable of high capture rates. We will also require some oil and gas for years – perhaps decades – to come. However, if CCS enables the continued use of abated fossil fuels at levels anywhere near today’s levels, we must consider the entire supply chain of emissions.

While oil-producing nations would like us to believe that applying CCS to the production of oil makes our consumption guilt-free, the simple fact is that the upstream and midstream steps of oil production (extraction, flaring and refining) only make up a small proportion of the entire emissions from a typical barrel of oil.

Some types of oil also embody greater emissions. Conventional light oil contains around 475 kgCO2eq per average barrel, of which around 86 per cent of emissions are from downstream combustion in planes, cars, ships etc. Light gassy oil contains around 750 kgCO2 per average barrel, with around 47 per cent of emissions from the downstream.

As at least 70 per cent of greenhouse gas emissions are currently from the burning of fossil fuels, we must not fall into the trap of believing CCS and abated fossil fuel production is a silver bullet.

To stay below 1.5oC, the UN emissions gap report states that GHG emissions must fall by 42 per cent by 2030. As at least 70 per cent of GHG emissions are currently from the burning of fossil fuels, we must not fall into the trap of believing CCS and abated fossil fuel production is a silver bullet. If we do, and we ignore our individual consumption of fossils, we collectively become the proverbial frog who never jumps out the heating water, even as it is brought to the boil.

The economic ramifications of relying on abated fossil fuel production are also potentially dubious. As is ignoring the current geopolitical context. As the Yom Kippur war caused the oil crisis in the 1970s, the Russian invasion of Ukraine brought about the 2022 energy crisis, with rising prices and a prevailing focus on energy security and affordability of oil and gas. CCS requires significant energy input, leading to increased costs of production.

In a world that prioritizes affordable and secure energy, this cost may pose a major barrier to the large-scale deployment of CCS. Even if the increased costs do not pose a significant barrier at first, while there are still insignificant CCS deployment levels globally, rapidly scaling CCS will undoubtedly make costs considerations an issue.

Of the three CCS demonstration projects in the Middle East, two are enhanced oil recovery (EOR) facilities. EOR is extremely controversial as the captured CO2 is used to increase the pressure in old oil wells, leading to more oil production – and hence more emissions. However, CCS projects are currently only economically viable with EOR because of the increased production costs incurred by retrofitting CCS.

An example of this economic reliance on EOR to make CCS viable is the Petra Nova coal power station CCS project in Canada. The low oil price in 2020 led to its mothballing, but as oil prices climbed in 2022, Petra Nova restarted operation in early 2023.

A COP28 agreement on the phasing out or down of fossil fuels is critical and will set the course for decarbonization action. But perhaps most importantly, it must carefully consider the implications of CCS-based abated fossil fuel production. Historically, the pathway decision-makers have chosen to reduce emissions has been to push hard decisions into the future, and not to consider fully the externalities at scale of technological choice.

A COP28 agreement on the phasing out or down of fossil fuels is critical and will set the course for decarbonization action.

Reliance on CCS-based abated fossil fuel production is likely to under-deliver on emission reductions when we consider the downstream emissions of our cars, boilers, flights and goods shipped across the world, while its high costs are incompatible with the current focus on energy security and affordability.

The modular nature of solar and wind projects has allowed for large-scale production in factories that has resulted in extremely fast cost declines. By contrast, CCS is a large-scale technology retrofitted to large-scale infrastructure like refineries and power plants, so its costs are unlikely to decline in the same manner. But it will enable oil-producing states and international oil companies to stay in business.